The future of retail is here, and it takes the form of autonomous stores. Naturally, the recent surge in examples of these digital acceleration initiatives raises a few questions surrounding their implementation, benefits, and impact on the retail landscape.
Following their recent feats in the autonomous store scene, what better way to get answers than to look to retail giant, Żabka Polska? With a recent jump from three outlets in September 2021 to fifty in July 2022, Żabka has achieved the fastest rollout in Europe which has made Żabka Nano the largest autonomous store chain in Europe.
We wanted some insight into the behind-the-scenes action that led to their exponential expansion. So, we invited Paweł Grabowski, Head of Unmanned Solutions, and Krzysztof Liszyński, Senior Digital Product Owner (Autonomous Retail Solution), to join Disruption Talks to share their expertise.
Together they offer a peek into Żabka’s operations from a logistical and technological standpoint, as well as insights into the future of autonomous stores. While Paweł and Krzysztof can’t say for certain what will happen in the years to come, it’s evident that autonomous stores are delivering value in terms of customer satisfaction and enhanced store operations. It goes without saying, these outlets are integral to how Żabka and the retail industry future-proof themselves.
What are autonomous stores?
An autonomous store is a retail outlet that operates with little to no human assistance. Essentially, consumers have more control over most aspects of the shopping experience. Customers can conveniently shop by walking in the store, reaching for products, and walking out of the shop. Their account is charged after they leave the store, and the bill is sent via phone. To ensure operations run smoothly, retail outlets use a combination of cameras, sensors, and AI.
Though autonomous stores gained popularity in the past couple of years, this present iteration isn’t the first. The concept first emerged in the form of vending machines in the early 1800s. Over the years, that evolved into self-checkout machines, contactless cards, and finally autonomous stores.
Altogether, the technology provides a more convenient experience for shoppers and retailers. As autonomous retail gains more ground, it is forecast to change the future of retail. Already it’s been reported that 75% of consumers want more autonomous shopping experiences, despite less than 3% actually having visited an autonomous store.
Żabka’s giant leap in the autonomous retail industry
Żabka Polska has been on the scene for over 20 years, with more than 8,300 stores in operation. Opening the largest chain of autonomous stores in Europe is another initiative that strengthens the group’s efforts on shaping what they call “the modern convenience” ecosystem, where customers can buy everyday groceries, but also have a coffee, pay a bill, or collect a parcel.
“It was a huge effort in every dimension. It was not only technology but spanned across our ability to grow the team and the processes, then scale the processes.”
— Paweł explains.
No doubt, it’s been a swift learning experience. As such, the company has had to learn on its feet while constantly considering how this revolutionary technology impacts its business model and retail in general.
Paweł and Krzysztof have been integral to this journey of making Żabka’s autonomous stores more convenient.
With Krzysztof responsible for developing their concept of autonomous stores into Żabka Nano, Paweł is at the forefront of developing a new and more adaptable business model around autonomy.
“We’re working on how we can implement future autonomous stores into our business model, in which we can have different kinds of stores serving the customers in various ways,”
— Paweł shares.
The definition of autonomous at Żabka
The company takes a customer-centric approach to defining the word autonomous. So, it’s not so much about autonomy as it is about how it impacts the customers.
At Żabka, the definition of ‘autonomous’ is built on two major assumptions:
- The store’s ability to offer the customers a shopping experience where they solely interact with the products
- The customer’s ability to get by without any external support
This narrows the shopping experience down to a simple process that’s enabled by a key — QR code, Żappka app, integrated wallet. All the customer is expected to do is pick their items off the shelves and leave the store.
It’s worth pointing out that there are certain levels of autonomy that work seamlessly in terms of:
- Restocking and replenishment
- Detecting potential hazardous situations
- Integrating signals based on video footage, temperature control, electrical controls, etc.
The bottom line is that while autonomy may be simple on the surface, there are different layers involved based on what the customer, store, or the entire business operation requires.
Choosing locations for autonomous stores
Finding the right locations for their stores is a vital part of business operations at Żabka. A lot of time and resources are directed towards gathering data and studying algorithms to discover some of the best spots.
However, Paweł admits that finding locations for their autonomous stores poses a unique challenge. Żabka isn’t looking to replace their traditional stores, so it had to adopt a strategic approach to the location selection process.
“We purposely selected small catchments that were unsuitable for traditional stores to enable us to move closer to the customers.”
The major criteria used to select these catchments include location size and the availability of certain product categories.
Looking at things differently, Paweł states that commercial gain isn’t Żabka’s sole driving force when picking locations. Social and even ecological goals also drive the organization. They aim to encourage sustainable habits and spur positive change using different models.
Are autonomous stores a threat to job security?
Whenever AI-driven technology is involved, there’s one question that arises. Will they end up replacing humans in the workforce? Or will they end up wreaking havoc?
Paweł offers two perspectives in this regard. From an academic standpoint, he says there’s no tangible proof that humans are at risk of being rendered jobless by AI. From a personal standpoint, he strongly believes that AI technology is here to simplify human life. Żabka’s mission to simplify its customers’ lives is perfectly reflected in this concept.
“AI is making life better by offering more choices, so you don’t have to routinely use the same store or service.”
Żabka’s approach to data privacy and security
A major part of the technology used to run autonomous stores is video-based. Naturally, this exposes them to sensitive data and raises the issue of data privacy and protection.
Krzysztof admits that this posed one of the main technological hurdles the organization had to tackle. With AI technology based on video recognition and about 40 cameras in the store, it’s evident that they had to bridge the gap between technology and the law.
So, while the focus is to constantly provide customers with a safe and secure environment, it doesn’t just end there. It’s also required that this safety and security is in line with EU GDPR.
Żabka’s plan to stay ahead of the competition
The future of retail is here in the form of autonomous shopping. Though Żabka has a head start on other retail chains, it’s safe to say that their competitors follow suit.
How do they plan to stay ahead? Paweł believes there are different angles to tackle here, and they all boil down to:
- Tapping into brand loyalty
- Having a good understanding of customers who have connections to the Żabka brand
- Incorporating customer feedback
- Understanding how to shape the service for the future
Paweł also believes that their mission of constantly looking for new ways to save time and enhance the shopping experience will help them maintain a steady lead.
This discussion is part of our Disruption Talks recordings, where we invite experts to share their insights on winning innovation strategies, the next generation of disruptors, and scaling digital products. To get unlimited access to this interview and more insights from industry experts, sign up here.