Doing without humans: How transactions are evolving in an automated world
FinancialNewsMedia.com commentary
The world of retail is being turned upside down with consumers and investors alike preferring “human-less” transactions, interactive retail services and multiple payment options. It’s no secret that traditional retail brands are doubling down on their investment into autonomous robotics in the name of competitiveness and bottom-line profitability.
Companies highlighted in this commentary are positioned to benefit from this disruption, include:
- Generation Next Franchise Brands, Inc. (OTC: VEND);
- Bank of America (NYSE: BAC);
- Wendy’s (NASDAQ: WEN);
- JD.com, Inc. (NASDAQ: JD); and
- McDonald’s Corp (NYSE: MCD).
Millennials, in particular, prefer to avoid any human interaction at all during the shopping or the delivery process. This tech-savvy generation places a premium on time, convenience, and customization, favoring machine automation over human interaction.
Steve Easterbrook, the CEO of McDonald’s, had this to say about the future of self-service kiosks: “What we’re finding is when people dwell (around our self-service kiosks) more, they select more… We do know it helps grow the business, we know it’s the right route to go down. We can’t get there quick enough in the US.”
From consumer electronics to bank branch transactions to earbuds to frozen yogurt, consumers of all ages are demanding both self-service and multiple payment options.
Investors with early insights into these new norms of daily commercial behavior are poised to prosper.
This qualifies as nothing short of a full-fledged “mega-trend” if defined as a global, sustained and macroeconomic force of development that is totally transforming business, economy, society and personal lives.
Mega-trend watch: ‘Going human-less’
ResearchAndMarkets.com predicts a multi-billion industry within the next five years: “Taking into account the overall sector, which includes things like electric charging kiosks and those increasingly sophisticated vending machines that dispense a widening array of products and foods, the firm predicts a $34 billion automated kiosk market by 2023.”
Journalist Greg Nichols writes that we’re on the verge of a total sea change in the retail industry: “A billion dollar industry is emerging to make checkout faster by removing human cashiers.”
In the absence of a cashier – and the traditional bricks-and-mortar retail environment – unattended retail attracts more customers who spend more money.
Fully-autonomous, self-monitoring, self-cleaning vendors that don’t take breaks, sick leave or vacations means greater efficiency for retail operators, investors and consumers.
Robots and food service disruption
Robotics and automation are changing everyday consumer behavior, and food service disruption is everywhere.
San Diego-based Generation Next Franchise Brands is the developer of the world’s first fully-automated robotic frozen yogurt vending kiosk designed to disrupt brick-and-mortar competitors: Red Mango or Orange Leaf.
These “unattended” robots eliminate the need for costly rents and employees; significantly reduce food safety concerns, and are capable of operating 24-hours a day.
On July 9, 2018, the company reported $150 million in aggregate bookings and additional commitments for its franchise concept Reis & Irvy’s.
Chairman Nick Yates, in VentureBeat, writes: “If robotics is the force driving vending machines forward, artificial intelligence is the next frontier – and we’re right on track.”
According to the MIT Technology Review, a number of stores in China are operating without checkouts and cashiers – 24-hour stores run entirely by autonomous technology.
After Amazon.com announced its purchase of Whole Foods, it began testing a similar clerk-free shopping concept at its 1,800 square foot Amazon Go store for Seattle employees.
Like its American peer, JD.com is investing in technologies like drone delivery that, along with its network of warehouses.
According to Jay Unni with Seeking Alpha, “even the most pessimistic analysts forecast average revenue growth of at least 20 percent for the next two years, and consensus pegs revenue growth at 30 percent for 2018 and 25 percent for 2019.”
JD.com has also been rapidly gaining market share on its larger rival, Alibaba Group, seeing its share of the business-to-consumer market grow from 17.7 percent to 32.9 percent.
As ZDNet’s Larry Dignan outlined in a recent article, McDonald’s is using kiosks as a centerpiece of its comprehensive AI strategy.
McDonald’s food service automation is reaching new heights. If you have been to a McDonald’s in Europe, Canada, or an airport recently, you have probably noticed the kiosks that allow you to order your food using a touch screen display and pick it up when it is ready.
Even further, McDonald’s opened a beta version of a fully-automated McDonald’s in 2015 involving robots that work 50 times faster than the average human. Shares of McDonald’s have steadily increased since 2015, reaching all-time highs.
According to Dignan, Wendy’s is also joining the rush to autonomitize its customer service offerings: “Wendy’s plans to roll out more self-service kiosks, use agile software development, develop mobile ordering and create a customer experience that drives loyalty and revenue.”
Todd Penegor, CEO of Wendy’s, emphasizes that “technology can play a great role in creating a better customer experience”.
The fast-food chain, which delivered 2016 revenue of $143 billion with net income of $129.6 billion, highlights how every company is becoming a digital one.
Increasingly, advanced vending machines are not only selling healthy food and drink options, but they increasingly offer other convenient items that people on the go frequently need like earbuds, power cords, batteries and toothpaste; and the available options via mobile pay mean 24-hour customer transactions.
Robots and the cashless society
Emerging companies like Generation NEXT Franchise Brands are successfully integrating food delivery automation and self-reporting systems, while producing robots that also have the ability to accept payments of all kinds, including PayPal, Google Wallet, Apple Pay, even cryptocurrency such as Bitcoin.
Young Americans are the biggest segment to shy away from cash purchases, and prefer other means of payment.
With PayPal, Google Wallet, Apple Pay and numerous other mobile payment options, Americans find it more convenient to pay for in-person purchases electronically.
In 2017, even traditional Bank of America opened three completely automated branches, where customers can use ATMs and have video conferences with employees at other branches.
The bank has focused on innovative software rather than physical robots, pouring billions of dollars into artificial intelligence and machine learning to speed transactions, resolve complaints and improve service at over 1,500 of its branches.
In places like Japan, unattended ordering and checkout are already the norm. Like so many other facets of life, the future of consumer retail will be increasingly automated, efficient and human-less.
Each of the companies mentioned in this report are poised to leverage the financial upside of increased robotic efficiency, multiplying paying options and a vastly improved customer experience.
