Meet Aisle24, the fully automated bodega chain building an employee-free grocery empire

This is Aisle24, the fully automated brainchild of Toronto entrepreneur John Douang. The business began as a novelty concept in 2015, when Douang was enlisted by a developer to design a “frictionless” bodega for students at Centennial College. It has since become a rapidly expanding franchise tailored to the current era of public health restrictions and shifts in the labour market.

The company has four locations in Toronto — with eight more on the way in Ontario and Quebec — and funding from significant investors.

To access an Aisle24 store requires an app downloaded to your smartphone that unlocks the door when the device is detected within five metres of the entrance. To exit requires a trip to the self-checkout counter, where a scanner and computer guide you through the payment process. The stores have the same products as your typical corner store, but they operate on a consistent 24-hour basis and without any of the usual human interaction.

Douang, who as a teenager worked evening shifts in his parents’ convenience store near Dufferin Street and Eglinton Avenue West, sought to create the cashierless model after working in software technology and learning how machines could perform many of the basic tasks required of retail workers.

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

In essence, he’s stayed in the family business while upending the model.

“I just think it’s natural for a business like this to make things more efficient over time,” he recently told the Star.

In the corporate world, phrases like “finding efficiencies” are often executive speak for reducing labour costs. And retail services are no stranger to the slow march of automation, which has attracted renewed interest from major grocers and food retailers facing persistent worker shortages and public health measures.

But there’s a personal edge to Douang’s idea; in a way, the local entrepreneur has been searching for these so-called efficiencies ever since he worked in his parents’ shop, restocking the shelves and selling Lotto Max tickets to the regulars.

Their parents were exhausted after 14-hour days in the shop, Douang recalled; the brothers quickly discovered the tribulations of operating a convenience store by themselves.

“I watched (my parents) work so hard. When they wanted to take a vacation, they had to shut the store down,” he said.

The family business lasted nearly 12 years before shuttering.

Douang came about the idea for Aisle24 after reading an article about vending machine technology in Europe. He concluded that the North American conception of a bodega needed updating.

The concept became reality in 2015, when real estate developer Knightstone Capital wrote the entrepreneur a $25,000 cheque to establish the first Aisle24 at Centennial Place Student Residence and Culinary Arts Centre. (Student hubs 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.)

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

“We’ve gotten plenty of interest to open in certain sectors: hospitals, senior care homes. We see lots of opportunities there,” Douang 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 on a decline that has been accelerated by the pandemic, while online grocery sales have increased 700 per cent since February 2020.

An increase in automation may prove to be one of the pandemic’s economic legacies. Businesses turned to technology to keep operations afloat amidst physical distancing measures, and the difficulty in hiring workers as restrictions lifted has provided new momentum for automation.

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

In 2018, Amazon launched its Go brand, a chain of convenience stores in the U.S. that operate without cashiers. Sobeys, in 2019, introduced “smart carts”: actual shopping carts that scan shoppers’ items, track their total bill, accept payment and let them skip the checkout line. Late last year, Dark Horse Espresso opened a chain of “robo-cafes” around Toronto, autonomous, contactless machines that occupy street-facing retail space and spit out lattes, cappuccinos, cortados and Americanos.

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

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

“The more they’re struggling to fill store-level jobs, the more they’ll consider automation,” Weintraub said.

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

Rather than a decline in jobs, the Brookfield report predicted a shift in the nature of grocery retail work, with dwindling cashier positions replaced by jobs fulfilling online orders, packing groceries, preparing food and delivering orders.

But the report also found a 15 per cent drop in full-time positions at grocery stores between 2006 and 2016.

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

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

One afternoon last week, I downloaded the Aisle24 app and visited the location on Erskine Avenue in pursuit of a 28-oz 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 shoplifting the produce, beyond general goodwill. I was alone in the store and the manager was nowhere to be seen. One security camera sat overhead the beef jerky, facing the opposite direction.

Douang says the stores are designed to track user data, making shoplifters easier to find. The app used to enter 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,” Douang said.

Maybe I wasn’t as alone as I thought.

As food retailers emerge from the pandemic, Douang expects to see this kind of technology increasingly adopted by grocers and small vendors.

“We’ve seen larger companies experimenting with smaller format stores using this kind of equipment. They’re looking toward automation and technology to operate in a profitable way,” he said.

“As markets progress, we’re going to see a lot more of this.”

Correction — Nov. 30, 2021: This article was edited to correct the surname of entrepreneur John Douang.