Price Lab in Yongsan, Seoul (Cheeseade)
Every time the clock's long hand strikes 12, electronic price indicators in this uncrewed convenience store change to reflect data the store's artificial algorithm collects on each product's expiration date, remaining stock and local demand.
Customers are required to follow a few simple steps to shop there. They check the changes in price, scan each product's bar code via smartphone and make transactions through the phone. They then can exit the store with an armful of groceries, from tomatoes or a pack of beef to fresh salad and pasta meal kits.
Situated in Yongsan, central Seoul, Price Lab -- launched by tech startup Cheeseade -- is the only shop in the country that changes prices of goods hourly.
Lee Woong-ki, CEO of Cheeseade, came up with the business idea to develop an offline store that could actualize the "lowest possible cost search" in real life.
The concept of searching products online, and, comparing prices in different marketplaces to find the lowest possible cost has become a common shopping habit.
"These days, demand for better pricing options are increasing with customers constantly practicing the 'lowest possible cost searches' online. With offline stores failing to consistently reflect changes in prices -- as opposed to online stores -- Cheeseade aimed to innovate the retail market with its own technology," Lee told The Korea Herald.
Price Lab's price indicator changes hourly based on data collected by the store's algorithm. (Cheeseade)
The store utilizes price indicators that harness visible light communication to set products to the lowest possible cost.
The price indicators in the shop communicate with the lights in the store to receive codified data each hour regarding the changed prices -- as the store's lights receive data from the Cheeseade headquarters about information that affects the value of items, such as the product's expiration date, remaining stock and the local district's demand for the product.
Applying the visible light communication technology to a convenience store helped the startup be selected as a Samsung Electronics' in-house venture program.
With help from the Korean tech behemoth, Lee said the store has been able to not only achieve cost-efficiency, but also considerably reduce waste.
"In the case of unstaffed convenience stores, it is difficult to assess which products to give a discount on, because no employees are present to check the remaining stock. This is not easy even in staffed stores, because it's not easy to know how much discount should be given at a certain point to minimize the leftover stock," Lee said.
However, Price Lab has been able to reduce disposal rates by more than 60 percent since the store's launch, he said. It has been analyzing various factors including local demand and the store's inventory to minimize waste.
Consumers were largely thrilled with the unique convenience store that aligned with current trends to spend more rationally, according to Lee.
"Despite the store being unstaffed, lots of positive responses have been received from customers through the chatting function on the store's mobile app," he said.
Consumers, who mostly included young office workers, found that the experience of buying food with prices determined by the freshness was distinctive. They wanted the same store in their neighborhoods. The rate of repeat visits has been continuously increasing, according to the company.
Thanks to the unique technology, the store's rate of return on investments has recorded 30 percent higher than the rate of return on investment recorded for existing typically staffed convenience stores.
Lee said Cheeseade's plans going forward include various studies at Price Lab to increase the competitiveness of offline stores. He also added that Price Lab plans to increase the number of stores to five within this year -- including launching a Price Lab in Gangnam, where office workers can enjoy healthy salads or simple meals.
"With the stores, offline store owners will be able to gain maximum margins by reducing discarded products, and customers will be able to experience sustainable eco-friendly consumption with reasonable price choices," said Lee.
The rise of unstaffed stores, whose numbers have increased 35-fold since 2019 according to the Ministry of Trade, Industry and Energy, follows the rapid advancement of technology.
However, experts have raised concerns that such fast-paced changes could be a double-edged sword.
"Elderly people who cannot use IT devices well and minors who cannot make mobile payments are tasks for unstaffed stores to solve," said Lee Eun-hee, a professor of consumer science at Inha University.
"Moreover, unstaffed stores will need to work on how to handle technical problems, such as when kiosks fail," she added.
By Lee Yoon-seo (email@example.com)