Offline Retail Gets Help from Made-in-Taiwan AI

Despite taking a hit from the COVID-19 pandemic and the rise of e-commerce, brick-and-mortar retailers may soon see a rebound as AI and smart retail solutions allow them to integrate online and offline capabilities.

While the popularity of e-commerce has allowed it to more or less overtake the labor-intensive conventional retail industry, a number of Taiwanese technology companies have begun offering AI-driven solutions that could allow brick-and-mortar shops struggling with minimum wage increases and labor shortages to regain their competitive edge.

Central to these solutions are the Internet of Things (IoT) and computer vision technologies. With IoT, for example, customers can view the availability and price of items before they enter a store, while computer vision enables offline retailers to monitor aisles and checkout areas, as well as track in-store inventory and the movement of customers and employees around a store.

One novel Taiwan-made smart retail solution is the Visual Checkout system employed by Taiwanese bakery chains IJySheng and 85°C Bakery Café. Developed and marketed by Taipei-based computer vision AI startup Viscovery, Visual Checkout’s hardware consists of an inexpensive camera installed on each store’s checkout counter. Customers place the items they want to purchase on a tray positioned below the camera. An AI algorithm integrated with the bakery’s payment system then identifies what is being purchased and rings it up.

Viscovery’s Visual Checkout integrates an AI algorithm for recognizing and ringing up items at a bakery with inexpensive hardware. Photo: Viscovery

Viscovery says that its algorithm has an accuracy rate of 98% and that recognition time for multiple different products is approximately one second. The standard monthly licensing fee per unit is around one-tenth of the labor costs of a human employee, which in Taiwan is around US$1,000 per month.

Photo: Viscovery

 “We also provide the retailer with a content management system, in which staff can add a new item to the shop’s portfolio by uploading just five images of that item,” says Viscovery CEO Kevin Chen. He notes that Visual Checkout can also be used to scan unpackaged fruits and vegetables sold in supermarkets, as well as meals at company cafeterias.

Another Taiwanese AI startup offering innovative products for offline retailers is iKala, whose Shoplus solutions can be integrated into a merchant’s Facebook page. Shoplus’ services include AI for customer communication, processing of orders and payments, product management, and logistics.

One of Shoplus’ customers is Unilever Philippines. During the initial outbreak of COVID-19 this year, Philippine authorities ordered most physical retail outlets to close, except to facilitate the speedy pickup of daily necessities. Using Shoplus, Philippine grocery stores that distribute Unilever products were able to continue taking orders from customers and directing them to pick up the purchased goods when ready.

“We expect this kind of shopping behavior to be a sustained trend in Southeast Asia even after COVID-19, given that Southeast Asian consumers like to pick up in person what they order online,” says iKala CEO Sega Cheng. “Southeast Asians are also more likely than consumers in other markets to chat extensively with merchants online before making a purchase, and it would be very difficult for a merchant to handle thousands of chats without our AI-driven Shoplus chatbots.”

Meanwhile, Dr. Retail – the solution offered by Taipei-founded, New York-headquartered SkyRec – uses video and mobile Wi-Fi signal analysis to identify shopping behavior, in-store traffic flows, and shopping hotspots within a store to help retailers plan their business strategies. According to SkyRec’s website, Dr. Retail has brought a 30% increase in the sales revenue of 2,000 stores across the U.S., Europe, the Middle East, and the Asia-Pacific.

SkyRec points to what it calls the “touching rate” as the key factor in this rise in store revenues, as opposed to the more commonly referenced “dwell rate” – how long customers stay in one area of a store before moving on. In one example, a retail outlet tried unsuccessfully to raise sales by displaying a well-known product from a popular footwear brand at the store entrance.

Using the Dr. Retail analytics system, the store’s manager discovered that while the dwell rate at the entrance was the highest of any other area in the store, the touching rate for the products placed there was quite low. However, once the display was moved to a larger table in an area that, while less heavily trafficked, contained more space to allow customers to try on the product, the touching rate increased along with sales transactions.

ComQi, a subsidiary of Taiwanese panel manufacturer AUO, is also making a name for itself in smart retail. The company has collaborated with Intel to develop cloud-based digital signage solutions that incorporate interactive technology for consumers.

ComQi’s UpLift solution utilizes radio-frequency identification technology in conjunction with a content management platform. With this technology, simply picking up a product triggers the display of product-specific advertising or information on a screen installed nearby.

Taiwanese companies specializing in digital signage, including AUO and Innolux, have forged strategic partnerships with point of sales (POS) machine operators, such as Taipei-based Flytech and FEC from New Taipei City, to provide application services through smart retail terminals.

AUO, for example, uses sensor-embedded store shelves and AI-based facial recognition and eye-tracking technology to analyze consumer intention and automatically, accurately push product information to target customers.

“Demand for these products is driven by unmet needs hidden in consumer shopping behavior,” explains Rachel Liao, an industry analyst at the semi-governmental Market Intelligence & Consulting Institute in Taipei. “By analyzing this behavior, retailers aim to optimize business operations and innovate their business models.”

Liao adds: “Online and offline retail channels used to compete with each other, but they are now being integrated to ensure that consumers enjoy a consistent, interactive experience across different channels and platforms.”

U.S. business consulting firm Frost & Sullivan, for its part, notes that retail has been one of the worst-hit industry segments in the global COVID-19 pandemic. Many retailers have been forced to shift their focus to conserving cash and maintaining continuity of operations in the short term. Over time, however, many retailers in advanced economies are expected to be willing to try out smart retail technology.

“Retailers need to transform their traditional modes of operation to better adapt to competition from e-commerce,” says Kenny Yeo, Associate Director and Head of Asia Pacific Cyber Security Practice at Frost & Sullivan. 

“Experiential shopping – something that is impossible with e-commerce – will be key for brick-and-mortar retailers moving forward,” he adds.