We Went to the "Unmanned Supermarkets" in Hangzhou and Beijing. They Were an Experiment in Both Credit and Lifestyle

What is it like to buy something in a convenience store with no one in it? That is what this article sets out to tell you.

If you also live in a big city, you may agree with me that the convenience store is one of the greatest inventions of modern life: lots of branches, bright and clean, well stocked, hot food, open 24 hours, and accepting more and more ways to pay...

The one thing that bothers me when my social anxiety flares up is the cashier who, as I pay, works hard to sell me a stored-value card or a promotional add-on deal. Usually all I can do is end the conversation quickly with a string of "no"s. Perhaps they find it tiring too: even at Starbucks, where staff are told to engage with customers, most of them show little appetite for chatting.

On June 6, Sesame Credit, China's first market-based credit-scoring agency, turned two convenience stores, one in Hangzhou and one in Beijing, into something more extreme: "unmanned supermarkets." For the 24 hours of that day there were no cashiers and everything was self-service. Customers could pay in cash or by Alipay transfer, and they could pay less than the price, or nothing at all.

Because the event was not turned into a widely shared shopping guide, as last year's "Alipay Wallet half-price day" had been, neither store was cleared out after a full day of stumbling business, and the count afterward showed a fair amount of revenue. But with so much interference and intervention from all sides, the attempt can no longer be treated as a proper "social experiment." Beyond the question of credit, it looked more like a lifestyle experiment in "getting to know the convenience store again."

I

At around 11 p.m. the night before the experiment, when I told my Uber driver I wanted to go to the Yefeng Modern Center on Shaoxing Road in Hangzhou, he seemed a little surprised: "There's nothing to do over there at this hour. I guess only that knock-off 'Xileduo' is still open."

"Xileduo" is not the subject of this article. It is just a convenience store that looks in every way like C-Store. The store taking part in the experiment in Hangzhou, a China Resources Vanguard Vango convenience store, was 200 meters away. It was not hard to find: seven or eight staff were putting up signs and labels inside the brightly lit shop, with more materials piled outside the door. Two GoPro cameras were already in place. On the day of the experiment, the number of GoPros around the store reached six, one of them fixed behind the checkout counter, its blinking red light hard for any passing customer to miss.

The store has a very good location. It occupies a ground-floor unit at the base of a 23-story office building, next to a fairly large Starbucks. The Yefeng Modern Center is itself a mid-to-upscale residential compound with a primary school inside, and Heping Square across the road is one of the few venues in urban Hangzhou suited to large exhibitions and events.

Store manager Ren Qihui told QDaily that on a normal day the store takes in more than 10,000 yuan, and a sizable share of that comes from the office building, the school and nearby residents. Primary school pupils alone make up a quarter of the foot traffic. The office workers, who have more money to spend, were largely absent from this weekend experiment.

The Quanshi convenience store that took part in Beijing has an even better location. It sits on the ground floor of the Marriott hotel in the Jianguomen area, and its customers are mostly either hotel guests or white-collar workers from the surrounding office buildings.

"When we picked the stores for the experiment, location and transport links were one consideration. If we had chosen one of those small convenience stores inside a subway station, where the crowds are heavy and mixed, it might really have been emptied out," a China Resources Vanguard staff member told QDaily. "We also considered the store format and the customer base. The store we chose this time, the Vango, has a good format and is on the larger side."

Judged by the shop itself and the range of goods, this Vango could indeed rival a small fast-food restaurant plus a medium-sized ordinary supermarket.

The store opened just over four months ago. It covers 140 square meters and has a side door leading straight into the office building. Besides the shelves, refrigerated cabinets and checkout counter, it has room for two kinds of seating, round tables and a bar counter, and even a corner with a hand-washing sink and a large trash bin.

The range of goods is just as complete. Imported products rarely seen in convenience stores, medium-sized packs of rice, flour and cooking oil, branded cosmetics, cigarettes, liquor, electronics, even local tourist souvenirs: it is all there. Ren Qihui confirmed that the types and quantities of goods on the day of the experiment were exactly the same as usual.

II

I missed the first customer to walk into the Hangzhou "unmanned store" once it was set up on June 6. But I am sure he was confused more than once while shopping:

• There really was no one in the store, and some things he might need, such as the microwave, had been moved.
• Most goods had new handwritten price tags, so at checkout he had to add up the total himself, relying on mental arithmetic that might not be up to the job.
• If he did not use Alipay and had no small change, he might have had to hand over more money than he owed.
• Although the Sesame Credit logo was on all the promotional materials, he might well have walked out thinking the supermarket was simply running a promotion of its own.

If you are buying only a few items, shopping in this "unmanned supermarket" is actually quite simple: walk in, pick what you want, and when you are ready to pay, either drop cash into the cash box on the counter or scan the QR code printed on the promotional materials nearby and pay with Alipay Wallet.

But once it came to adding up the total, making change, using a stored-value card, bagging, taking hot food, or heating a boxed meal yourself by following the instructions, the cost of having no staff on watch became clear. Small problems came up one after another. Sesame Credit and Alipay staff, who had been waiting in the Starbucks next door, and China Resources Vanguard employees in plain clothes kept coming back into the store to help: an older man who could not find the cash box and so could not buy cigarettes, young people unsure how to pay for several items in one order, and a foreigner who wanted freshly ground coffee and could not get it. Every so often they also had to restock plastic bags, cardboard heat sleeves and small change.

The people who handled the whole payment process with ease were mostly young and middle-aged women from nearby residential compounds, along with the children they had brought along to experience "Credit Day," or who had volunteered to add up the bill for their mothers.

"So far the biggest problem is that the total is hard to work out. Three days before the event we spotted this problem in internal discussions, but we had no good solution, so in the end all we could do was use handwritten price tags. The other problem is the poor network connection when people scan the Alipay code or try to install Alipay Wallet. After 9 a.m. noticeably more people were using Alipay Wallet. We should have set up a free Wi-Fi hotspot," Chen Lingling (nicknamed Ximu), who runs the event for Sesame Credit, told QDaily that morning.

Almost every customer I asked said that, besides knowing this was an "unmanned supermarket," they had noticed the small cameras placed around the store. At times they also faced professional cameras many times the size of a GoPro: several TV stations had heard about the event and rushed over to film and interview. At around 9 a.m., the advertising company shooting footage even cleared part of the store for a while.

When another QDaily reporter reached the "unmanned supermarket" in Beijing, things were no better. The reporters and advertising staff waiting inside far outnumbered the ordinary people who drifted in now and then to buy something. Being watched on camera and asked "how much did you pay?" was a thoroughly unpleasant experience, so much so that several customers changed their minds and bought nothing, or paid extra.

With staff, equipment and media stepping in again and again, the "unmanned supermarket" cannot by any measure count as a proper "social experiment." "Experience plus publicity" may describe the event more accurately.

III

In supermarkets in both London and New York, I have used those impressive-looking self-checkout systems: you set up your plastic bag as the screen tells you, scan the items one by one over the marked area, and finally swipe a credit card to pay. Compared with a human cashier, it is a little slower and the machines cost more, but it has largely ended the experience of queuing three or four minutes to buy one or two small things.

Unstaffed checkout is also a test of how well a supermarket guards against theft and loss. According to an account by industry insider Li Haomin on Zhihu, an ordinary supermarket loses 1-2% of annual revenue to theft, and Walmart, with tighter controls, holds it to 0.8%. But theft rates are clearly higher with unstaffed checkout.

In the one-day experiment at the "unmanned supermarkets" in Hangzhou and Beijing, losses far exceeded those figures. The Hangzhou store actually collected 82% of the value of the goods sold that day, losing nearly 3,000 yuan. At the merchant's request, the Beijing store's figures were not made public at all.

What may have hurt the Quanshi convenience store most, to the point of leaving it speechless, were the several expensive packs of cigarettes and bottles of liquor someone "bought" for 10 yuan that afternoon. When a QDaily reporter arrived about an hour after it happened, the shelves looked fairly orderly at first glance, but the pricier categories, such as power banks, cosmetics, cigarettes and liquor, had been largely cleared.

Under the agreement made beforehand, Sesame Credit would cover all losses, and the stores were told not to interfere with anything customers did when paying, even though staff were on standby close by.

Asked about the incident, Hu Tao, general manager of Sesame Credit Management Co., said that although a very small number of people "did not pay" or "did not pay enough" during the experiment, these were only minor episodes. Sesame Credit will also work with more outside institutions and partners to improve the social credit system as a whole, and to build the basic infrastructure for China's business ecosystem and for society at large. "This experiment has made us more confident in China's credit society."

Having heard about the "unmanned supermarket" trial, some supermarket brands have already approached Sesame Credit on their own, hoping to put the unmanned supermarket and unstaffed checkout model into real use in stores in China. But if they cannot brace themselves for high theft rates, the "unmanned supermarket" they design may end up as a big warehouse full of vending machines.

IV

Compared with the Alipay QR code in the store, "Sesame Credit" is a name still quite unfamiliar to the public, so much so that many people who came in asked when paying: "Is there a discount for paying with Alipay today?"

On May 28, Alipay Wallet had just held its first "Alipay Day" of the year, a joint promotion with major supermarkets and retail chains that gave shoppers 20% off, along with a promise to offer the same discount on the 28th of every month from then on.

China Resources Vanguard was one of the supermarket brands in that "Alipay Day." It runs more than 500 standard supermarkets and convenience stores in southern and eastern China and holds a 20-25% share of convenience stores in Hangzhou. But its partnerships with Alipay and Sesame Credit, both part of Ant Group, were completed only in the past six months. As for the "unmanned supermarket," the two sides agreed to try it together during talks over the past month.

Compared with Alipay and Yu'e Bao, Sesame Credit is a younger business. But in the five months since the central bank announced early this year that it would allow Sesame Credit to run a personal credit-scoring business, it has opened personal credit-score lookups to tens of millions of users. A higher score signals better creditworthiness and a stronger record of keeping commitments, and it earns matching perks from Sesame Credit's many partners.

We reported earlier that Sesame Credit has signed agreements with the embassies of Singapore and Luxembourg: users with Sesame Credit scores of 700 and 750 or above, respectively, can submit fewer visa documents for those two countries. And during the June 6 "Credit Day" event, partner brands in rental, retail, travel and other industries offered various discounts to users above certain Sesame Credit scores, while the cash red packets users snatched in Alipay Wallet were, on average, far larger than those in the Spring Festival "red packet rain."

Chen Lingling said that, as an independent credit-rating agency, Sesame Credit currently partners with Alibaba, Alipay and other brands, sharing data and blacklists with them. Users can expect to receive, within the year, a personal credit report more detailed than the current score and its breakdown, and clients such as companies and embassies will be able to apply for more detailed industry versions. In the near term, however, Sesame Credit will not consider sharing information with any rating agency other than the central bank's personal credit system.

Oh, and one last thing worth mentioning: although the two unmanned supermarkets were part of the "Credit Day" events, they were not limited to customers who had signed up for Sesame Credit. Anyone could walk in and buy something.