Firm to open first cashierless pop-up outlet in Shanghai

Tencent Holdings Ltd has opened its first cashierless pop-up store in Shanghai, the latest player to delve into what could become a 65 billion yuan ($10.2 billion) industry by 2020.

Named We Life, the 300-square meter shop features the use of WeChat Pay, the proprietary e-wallet of messenger app WeChat, to let shoppers buy items without paying cash, swiping a card, or interacting with a single human being.

Customers can enter the store by using a phone to scan a quick response code at the gate, which enables user identification and automatic payment.

All products in the store are equipped with radio-frequency identification tags, which use magnetic chips to store information such as price and inventory. Shoppers can also skip long lines for the checkout by scanning these codes.

The store, which will be open until Feb 4, showcases Tencent's payment capabilities in the realm of physical retail, said Bai Zhenjie, an executive in charge of retail at WeChat Pay.

"Instead of opening our own brick-and-mortar stores, we would like to present such business models to third-party partners and provide them with such capabilities," he said.

He added that facial recognition and a credit rating system would be incorporated in future stores.

Tencent has joined a bevy of tech firms in China which are racing to popularize unmanned retail, a sector forecast by iResearch to top 65 billion yuan in China in three years.

Last month, e-commerce giant JD announced a plan to roll out hundreds of stores that combine facial recognition, QR codes, and RFID to eliminate checkouts and boost data analytics, while Alibaba Group Holding Ltd launched its Tmall Cashierless Supermarket during the fourth World Internet Conference in December.

Dozens of startups have also emerged in the past year, launching similar or identical concepts. From BingBox to F5 Future Store, they let users buy snacks and small meals through a touch screen with no humans on the watch.

"Cashierless stores are going to be big business in China, as our research showed that Chinese shoppers have exhibited this very strong tendency of doing research online by themselves and self-serving when they make purchases," said Spencer Leung, a consumer analyst at Swiss financial services firm UBS.

Zhang Xiaolong, senior vice-president of Tencent, said during a WeChat-themed Open Class last week that the app will make more aggressive strides in offline scenarios this year, a move likely to pit it squarely against Alibaba.

"While Alibaba is more into owning everything, from travel agency Fliggy to local restaurant review platform Koubei, Tencent is more into decentralized partnerships," said Wang Xiaofeng, a senior research analyst at market research firm Forrester.