China’s Guangzhou Tengshi secures further funding to expand automated convenience stores
December 19, 2017 Category China News Round-up, Weekly
Chinese automated convenience stores operator Guangzhou Tengshi Information Technology has completed its third round of funding, from four investors, including two Chinese venture capital firms, as it looks to invest in store expansion and technology. Founder and Chief Executive Luo Jiecheng said that Zhejiang Youchuang Venture Capital and Lanshan Venture Capital (Beijing) Consulting were part of the financing that brought in over CNY10 million. The other two investors included a food manufacturing company and an individual investor.
The new capital will help Guangzhou Tengshi expand the number of its stores, which operate under the brand name “Magic House”, in Guangzhou to between 300 and 500 next year, with each shop 60 square meters in size. It currently operates six stores in the city’s Tianhe district. Unstaffed and automated convenience stores have mushroomed in China in recent months as retailers look to improve slim profit margins by reducing staff costs.
E-commerce companies Alibaba Group Holding and JD.com have moved into the business, while Bingobox runs completely unstaffed convenience shops of about 10 square meters in size in Shanghai, with products supplied by French supermarket chain Auchan. Typically, customers use a mobile phone to scan a QR code to gain entry, and then pay for goods with mobile wallets. However Luo said he believed that Chinese consumers were not yet ready for a completely unmanned shopping experience, as people still required a level of human guidance. Hence all Guangzhou Tengshi stores would still be staffed by two people, contrasting the do-it-yourself approach of other competitors in the field, he said. But the company will continue to develop artificial intelligence (AI) and other technologies. It currently uses AI in the areas of facial recognition and the management of big data related to customer shopping frequency and the types of product bought, the South China Morning Post reports.
Luo added that currently all six stores are profitable. The firm has no plans to expand outside Guangzhou.
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