Meet Aisle24, the fully automated winery chain building a grocery empire without employees

The little store below 88 Erskine Ave., an imposing condo near Yonge and Eglinton, has all the makings of a typical Toronto convenience store. The shelves are stocked with staples and household items, chilled sodas, and a generous amount of jerky.

However, what is missing are the people. No employees to fill the shelves, no cashier manning the checkout. Customers come and go, but the store is tucked away in a basement next to an underground parking lot, so foot traffic is light.

This is Aisle24, the fully automated brainchild of Toronto businessman John Duoang. The business started as a novelty concept in 2015, when a developer hired Duoang to design a “frictionless” warehouse for Centennial College students. Since then, it has grown into a rapidly expanding franchise adapted to the current era of public health restrictions and changes in the labor market.

The company has four locations in Toronto, with eight more on the way in Ontario and Quebec, and funds from major investors.

To access an Aisle24 store it is necessary to download an application on your smartphone that unlocks the door when the device is detected five meters from the entrance. Checking out requires a trip to the self-checkout counter, where a scanner and computer guide you through the checkout process. The stores carry the same products as typical corner stores, but operate constantly 24 hours a day and without the usual human interaction.

Duoang, who as a teenager worked night shifts at his parents’ convenience store near Dufferin Street and Eglinton Avenue West, sought to create the cashier-less model after working on software technology and learning how machines could perform many of the tasks. required by retail workers.

With his wife, Marie, and his brother, Josh, Duoang created a franchise that relies on franchisees to lease individual company locations and maintain its inventory without the help of store employees.

In essence, it has remained in the family business while the model changes.

“I think it’s natural for a company like this to do things more efficiently over time,” he recently told Star.

In the business world, phrases like “find efficiencies” are often executive language for reducing labor costs. And retail services are no strangers to the slow march of automation, which has drawn renewed interest from major supermarkets and food retailers facing persistent shortages of workers and public health measures.

But there is a personal advantage to Duoang’s idea; In a way, the local businessman has been looking for these alleged efficiencies ever since he worked at his parents’ store, restocking shelves and selling Lotto Max tickets to repeat customers.

His parents were exhausted after 14-hour days at the store, Duoang recalled; the brothers quickly discovered the tribulations of operating a convenience store on their own.

“I saw (my parents) work so hard. When they wanted to take a vacation, they had to close the store, “he said.

The family business lasted almost 12 years before closing.

Duoang came up with the idea for Aisle24 after reading an article about vending machine technology in Europe. He concluded that the North American winery concept needed updating.

The concept came to fruition in 2015, when real estate developer Knightstone Capital issued the entrepreneur a check for $ 25,000 to establish the first Aisle24 at Centennial Place Student Residence and Culinary Arts Center. (Student centers are a common testing ground for retail innovation. This year, McGill University partnered with Alimentation Couche-Tard Inc. to launch a similar, fully automated grocery store on campus.)

Since then, Aisle24 has grown in scope. The company attracted seed funding from prominent Toronto investors Wes Hall, a “dragon” in “Dragons’ Den,” and Wayne Purboo, vice president of Amazon Advertising. In October, it announced new stores in the Canary District, Liberty Village, Leslie and Sheppard, and Yonge and Queens Quay. Duoang says Aisle24 plans to expand to British Columbia, Alberta, Manitoba, Nova Scotia and New Brunswick over the next two years.

“We have aroused a lot of interest in opening in certain sectors: hospitals, nursing homes for the elderly. We see a lot of opportunities there, ”Duoang added.

A recent report from the Brookfield Institute for Innovation and Entrepreneurship, an independent economic policy institute based at Ryerson University, found that customer-facing roles in food retail are in decline that has been accelerated by the pandemic. , while online grocery sales have risen 700 percent since February 2020.

An increase in automation may turn out to be one of the economic legacies of the pandemic. Companies turned to technology to keep operations afloat amid physical distancing measures, and the difficulty in hiring workers as restrictions were lifted has provided a new impetus for automation.

“People have spent most of the pandemic concerned for their health, safety and wanting to avoid human contact,” said Marty Weintraub, a Deloitte retail consultant. “The longer that sentiment persists, the more people will lean towards frictionless stores.”

In 2018, Amazon launched its Go brand, a chain of convenience stores in the US that operates without ATMs. Sobeys, in 2019, introduced “smart carts” – actual shopping carts that scan shoppers’ items, track their total bill, accept payments, and allow them to skip the checkout line. Late last year, Dark Horse Espresso opened a chain of “robo-cafes” in Toronto, stand-alone, contactless machines that occupy street-facing commercial spaces and spit out lattes, cappuccinos, cutouts and Americans.

Recent data from Statistics Canada indicates a record of job openings in the food industry. In September, the vacancy rate was 14.4 percent, compared with an average of 12.9 percent from June to August. The data shows that the sectors had 196,100 vacancies that month, more than in any other sector.

Results from the Canadian Business Conditions Survey also showed that more than half of all businesses in the foodservice industry expected to face obstacles in hiring qualified employees.

“The more they struggle to fill store-level jobs, the more they will consider automation,” Weintraub said.

Increased reliance on technology to fulfill retail work has a history of eroding low-wage job opportunities. TO report published by the International Monetary Fund this year predicted that the automation of the pandemic era would increase global inequality in the coming years.

Rather than a decline in jobs, the Brookfield report predicted a change in the nature of grocery retail work, with the decline in cashier positions being replaced by jobs fulfilling online orders, packing groceries, They prepare the food and deliver the orders.

But the report also found a 15 percent drop in full-time grocery store positions between 2006 and 2016.

Automation comes with its own set of challenges for retailers. The software can take years to develop, Weintraub noted. Retailers using faulty technology risk losing customers, defeating the purpose of their frictionless ambitions.

“Technology costs can also be very expensive,” Weintraub added. “For some retailers, it’s still a bit difficult to make a business case.”

One afternoon last week, I downloaded the Aisle24 app and visited the location on Erskine Avenue looking for a 28-ounce can of diced tomatoes. (Shakshuka was for dinner).

While paying at the self checkout counter, I couldn’t help but wonder what was stopping me from stealing the products, beyond general goodwill. He was alone in the store and the manager was not in sight. A security camera was over the dried meat, looking in the opposite direction.

Duoang says the stores are designed to track user data, making thieves easier to find. The application used to access Aisle24 locations requires users to enter their credit card information and a photo of their face.

The stores also use “a real-time analytics system that tracks the user through the camera system and the point of sale,” Duoang said.

Perhaps he was not as alone as he thought.

As food retailers emerge from the pandemic, Duoang hopes to see this type of technology increasingly adopted by grocers and small vendors.

“We have seen larger companies experimenting with smaller format stores using this type of equipment. They are looking for automation and technology to operate profitably, ”he said.

“As the markets move forward, we will see a lot more of this.”

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