Subscribe / Unsubscribe Enewsletters | Login | Register

Pencil Banner

7-Eleven thinks it can go cashier-less. It's wrong.

Evan Schuman | May 26, 2017
There's a massive difference between retailers using technology to free up associates to do more hands-on work and using that technology to replace those associates

rfid chip
Credit: Shutterstock via Computerworld US

There's a massive difference between retailers using technology to free up associates to do more hands-on work and using that technology to replace those associates. Freeing up will work but replacement won't. 7-Eleven's plans to rid itself of the need for store associates, by leveraging RFID-tagged merchandise and relying on payment cards and mobile purchases, is one Slushee too far.

We've dealt with this before, with Amazon and with Lawson in Japan. Like Lawson, this 7-Eleven tale involves a convenience store chain in Japan. The reason behind the Japan connection is less technological than demographic: Japan has a serious shortage of workers who are interested in manning the POS in retail. The U.S. suffers a similar problem, but it's far more pronounced in Japan.

That's why reducing the workload of those employees - theoretically allowing a store to fully function with fewer workers - makes perfect sense, whether or not the chain is dealing with recruiting challenges. But workers are essential when the payment system fails/glitches or when a purchase is outside of the expected scope, such as if someone wants to pay cash.

Let's take a look into what 7-Eleven's Japanese operations seem to have in mind. Courtesy of a report from Nikkei, we learn that the company that operates 7-Elevens in Japan, Seven & i Holdings, has cut a deal with Lawson, Ministop, FamilyMart shops and East Japan Railway's Newdays for a region-wide RFID self-checkout system, slated to be countrywide by 2025.

But here's the tech twist: "The system will employ chips so that items can be tallied simultaneously, rather than the current method of self-checkout in which each item's bar code is scanned separately" and "the five chain operators also are considering fully automated outlets with no staff," the Nikkei report said.

The potential for staff-less stores means that these systems must work perfectly at all times, since these chips will have no human backup. This also assumes that this plan will make financial sense, given that the tags will cost from 9 cents to 18 cents each, the story said, which is more than most U.S. passive RFID tags, which these days generally cost from 3 to 5 cents each. It's high for passive tags (no power) but low for active tags.

Those chip prices will likely fall if there's enough volume. Japan's Ministry of Economy, Trade and Industry said that it hopes to see deployment in other areas of the country's retail segment.

Some retailers have experimented with reusable RFID tags, but that forces store associates to take the time to remove each tag after scanning. That would defeat the whole "reduce associate tasks" point of this Japanese RFID effort. Hence, this will add unnecessary margin friction on many of the low-cost items sold at convenience stores. On the other hand, if these chains are cooperating, they could all raise prices slightly to cover the new RFID costs.


1  2  Next Page 

Sign up for CIO Asia eNewsletters.