Retail is in John Douang’s blood. Specifically, his family owned a convenience store in Toronto, which was not convenient when it came to trying to balance having a personal life and growing the business.
“They worked long hours and if they wanted to take a break or a vacation, they had to shut the store,” said Douang, Co-Founder and CEO of Aisle 24 in an interview with Retail TouchPoints. “That meant lost revenue and lost income. Moving into cashierless, touchless and cashless was the natural progression of the retail industry.”
Douang and his co-founders Josh Douang and Marie Yong knew there had to be a better way to manage the 24-hour grocery retail business without being on location around the clock. They also wanted to create a smarter, safer and more secure environment for customers.
Building a Smart, Secure Store Experience
The trio developed the technology for the Aisle 24 cashierless grocery store. In addition to making 24-hour grocery safe and easy, Douang and his team also needed to gauge customer demand and expectations of their store journeys.
As Aisle 24 evolved into a franchise model, the company worked in partnership with Swedish security and surveillance technology firm Axis Communications to adopt a solution that solves many of the security and analytics challenges of remotely operating a cashierless grocery store at all hours. Toronto-based customer security solutions provider Smart Installs implemented Axis Communications’ Open Platform technology, affording Aisle 24:
- Surveillance for remote monitoring;
- Analytics to guide inventory management and business operations;
- Insight into monetizing space, particularly for locations with smaller footprints; and
- Confidence that customers and staff remain safe.
In an interview with Retail TouchPoints, Douang and Jason Chiu, Professional Services Group Manager for Canada at Axis Communications, revealed how they worked together to develop a seamless, secure and human-centered cashierless grocery shopping experience.
Retail TouchPoints (RTP): Why is cashierless technology important to the 24-hour grocery business and how does the design of Aisle 24 stores support this model?
Douang: The grocery sector is a very low-margin business that relies on a lot of volume and traffic. A lot of smaller independent retailers in that space find it very challenging to operate their businesses because they have to be there to manage the cash in order to make any money.
The backend operation is very important to profitability. People are attracted to the use of innovative technologies and cashierless store models to better operate their businesses, at least from a franchising perspective and from our own corporate initiatives. We have corporate stores and our own corporate staff that have to go in and replenish and manage the store. We have to use technologies that either are available or technology that we will build to make these processes more efficient.
From the customer’s perspective, it can’t just all be about technology. You have to offer good products, interesting products and good prices. We pride ourselves on being able to craft a product offering to the demographics in the particular community in which an Aisle 24 location is present to meet the locals’ needs and wants.
RTP: What were some of the challenges Aisle 24 faced prior to adopting the new surveillance and security technology?
Douang: When we first launched the business in 2016, we only had what we called ‘the resident format,’ which was internally focused or inside an already secure environment. It was usually a condo, or student residence, which had a 24-hour concierge. We didn’t have to worry too much about security at that point. But the goal from the beginning was always to open this up to the general public and when the pandemic hit in 2020, we knew we had to accelerate that plan.
We worked with Smart Installs to find different technology hardware providers that would allow us to achieve our mission, which was to launch what we call ‘a community format store’ as a general access store. Anybody who lives in the community can create an account, use our mobile app and get into the store. During testing, we found that Axis Communications’ hardware and Open Platform technology allowed us to create that seamless experience.
RTP: How has Aisle 24 been able to make the experience safer for both customers and employees?
Chiu: When the user approaches the store, they’re authenticated through the intercom on the door. They’re able to use their credentials to enter the store and at the same time, there is a video capture of the person at the door. As soon as they enter the store, they’re being viewed by our cameras. The nice thing about our cameras is we have a lot of analytics capabilities. If Aisle 24 wanted to use it for people counting or if we had any other situation in the future where we needed to perhaps limit store occupancy, we can program a limit.
If there are ever too many shoppers, we can actually lock out people or prevent them from entering the store at the intercom level at the door. This can all be automated, which is really a powerful tool. On top of that, there is audio employed in stores so managers are able to play attractive background music and create a more enjoyable shopping experience. Should they choose to actively monitor these stores or if an announcement needs to be made, they can leverage the use of network audio to broadcast these messages. Even if it’s things like announcing sales on items, they could just play them through the audio and these can be fully automated because they’re all on the network.
RTP: What types of analytics tools is Aisle 24 using and how is the company able to improve business operations and even store designs?
Douang: Our customers are coming in the evening, late evening and in the early morning. From that data, we’re able to craft our experience to be better. From a physical standpoint, we definitely learned a lot in terms of how to guide the customer journey through the store. There are a lot of traditional merchandising strategies that are used in a traditional grocery shopping experience, which we do employ. But the goal is to get really create a guided experience for them as they’re navigating through the store so that it is much easier for them to get in and get out.
We look closely at our sales velocity, how quickly items are moving, to better merchandise and inject products into different aisles to support quicker grab-and-go experiences. Looking at that data, we’re able to judge very quickly and adapt. This is why it was important for us to implement a digital labelling system. In traditional grocery environments, countless labor hours are spent redoing pricing and sale prices. It is not efficient. With digital labels, we can control that immediately and remotely.
RTP: How have you been able to improve the customer journey by leveraging these trend and behavioral insights?
Douang: Gen Z and millennial consumers are the largest spenders [for Aisle 24]. As Gen Z gets older, those consumers are going to control a bigger market spend. Their expectations are very aligned with the digital world. Having a traditional experience in a retail environment doesn’t really align with their demands.
Back when I was a kid, Sunday was a shopping day. You got the family together and you spent a few hours going out doing the grocery shopping. Well, that has changed. The Gen Z and millennial demographics have led that change where it’s not a Sunday event anymore. It’s almost a chore. It’s a necessity — you need to eat. But I think we can do it in a different way. Our goal around speed and getting people in, getting people out and carrying on with their days was really important.
RTP: How will these tools support Aisle 24’s long-term expansion?
Douang: What we’ve learned over the past six years is that, for our customers, it’s very important that things work seamlessly and easily. It’s very easy for them to get turned off from an experience when something goes wrong. Ensuring that we are testing what we’re doing and that it’s integrated well is very important and when it doesn’t go right, we make sure that there is a very human response to the customer. That’s super important for us. And that’s what our customer base really appreciates.
Chiu: Aisle 24 is looking at different uses for audio capabilities. Perhaps this could be a way for them to develop advertising models that generate additional revenue. A lot of larger retailers are using our devices as machine vision for things like retail analytics so that they can know when to restock their shelves. The capabilities are endless because once you put one of our devices onto a network, the programming behind it enables all these cool functionalities. Aisle 24 installed our devices with a forward-thinking attitude about using it for intelligence that goes far beyond security.