The Future of Retail

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The Evolution of Retail

The ways in which consumers buy and sell goods and services have changed drastically over the years. From the creation of currencies and markets thousands of years ago to the more recent inventions of credit cards and modern inventory systems, retail has evolved and grown over the years, allowing suppliers to cut costs and consumers to buy their products more quickly and conveniently. One innovation that has played a huge part in the retail environment for the past twenty years, and will continue to do so in the future, is e-commerce.

E-commerce Industry

Retail E-commerce sales in the U.S from 2009 to 2018[1]

E-commerce is defined as commercial transactions conducted electronically.[2] Surprisingly, e-commerce has been in existence since before the internet, but not in the form it is in nowadays. In the 1970s, technologies such as Electronic Data Interchange and Electronic Funds Transfer gave business companies and organizations the ability to send commercial documentation and conduct business electronically.[3] Because these technologies were made and implemented primarily with companies in mind, and not individuals, they were not readily accessible.

Fast forward to today, e-commerce means a much different thing. E-commerce today carries the meaning of purchasing goods and services over the Internet, a definition that popularized when the internet came to popularity around the early 2000s.[2] Think of some of the biggest companies in the world that sell goods and services online, like Facebook, Amazon, Alibaba and Rakuten. Large parts of their success can certainly be attributed to their ability to capitalize on the rising popularity and accessibility of the internet, a revolution that began in the early 2000s. The massive growth in this sector means that companies need to either adapt or be left behind. Today, platforms like Shopify allow just about anybody with an idea to start their own e-commerce business.[4] In addition, the speed of shipping provided by Amazon Prime has certainly raised the bar for e-commerce businesses everywhere and also removed a barrier stopping customers from shopping online as opposed to in store.

In general, the U.S e-commerce market sector has been developing relentlessly. According to the U.S Department of Commerce, the e-commerce sales in the US increased from $350 billion to $453.5 billion the period from 2014 to 2017 [5]. Additionally, online retails spoke to approximately 50% of all retail sectors in 2017 [5]. Likewise, different countries across the globe are experiencing a rapid growth in their web-based business income. For instance, in China, the e-commerce division accounted for 17% of all sectors revenue in 2017 and is relied upon to develop to 25% by 2020.[6]

Omni-channel Retail Strategy

Traditional brick-and-mortar sales tremendously exceed online sales, taking up over 90% of total retail sales in the U.S [7]. However, with the fast growth of e-commerce industry, more and more brick-and-mortar retailers are encouraged to expand their business into the online market to remain competitive in the long run.

The omni-channel model in retail works by merging both the physical and digital perspectives [8]. This allows the consumers to shop both online and offline, which helps to improve the consumer experience. A consumer shopping behaviour study conducted by over 46,000 customers from June 2015 to August 2016 showed that 73% of the consumers used multiple channels when shopping [9]. Additionally, 50% of consumers are interested in making an online purchase and pick-up in store, and 89% of consumers want to experience a seamless shopping experience [10]. In fact, if a company has a strong omni-channel customer engagement, it can help to retain on average 89% of the customers [10]

Omni-channel Strategy[11]

Example: Indochino


Example of a company that successfully adopts the omni-channel strategy is Indochino. Indochino is a custom suits retailer, which was established in 2007 by Kyle Vucko and Heikal Gani [13]. The consumer can book an appointment and come to an Indochino’s showroom, where the consumer will have an experience with the virtual inventory [13]. The Style Guides here will help the consumer measure, choose the style and customize the suit. The consumer will also have the suit delivered in no more than three weeks. [13]. The consumer can also order the suit online. The consumer will first take their measurements, choose the styles, and customize their suits. If they do not know how to do it, they can follow the video provided by Indochino on how to do the measurements. Indochino will also ship a tape for the consumer for free if they do not have one. Having done ordered online, the suit will be delivered to the consumer in two or three weeks. [13].

The company believes that visiting a physical store will turn a consumer into a repeat online buyer. Company CEO, Drew Green, stated that the showroom gave the company an online sales boost [14]. The company manages to retain their customers; evidently, almost 50% of Indochino’s transactions came from return customers [14]. The company has seen a steady growth from Dec 1, 2016 to May 28, 2017 in revenue of more than 57% and customer base of 43% [14]. Additionally, the company achieved 50% year-over-year growth within the past three years [15].

Indochino is expanding their product lines to customize shirts, blazers, and outerwear [13]. Indochino currently has 8 showrooms in Canada, and 5 showrooms in the US. The company expects to open 150 physical stores internationally and sell a million suits by 2020 [14]


Walmart is an American multinational retail corporation and the world’s largest company by revenue, with the fiscal year 2018 revenue of $500.3 billion [16]. Walmart was established in 1962 by Sam Walton and incorporated in 1969 [16]. It is the biggest publicly traded corporation in the world with 2.3 million employees [17]. The company has 11,695 Walmart stores in 28 countries with over 260 million customers. [16]

Walmart & Omni-channel Retail Strategy

Dominating in the traditional brick-and-mortar retail stores, Walmart has made large strides to compete in the digital world by embracing a new business model called the omni-channel model, providing customers a more seamless shopping experience.

The Expansion of Walmart's E-commerce

Walmart is increasing their presence in the e-commerce market by acquiring other e-commerce platforms, creating customer experience features through mobile, and offering a customer delivery service.

Acquisitions of E-commerce

Walmart has been expanding its web-based business by acquiring a considerable number of e-commerce platforms with a focus on new fashion retailers. Walmart spent $3.3 billion on the website in 2016 [18], which became the main platform for Walmart to sell more upscaled brands such as Bonobos, Moosejaw, ShoeBuy and Modcloth [19]. After the acquisition of, Walmart’s e-commerce growth increased from 7% to 13% [20], allowing Walmart to gain a competitive advantage to reach a higher-income segment of customers. In addition to acquiring e-commerce platforms, Walmart intends to broaden their product lines by partnering with well-established retail organizations, such as Canadian retail giant, Hudson Bay Company, and The Lord & Taylor department store chain. [20]

Improvement of Customer Experience Features

The number of consumers who purchase online using their mobile phones is substantially rising. It is estimated that the number of shoppers who purchase with mobile phones will increase by 5.4% [21]. As such, it is estimated that the mobile commerce market will increase significantly by 40% [21]. “71% of shoppers who use smartphones for research in-store say that it’s become an important part of the experience” [22].

To take advantage of this developing business sector, Walmart has focused on making rapid advancements in customer experience features of the Walmart App, such as including store maps and shopping-list builders [23]. The Walmart App will also include an in-store app experience called Store Assistant which will activate when consumers come into the store [23]. The main functionalities of the Store Assistant are to help with building shopping lists, calculating costs and finding products. [23]

Customer Delivery

Online Grocery Pickup
Walmart Mobile App [24]

Since “50% of shoppers expect that they will be able to make a purchase online and pick up in-store” [10], with Walmart Pickup, the consumer can order items online and pick them up in any Walmart on the same day, and it is free [25].

The Walmart app enables the consumer to update his/her location with the store. This enhances customer experience with the pickup process, as it ensures that the items are available when the consumer arrives [25]. This option is available at more than 4,600 stores [16]. The number of grocery pickup locations has increased from 600 locations to 2100 locations since 2017 [26].

Online Grocery Pickup also offers the shopper an option of having those online ordered items delivered to the shopper’s car at a selected time [27]. This choice is accessible in 600 stores, and Walmart will open up this service in another 500 locations this year. [27]

Partner with Third-Party Companies

On January 31, 2017, Walmart began to offer free two-day shipping orders of minimum $35 on over two million items without a membership fee [16]. In addition to the offering of free two-day shipping, Walmart is currently testing a program with Spark Delivery that helps with online grocery orders [28]. By partnering with third-party companies Deliv, Postmates, and DoorDash, Walmart is able to have grocery delivery accessible in 50 markets [28]. Spark Delivery is expected to enable Walmart to achieve its target of 100 markets this year, which takes up 40% of U.S households. [28]

Furthermore, Walmart announced that they have collaborated with Instacart, the most prevalent delivery service in the U.S, to support same-day delivery [29]. This service will start in Dallas, Austin, Texas, and St. Louis [29]

Implications for Walmart

The rapid growth of the Internet and e-commerce industry have shifted the way traditional retailers operate their business. The omni-channel model pushes Walmart to reconsider their IT competence to stay competitive in the industry. Walmart faces a huge challenge in penetrating the e-commerce market because its main competitor, Amazon, has dominated the online market for such a long time.

Evidently, the online retail market share of Amazon experienced a marked increase from 38.1% in 2016 to 43.5% in 2017 [30]. As such, there was a considerable growth in sales from $149.1 billion dollars in 2016 to $196.8 billion dollars in 2017 [30]. Furthermore, Amazon took up 70.2% of the total $62.5 billion growth in online retail in the U.S [31]. On the other hand, Walmart’s online market share only came in at 2.8% in 2016 and experienced a slight increase to 3.6% in 2017. [30]

Despite this challenge, Walmart reached 60% year-over-year e-commerce growth, becoming the third-largest online marketplace in the U.S [32]. Additionally, Walmart aims to achieve 40% of e-commerce sales in 2019 [33]. To better embrace the omni-channel retail strategy, Walmart's next objective is to invest and develop on other innovative technologies, such as Automation Technologies and Artificial Intelligence Technologies, which will be discussed further below.

Walmart & Automation Technologies

In addition to developing their e-commerce sector, Walmart invests in new automation technology to improve brick-and-mortar operations, such as the Automated Shelf-scanner - Bossa Nova Robot. The Bossa Nova Robot will help with inventory management in Walmart's brick-and-mortar stores. Besides, online grocery is becoming one of the crucial segments in Walmart's online business. Therefore, in order to enhance the shopping experience, especially customer service and customer delivery of online grocery, Walmart looks into other new automation technologies such as Alphabot System and Autonomous Vehicle Transportation.

Automated Shelf-Scanner

Bossa Nova Robot[34]

The automated shelf-scanner, also called an inventory scanning Bossa Nova Robot, is fully autonomous and moves at speed of 0.4 miles per hour [35]. Utilizing the concept of 3D imaging and Artificial Intelligence [35], the robot is able to check pricing, incorrectly positioned items, stock levels [36]. Moreover, it can report the status of inventory in real-time to the manage r[36]. Currently, the robots are being used in 50 Walmart stores in the U.S [35].

Walmart’s employees scan shelf about two times a week [35]; with Bossa Nova Robot, the shelf can be scanned three times a day within business hours [35]. Robots are three times faster than humans and they are 50% more productive than humans [35]. With these capabilities, Bossa Nova Robot saves time and effort for Walmart’s employees by taking over repetitive tasks.

Alphabot System

Alphabot System[37]

Partnering with Alert Innovation, Walmart introduces an automated system for picking grocery orders for delivery called Alphabot [38].This system will automatically fulfill customers’ online orders, collect ordered items, and gather them from storage to Walmart’s associates who will pack the orders to the consumers [39]. Alphabot can pack an order that consists of 50 items in minutes [35]. As such, this technology saves time for Walmart’s associates on going back and forth to the storage to look for ordered items. Indeed, they will have more time on improving customer service by ensuring the consumer will receive the highest quality products. The automated Alphabot system is installed on October 1, 2018, and it is expected to be run by the end of 2018 [40].

Autonomous Vehicle Transportation for Grocery Order Pickup

To further strengthen its customer delivery service, Walmart aims to partner with Waymo - an autonomous vehicle transportation company [41]. This service allows customers to order the groceries online at, then the consumers will get a ride to and from Walmart in a self-driving Waymo car to collect their groceries [41]. Currently, this service is under a pilot test in Phoenix [41].

Walmart & Artificial Intelligence

In an attempt to improve customer shopping experience in-stores, Walmart looks further into Artificial Intelligence Technologies, such as Eden Technology, which helps identify the freshness of products in-stores. Eden Technology also helps to create a more efficient supply chain. Another Artificial Intelligence Technology that Walmart aims to launch is a technology that can measure the satisfaction of customers and analyze purchasing behaviours. With this technology, Walmart hopes to improve the customer shopping experience and retain existing customers.

Eden Technology

Eden Technology[42]

Walmart is developing an in-house mobile application that can identify the degree of freshness of product [43]. The way it works is very simple - users can take a picture of the product, and the application will show users the information related to the freshness of it. The freshness algorithm of the product is determined by an image-based algorithm and machine learning [44]. The image-based algorithm is established by combining food specifications set by the USDA (United States Department of Agriculture) and Walmart’s product standards with a basic standard of over a million photos [44].

The application can be used by both Walmart’s Associates and the consumers. The application is expected to help Walmart’s Associates to inspect food fresh fruits and vegetables for defects and anticipate the accurate date for spoilage [45]. Additionally, Walmart’s Associate is able to manage the distributions of fresh fruits and vegetables from warehouse to shelf, which helps reduce the amount of food waste [45]. This enables the employees to perform their jobs more efficiently, and will potentially improve supply chain and quality management system. As for the consumers, they can use their smartphones to scan for the products in the stores. This allows the consumers to have a better idea of the freshness of products they intend to purchase, which improves consumer shopping experience.

Eden technology has been on trial in 43 distribution centers since 2017, and it has saved Walmart $86 million in food waste [46]. Indeed, Eden technology is estimated to save Walmart over $2 billion in the next 5 years [46].

Happiness Measurement & Purchasing Behaviours Interpretation

Another strategy of Walmart in improving customer service as well as in analyzing shopping behaviour involves an Artificial Intelligence technology that can identify the level of dissatisfaction of consumers [47]. Facial recognition software will be installed at store checkouts to read faces, and monitor customers’ expressions and movements to determine if a customer is unhappy or frustrated [47]. The consumer’s age and ethnicity can also be observed [48].

Advantages of the Technology

If an unhappy customer is identified, the technology will alert a representative, who will be instructed to come to the customer to improve the customer’s mood using methods such as opening more tills to reduce queuing times [49]. Thus, this technology hopes to enhance the customer’s level of satisfaction, which will help retain existing customers and improve customer service.

Additionally, this technology is expected to analyze shopping behaviours by correlating the biometric data (or facial expressions) captured to consumers’ transactions history [50]. Walmart believes there is a high correlation between the customers’ facial expressions and the customers’ purchase behaviours. As such, Walmart assumes that they can detect changes in shopping habits based on the level of satisfaction of consumers[50].

Controversies of the Technology

This technology has garnered several controversies. The first controversy involves the privacy of consumers, as it is uncertain if the consumers are willing to let the retailer keep track of their emotions, race, ethnicity and spending habits [51]. The second controversy involves the functionalities of Artificial Intelligence. In other words, it is questionable as to whether Artificial Intelligence can understand human emotions [51]. Artificial Intelligence can recognize a happy and unhappy customer; however, it might not be able to correctly identify the root causes of these emotions [51]. For example, the reason why a person who looks unhappy in a queue might not be due to the long waiting time, he/she might just have personal problems such as receiving bad grades or having financial issues. On the other hand, a person who looks happy might not be related with his/her shopping experience; he/she is happy is because of other factors such as receiving a job offer, or passing a test. It is also questionable as to how Artificial Intelligence can differentiate between a sleepy customer versus an unhappy customer. This, in turn, will be problematic for Walmart in using this technology to detect changes in consumers’ shopping behaviours based on emotions. Emotions and shopping habits might be correlated, but they are not a causal relationship, that is, shopping habits are not dependent on emotions.


Amazon is undoubtedly one of, if not the, poster child for this age of e-commerce, at least in North America. In their early years, though, Amazon wasn’t exactly the powerhouse they are today, and many experts actually had labelled them as a company destined to flop[52]. Founded in 1994 by CEO Jeff Bezos, Amazon started up as an online book retailer.[52] Initially, it was widely believed that once larger bookstores with more resources, such as Barnes & Noble, set up their online presence, Amazon would quickly shut down.[52] Amazon has thrived through their ability to continually innovate and creatively expand their business model. For example, in 1996, Bezos launched the Amazon Associates program, which transformed Amazon from an online book retailer into an online “anything” retailer.[53] Then, in 2006, Amazon launched Amazon Web Services, IT infrastructure services, further transforming Amazon into a technology company.[54] Xavier Garambois, Vice President of EU Retail at Amazon, says “Innovation is part of the Amazon DNA and over the past 15 years we have been constantly adding and refining technology that enhances and improves the experience of all our customers.” [55] Some other business ventures that Amazon has taken in order to stay ahead of the competition are introducing streaming services such as Amazon Music[56] and, more recently, physical retail such as the Amazon bookstore[57]. Considering the trend into e-commerce, their current interest in physical retail is quite surprising and does not seem to make as much sense as their past decisions.

Why Physical Retail?

It seems backwards for Amazon to expand into the realm of physical retail when the rest of the world, including Walmart, is doing the opposite. What are their reasons for doing so? Despite the trend into online shopping, there is still a high demand for brick and mortar stores. In fact, according to IBM, 67% of our youngest and most tech-savvy generation, Generation Z, spend most of their time shopping in a store, compared to 22% online.[58] Another result surveying Canadian consumers shows that reasons for visiting physical retail stores include being able to see, try, and touch merchandise, getting the product immediately, easier returns, and enjoyment of the in-store experience.[59] Evidently, there is a need for physical stores that e-commerce either cannot or will take a long time to replace. Amazon’s investments into physical retail include Amazon 4-star, Amazon Pickup Centers, Whole Foods, Kohl’s, Amazon bookstores, Amazon Prime Fresh, Amazon Lockers, Amazon Pop-up stores and, most recently, Amazon Go.[60]

Amazon Go

Amazon Go[61]

In December of 2016, Amazon opened a state-of-the-art physical mini-market called Amazon Go.[62] What separates this market from any other supermarket? Amazon Go has no cashiers. Customers simply scan their Amazon Go app at a sensor at the gate, take the desired items off the shelf after which the product is added to the customer’s cart (both physically and in the Amazon Go app), and scan their app again as they walk out the door.[62] Customers are automatically charged for what they have taken.

Figure 1: Computer Vision[63]

Amazon has not released any details as to how they add products to the customer’s virtual carts. However, it is safe to assume that it has to do with the hundreds of cameras installed in the ceiling of the store, equipped with what Amazon describes as computer vision, deep learning and sensor fusion.[62] These cameras are smart enough to differentiate two customers that are shopping side by side and also identify whether a product was picked up or put back on the shelf, an incredibly amazing feat. For context, just two years ago, computer vision was nowhere near good enough to run an Amazon Go store. Figure 1 shows a computer in 2016 trying to identify objects given an image, and it misidentifies many objects.[63] Some of the extreme test cases that Amazon’s engineers put the system through before Amazon Go’s grand opening are both technologically amazing and funny. For example, to test whether the system could track people that looked similar to each other, they had three employees dress in identical Pikachu costumes, where the employee’s faces were hidden, shop in the store and the system accurately tracked them all.[64]

Connecting online and offline experiences

Amazon Go represents an idea that retail businesses have been interested in for a while now; not only having e-commerce and physical retail, but connecting the different channels of a business to create a seamless experience. Because the e-commerce and brick and mortar portions of a business have traditionally always existed separate of one another, bringing the two together creates many opportunities for convenience and personalization. For example, any purchases at the Amazon Go store will be linked to the customer’s Amazon account and could be further used to create recommendations or other useful personalization options.

Alibaba / Guess

Smart Mirror[65]

In Hong Kong, Chinese e-commerce giant Alibaba and fashion retailer Guess have teamed up to create a concept store that gives customers a completely different shopping experience from Amazon Go, yet with the same theme of connecting e-commerce and physical retail.[66] Whereas Amazon Go is connected to the customer’s Amazon app, this store, equipped with technology dubbed FashionAI, is used with the customer’s Taobao app, and all personal information about the customer such as purchase history, recommendations, and payment information are taken from the app.[66] In this store, each article of clothing is attached with an RFID tag, which can be identified by the smart mirrors located inside the fitting rooms.[66] These smart mirrors are really at the core of this shopping experience because, through them, customers can choose different sizes (which employees will bring directly to the fitting room), select different clothes, and mix-and-match personalized suggestions for them. After customers have decided what they want to purchase, they can checkout and pay through their Taobao app.[66]

Advantages of Amazon Go

The primary advantage that Amazon Go has over conventional convenience stores is speed, a feature that they have advertised endlessly. With this “walk in walk out” technology, customers no longer need to wait in checkout lines, which both saves time and creates a smoother experience, especially for customers that only want to buy a few items. As a result, Amazon Go has become a go-to for people looking to buy a quick snack, or on the way home from work.

Disadvantages of Amazon Go

Amazon Go doesn’t come without disadvantages and fears of the changes that it will bring. As is the case with many technologies involving personalization nowadays, there are privacy and surveillance concerns. A survey of U.S. internet users showed that 30% of users worry frequently about companies collecting and sharing their personal data online with other companies.[67] Now, as the cameras in Amazon Go can not only track you as you shop but also automatically identify you, Amazon will be able to collect and share both online and offline data.


Walmart’s and Amazon’s innovations suggest the future of retail will embrace the omni channel experience of connecting online and offline experiences - a trend that has become prevalent in China too. “Over the past two years, Alibaba has invested as much as $8 billion in brick-and-mortar retailing, acquiring stakes in local supermarket chains…Similar to Amazon’s $13.7 billion acquisition of Whole Foods, Alibaba believes a foothold in traditional retail is the path to future growth.” [68]

The retail industry is becoming one of the most promising fields of business in China for the near future. The spending power of the Chinese population has increased dramatically and the Chinese market has matured into one of the largest and still growing consumer markets worldwide. As a result, retail stores are facing many challenges with: 1) keeping up with increased consumer shopping, 2) creating more convenient and on-demand services and 3) satisfying wanting ‘new products’ quickly. To address these challenges, Chinese retailers have been embracing and leveraging the rapid growth of technology. China’s recent e-commerce boom can be attributed to four reasons: consumption upgrade, mobile commerce and digital payment, and most importantly the concept of new retail. [69]

Consumption Upgrade

China has been undergoing an enormous economic shift, and the consumer purchasing power is increasing as Chinese households are both gaining "higher disposable incomes and experiencing better standards of living". [70]

Digital Payment

Mobile commerce has been rapidly growing in China, thanks to the influence of Tencent’s and Alibaba’s digital payment systems. The nation took less than 5 years to become a “mobile-first nation”.[71] One in four China Internet users are “mobile native,” meaning they only access the Internet by phone, while only 11% of U.S. web users are “mobile native”. [72] Chinese consumers are using their phones to complete everyday transactions from ordering food to buying event tickets.

New Retail

Alibaba has grown to become China's largest online commerce company. The company has a variety of different businesses, but it is best known for, an online business-to-business trading platform for small businesses. The company is also behind Alipay, a digital payment system has been the most popular online payment system in China. In 2017, Jack Ma revealed his concept of New Retail: “the concept of moving, not just Alibaba, but all retail beyond the digital versus physical limitations.[73] Jack Ma expressed that "commerce as we know it is changing in front of our eyes. E-commerce is rapidly evolving into 'New Retail’. The boundary between offline and online commerce disappears as we focus on fulfilling the personalized needs of each customer." Simply put, “New Retail is using technology to transform offline retail” – offline and online retail are merging, not competing”. [74]

Jack Ma’s vision of “New Retail” is best demonstrated through the Alibaba-backed supermarket chain, the Hema store. Similar to Amazon Go, both stores are creating a cashless and cashierless shopping experience –linking offline and online retail. However, for some, traditional brick and mortar stores will still hold value because shopping is seen as a social activity and lifestyle choice. "Online sales penetration in China is the highest in the world, but brick-and-mortar retail still accounts for more than 80% of total retail sales". [75]

Hema Supermarket

Hema Store[76]

Hema is a digitalized supermarket chain that opened in early 2016. As of 2018, the store currently operates 52 stores across 13 of China’s biggest cities. In the future, the store plans to open 2,000 more stores within the next five years.[77] In order to buy products either online or offline, customers have to go through the Hema app which is linked to their Alipay account. In stores, transactions are completed through a cashier-less and cashless process; customers can even pay through facial recognition. Some stores also include a restaurant where fresh seafood can be cooked and prepared while the customer continues to shop. Hema also offers free delivery for orders within 3km of a store. [78] The four main technologies that transform the store are: digitalized price tags, robotics, online delivery, and mobile functions.

Digitalized Price Tags

Digitalized Price Tags[79]

The Hema store displays all of its products pricing labels through a digital screen. The digital price tag solution enables instant pricing, automatic updates and real-time inventory.[80] This means that the price in store is the same as the price on the app, seamlessly synchronizing offline and online data. For each label, a QR code is also encoded by the side; when scanned, additional product information such as nutritional information, origin of the produce, how it was produced, recipe and preparation suggestions, and even food safety certifications of the produce can be viewed. [81] This might seem like a novelty piece of technology, but in China, it is a step forward encouraging retailers to pay more attention to where they are getting their produce from – this helps improve their reputation of the cleanliness and standards of their produce.

China has occasionally received backlash for the lack of hygiene and freshness of produce in many supermarkets, so integrating this additional information for customers to access is a big push for retailers to show that they care about the integrity of the product and where it comes from. Hopefully, this will be an example for all retailers to follow, not just in supermarkets. This technology can also be applied to fashion retail stores since many are constantly under fire for the mistreatment of workers and animals. By displaying additional product information, it builds consumer trust and confidence in Hema products, giving consumers another reason to shop at this store rather than at its competitors. A digital price tags also means employees, do not have to spend time individually replacing each price tag whenever there are changes.

Robotic Restaurant

Robotic Restaurant[82]

In some select Hema stores, there is a robot-operated restaurant. Alibaba uses its existing technology from its e-commerce automated warehouses to power the robot restaurant (similar to Amazon’s Kiva robots).[83] The fact that there is a restaurant inside the store reiterates Jack Ma’s vision of blending traditional and digital retail together. Hema is attracting shoppers into the physical store by allowing customers to personalize their meals; however, the technology is not the main driver for attracting customers. The supermarket’s fresh seafood section allows customers to choose what they want to eat and have it cooked and served.[84] Hema’s business model seems to be attracting customers as a lifestyle factor, considering the recent consumption upgrade, consumers are looking for higher quality food and imports - making the seafood section at the restaurant attractive.[85] Robotic operated restaurants have also been deployed worldwide, for example Spyce Kitchen in Boston, US.[86] In a country where service is heavily emphasized, the rise of robotic servers poses an interesting question of whether or not this will disrupt the tipping culture or even if there will be a future where customers have to tip robots.

Online Delivery

On average, for a Hema Supermarket that has been open for at least 1.5 years, daily average sales are upwards of US$116,500 – about 60 percent of which comes from online orders.[87] By having the store double as a warehouse and distribution center, Hema is able to quickly fulfill online orders. The store has several automated conveyors that link the front end of the store to the back end sorting center. "'You may see there are about 30 people shopping in the store, but in fact, there are 100 to 200 customers shopping online at the same time,' said Alibaba representative Yan Qian. 'Once we receive an online order, our staff immediately start picking out the customer’s selected items, get all items in the basket scanned and packed, and put the bags on a conveyor belt that carries the orders to a delivery center adjacent to the store. And to the delivery trucks'".[88] This system is what allows the store deliver so many of its products online within a day.

Conveyor belt system to distribute online orders[89]

The digitalization process enables suppliers to view customer orders in real time, and to plan their inventory accordingly. The suppliers then ship directly to the store, and since the supermarket also acts as an distribution centre, there is no real 'storage' space to hold inventory. Lower inventory levels require less space, so this extra space can be used to develop more dining areas like the robot restaurant. The store also guarantees free delivery of your products in 30 minutes if you live 3km within a store. [78] Many people are even planning on moving closer and working near to a Hema store, to take advantage of this offer. [78]


The disadvantages to this design is that it puts pressure unto its employees. Workers have 10 minutes to pick the items, 10 minutes to sort them in the back, and 10 minutes for delivery. [78] In order to successfully maintain their competitive advantage of quickly fulfilling online orders, there must also be enough demand to use the online delivery service. With the future expansion of more Hema stores, the stores are planned to operate in high dense population areas to attract large volumes of customers and earn revenue. Such areas are locations close to where people work or live, meaning high operating costs.[78]


Hema app[90]

Everything from entering the restaurant to making purchases is completed through the app. All shoppers have to use the store's app in order to benefit from the services. (Similar to Amazon Go and their Amazon account). “Mobile is expected to consolidate its leading position as the go-to form factor during the 2016-2021 period, as more Chinese consumers, even those in more rural areas, embrace smartphones as a conduit for commerce”. [71]


The main advantage of this integration is it allows the business to collect data. “Big data has become a vital pillar of the information industry, and is used to crunch vast amounts of complex statistics to show patterns and trends in business and consumer habits. Hema is able to collect reams of statistics for physical and virtual stores, which allows it to track and analyze the shopping patterns of customers. Every purchase is logged and preferences noted, with items promoted that appeal to the tastes of individual shoppers.” [84] For example, the data might reveal that many customers visit the store after work—so a marketing campaign might have a greater impact in the evening than in the daytime.[91] Using the collected data, the store can then tailor its inventory based on the spending habits of what people prefer to buy. [78] The data is also being used by truck drivers in real-time; since delivery addresses are saved onto a customer’s profile account, orders are grouped and optimized to show the most effective delivery route.[78]


When a stores’ functions are mostly dependent on mobile devices and payments, a disadvantage to consider is the question of how reliant consumers become on their phones. As China continues to move towards a cashless society, mobile payments are imposing implications with the older and lower-income demographic. “As a 2017 report from the Consultative Group to Assist the Poor indicates, close to 70 percent of rural Chinese remain offline and require a compelling reason to acquire the smartphone and bank account needed to utilize mobile payments. As these digital platforms attempt to become the default form of payment, China is facing a critical challenge to get its unbanked citizens caught up to financial inclusion standards”. [92]

China’s popularity of QR code payments have also introduced some security and privacy problems. "In the southern province of Guangzhou, a total of $14.5 million yuan were stolen in QR code scams, where fraudsters replaced legitimate codes with fake ones or embedded malware in them to steal personal bank account information".[93]

Conclusion to Hema

Ma’s vision with stores similar to Hema is to have "a customer that comes into the store, buys a single orange on the app, tastes it in the store, and then decides to order a bulk delivery to their home for then or later. In the future, the customer trusts that the oranges at Hema are high quality and does not hesitate to order more online". [78] This vision is pioneering the way many other retailers are operating around China.

Other Retail Innovations in China

Bingo Box

BingoBox is a 24-hour, unmanned convenience store. “Each item has an RFID tag and the system will be able to detect whether it has been paid for,” he said [94]. “Furthermore CCTV cameras are monitoring the store 24/7. If you steal something from a traditional convenience store, you might be able to get away with it. But if anyone tries to do that in BingoBox stores, we will definitely find out and they will be banned from entering our stores in the future.” [94]

Magic Mirrors

Magic Mirrors, "is an augmented-reality-powered digital screen that lets shoppers virtually try on and purchase cosmetics. The mirrors are being installed in bathrooms of shopping malls so that consumers waiting in lines, can browse through a wide array of lipstick, blush, eyeliners and eyeshadow, and a vending machine offering beauty and feminine products from nearly 10 brands".[95]


Alibaba also partnered up with Starbucks to provide the “New Retail” experience. The now largest Starbucks in the world, "combines the Taobao app and augmented reality, to provide a fully immersive and digital retail experience. Using location-based technology, the app recognises when an user has walked in the store. Customers will then see a detailed map, menus of coffee and tea available, save their favourite products. Mobile Taobao’s AR function also allows customers to scan key features around the roastery (types of beans in different silos, brewing methods and roasting process, visual and animations tour, collect badges to post on social media)".[96]



In the future mobile devices will play an influential role in the way consumers and businesses approach retail. Mobile devices hold enormous amounts of data about a customer, given that it is something most people take and interact with everyday. From a business perspective, the data collected will be valuable in understanding consumer behaviour to retain loyal customers. From a consumer perspective, our smartphones allow an easier and quicker access to simple daily transactions as seen through mobile-enabled stores such as Amazon Go and Hema. China has adopted the use of mobile commerce rather quickly, and it seems like North American retailers will follow through shortly; from just mere observation there are already an increasing number of people who:

  1. are using their phones as a digital wallet and
  2. using phone apps for different services and products.

In the future, these functions will be more integrated and instead of having several apps for different services, there will be one prominent and cohesive app for everything, which will allow consumers to interact with retail in a more immersive way.

Bluetooth Low Energy

Bluetooth Low Energy (also called Bluetooth LE or Bluetooth 4.0) is a new power- and application-friendly version of Bluetooth. Bluetooth LE creates connectivity between mobile devices and physical bluetooth beacons.[97] Beacons, set up in strategic locations in a retail store, can work with mobile apps to trigger particular messages or actions based on rules, such as triggering a push notification when a user is within a certain distance from a beacon.[98] This data can help retailers to know about how many customers visited their store, which particular section was the busiest of all, busiest day and hours of the week, traffic patterns and so much more.[99] The above data can be utilized to make improvements in a particular section of the retail store and enhance products and services.

As mobile devices begin to play larger roles in physical retail stores, Bluetooth LE will have a key role in both increasing customer engagement and in making the shopping experience more convenient and fast. In Graz, Austria, Ikea has equipped their store with Bluetooth beacons that send push notifications to anybody with the Ikea Family app installed on their device.[100] The beacons are used so that “shoppers are welcomed on arrival, an invitation to take a break at the food market and enjoy a free coffee is displayed or a reminder to use the reward card when checking out pops up”.[100] In the future, more retailers will begin to adopt this technology in order to both personalize their customers’ shopping experiences and to collect consumer data.

Types of stores

Based on the success that Walmart, Amazon and Alibaba are seeing through innovating and re-inventing their businesses, other stores will soon follow suit. In the future, physical retailers will primarily focus on creating two types of experiences in their stores: one that focuses on customer convenience and speed, and one that focuses on customer engagement.

Convenience and speed

These stores will attract customers who want to enter and exit a store as quick as possible, buying everything they wanted to, as opposed to the shopping experience. Retailers that focus on creating convenient and speedy experiences will usually sell merchandise in which customers will walk in knowing what they want to buy already, such as groceries. A perfect example of this is Amazon Go. Key features of these types of stores will be optimized store layouts, reduced or no checkout lines, and online ordering/in-store pickup.


These stores will attract customers who perceive shopping as a lifestyle choice and are keen on receiving service that is enhanced through technology. A main focus will be to create unique and interactive shopping experiences where online features are brought into physical stores, such as seeing customer reviews, checking available inventory, personalized recommendations based on purchase history, and delivery of merchandise to your home. These features, traditionally available only through e-commerce, give customers a more complete shopping experience and allow them to make more informed decisions. An example of a store that aims to create more engagement is the Alibaba/Guess collaboration mentioned earlier.

Challenges (Consumer data)

The collection of consumer data is an area in retail that will continue to grow exponentially in the future, as more and more types of different data is collected through new technologies. It’s pretty common knowledge that our online habits are being collected and information is being inferred from it. Businesses will then use this information to improve customer experience, refine marketing strategy, or even sell to gain a profit.[101] In addition, companies like Amazon and Alibaba are beginning to be able to connect your offline presence in stores to your online presence, creating more complete profiles of their customers. Companies have used this increased availability of consumer data in both non-intrusive and intrusive ways.

Lolli & Pops

Lolli & Pops, a candy store in the US, has come up with an innovative method to use consumer data in-store in a non-intrusive way. Teaming up with a software company called Mobica and Intel, Lolli & Pops is experimenting with installing cameras in their stores, equipped with computer vision.[102] Loyalty members can upload information about themselves (including a photo) and when they approach the store, the cameras will identify them.[102] Store associates are then alerted on their tablets and they will receive the customer’s profile, so that they can give more personalized customer service.[102] According to Intel’s chief innovation officer for its Retail Solutions Division, Shelley Shulman, “Privacy isn’t an issue because they have such a strong relationship with their customers and are trusted by them already.”[103]


Consumer data can also be used intrusively. FaceFirst is a company that sells anti-theft facial recognition software to retail stores.[104] Using this software, clients will have access to a shared database where they can upload pictures of people they want to watch, like customers who have already shoplifted from their stores, disgruntled former employees, or persons of interest who can be found on local watch lists.[104] Loss prevention teams using FaceFirst’s software will be alerted almost immediately if their cameras pick up these persons in their stores.[105] The reason why FaceFirst’s software is controversial, but not Lolli & Pop’s, is because customers are tracked through the software regardless of consent.

Facebook Scandal

There are a substantial number of people concerned with how data is collected currently. In early 2018, Facebook came under heat for the mishandling of user data in what would be known as the Facebook-Cambridge Analytica data scandal.[106] In this scandal, it was revealed that Cambridge Analytica, a company that had worked with president Donald Trump in his election campaign, had gathered the personal data of millions of people from Facebook and used it for political purposes.[106] One would expect that a scandal of this level would put Facebook out of business, or close to it, but after initially losing $35 billion in market value, Facebook regained that market value in May of the same year.[107] This brings up the question how much our society actually values online security and privacy.

Challenges (Implications of Automation in the Workforce)

As we have seen with Walmart, Amazon and Alibaba, automation will play a key role in many areas of retail, specifically in entry-level roles. This will create a massive change in the structure of our job market. According to a report by the Brookfield Institute, there is a high risk of 42% of the Canadian labour force being heavily affected by automation.[108] As a result of this transition, there will be both new job opportunities and also job loss.

Job Opportunities

The Brookfield Institute predicts that automation can create more than 700,000 jobs in the near future.[108] In retail, job opportunities that will increase, or are at low risk of being affected by automation, are positions involving computer expertise, such as computer systems analysts and programmers, and robotic engineers and technicians, or upper level management, such as retail and wholesale trade managers.[108] Retailers will become more and more technology-reliant, and so will require more competence in creating and maintaining the technology in their businesses. For example, Amazon Go currently has 337 full time job postings, 169 of which are in software and hardware development.[109]

Additionally, although lower-skill tasks will more automated, employment in those occupations may not decline but rather workers may move to perform new tasks. For example, at Hema, workers are stationed as hosts to help customers at the check-in counter or answer questions, where previously they may have worked only server jobs. Gianna Perini, the head Amazon Go executive also says that a net loss in employment is unlikely; Amazon has simply “put associates on different kinds of tasks where we think it adds to the customer experience”.[110] Contrary to the popular belief that automation will take over our jobs, it is mostly implying jobs that do not require high levels of creativity or higher education levels. Automation “is more likely to replace part of a job than an entire job. When Amazon installs warehouse robots, they currently don’t replace full workers, but rather, the part of the job that involves fetching products from different shelves”.[111] This trend can potentially help push people to pursue a higher education and innovate the future, automation is helping to reduce redundant and repetitive work while employees can focus on more pressing matters.

Job Loss

While robotic automation may bring benefits to a company, there are a considerable number of negative implications in the workforce. Research firm International Data Corp’s Manufacturing Insights Worldwide Commercial Robotics, predicted that “[b]y 2018, 45% of the 200 leading global e-commerce and omni-channel commerce companies will deploy robotics systems in order fulfillment warehousing and delivery operations”.[112] Jobs that are at high risk generally involve data processing, such as telemarketers, loan officers, and bank tellers, or are labor-intensive, such as drivers and cashiers. The cashierless store may very well be the store of the future, with reports saying that Amazon plans to open 3,000 Go stores by 2021[113], and other companies like 7-11[114] looking to join in. If the Amazon Go concept is the model of the future, and if more and more cashierless stores open up, the future poses potential threats to lower entry jobs.

Although automation may create more jobs for people with the skills to program and maintain technology, such jobs currently demand for more workers, with higher skills and education levels, than actually available. “A country like the United States with a very robust high-tech sector will be a strong contender for those technologically intensive manufacturing jobs, even if there aren't very many of them.”[115] Moreover, according to a Mckinsey report, “displaced workers might not find new work quickly, or at all, because they lack the skills or educational requirements”.[116] This trend is becoming highly evident in less developed nations. Dani Rodrik, an economist at Harvard University describes the impact of automation on less developed nations as "premature deindustrialization," in which countries start to lose their manufacturing jobs without getting rich first. For many less developed nations, the manufacturing industry is seen as a ticket out of escaping poverty, but the impact of automation is more hurtful and harder to recover from for those countries. The result will be that “Countries that haven't yet industrialized... may be left out in the cold”.[115] A challenging feat for companies (or even government) in the future may be to put "measures in place to reduce the impact of labor displacement from automation, like education programs for re-skilling workers who will lose their jobs". [115]

The next era of robotic automatic is being called the fourth Industrial Revolution. History has shown that with every period of industrialization before, workers have been able to bounce back and labor displacement was only short-term. Ethan Pollack, an economist at the Aspen Institute’s Future of Work Initiative, expresses that in the past when the economy experienced disruption, it eventually adjusted and jobs were created elsewhere. However, he worries that with each wave of innovation, advances in technology will impact jobs more brutally than they have in the past. He poses an interesting debate of “What happens if [in the near future], each period of disruption comes so quickly, that it never recovers?"[117]


Thanh Huong (Nora) Le Yin Teng Ho Keith Chan
Beedie School of Business
Simon Fraser University
Burnaby, BC, Canada
Beedie School of Business
Simon Fraser University
Burnaby, BC, Canada
Beedie School of Business
Simon Fraser University
Burnaby, BC, Canada


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