- Stockholm-based startup Lifvs created technology to run self-service grocery stores in Sweden.
- These stores are unstaffed and run remotely, which means they can be open 24/7.
- Low labour and rental costs enabled Lifvs to open stores in low traffic areas and rural communities.
- For more stories, go to www.BusinessInsider.co.za.
Stockholm-based startup Lifvs set up and runs mini grocery stores in rural parts of Sweden.
These stores are located in shipping container-like structures and are open 24 hours a day, seven days a week.
The stores are completely unstaffed for most of the time.
This is because they are run remotely using artificial intelligence (AI) technology.
Cofounder and COO Daniel Lundh told Insider that he launched the company in 2018 because he wanted to solve food deserts (an area that has limited access to fresh food) in rural Sweden.
He'd seen a gap in the market: more than half of Sweden's grocery stores closed in the 1990s as larger supermarket chains swooped in. 90% of these stores were in rural locations, he said in a recent phone conversation with Insider.
'The industry went through a big shift, they were looking at the States – the Walmarts and the Targets of the world – and Sweden was building these large grocery stores and closing local services," he said.
"We wanted to go where we were needed most," Lundh said. Livfs has 27 stores across Sweden.
The "modules" its stores are housed in are made off-site and shipped to each location.
They come in two sizes: 290 square feet (26.9m2) and 580 square feet (53.8m2). The smaller version is made of steel, and the larger one of wood.
These buildings are built from scratch. They are designed to be the perfect width and weight to be transported on the back of the truck.
It requires several permits to base a store in a particular location. But once power access is in place, it only takes hours to open a new location.
Low store operating costs and labor costs are at the heart of Lifvs' business model. This enables the company to serve rural areas where there are fewer customers, and therefore, less business.
So how do you actually shop at a Lifvs store?
Customers first need sign up for the Lifvs app on a smartphone and enter card payment details. The app is connected to BankID, Sweden's national identification app operated by its banks, which will verify the customer's details.
You then use the app to unlock the door and enter the store.
Once inside, the customer is free to browse.
To make a purchase, you scan the barcode on an item or on its listing on the shelf. The cost of this product is automatically deducted from your card.
Lundh says the technology behind the app uses AI to offer customers personalised deals and coupons based on their previous shopping trips.
The app also offers recipe suggestions or bundle deals when you scan an item.
The technology used at Lifvs is akin to what Amazon uses at its cashierless stores, Amazon Go.
But there's a key difference, Lundh said. At an Amazon Go store, the technology will automatically detect when an item is taken from or returned to the shelves (using cameras). These are then added or removed to a virtual basket.
At Lifvs, customers have to physically scan and add items to the app, which gives the company a chance to interact with the customer more, he said.
"To me, you're throwing away the biggest advantage by not helping them [the customer] with a shopping list or pushing a recipe or coupon," he said.
"If I [the retailer] can only track someone with a camera ... that doesn't give me anything more than the data of what they buy," he added.
Lifvs stocks around 550 product stock-keeping units (SKU), including meat, vegetables, dairy products, and household goods. Amazon Go convenience size stores stock around 1,000 SKUs, for comparison.
Space is limited in these stores so rather than having endless options, there is usually one type of product on offer.
This is a store for shoppers to pick up midweek groceries rather than to do a big weekly shop. The average customer shopping trip lasts three minutes, Lundh said.
Lundh said his team initially had no idea what quantities of food to order up but gradually the data it's collected on customers' shopping trips has enabled its technology to make better estimates.
The technology is keeping live tabs on stock levels and sell-by dates. "If we know a batch of milk is going old, we can lower the price remotely," Lundh said.
A store manager visits each location three times a week to cross-check stock levels. The store is also cleaned at that point.
This shopping experience is well-suited to Covid times.
Aside from the door handle and the items a customer wants to purchase, it's contact-free.
The lack of staff keeps labour costs low, but it also makes the store more susceptible to shoplifting.
While there are cameras in each store, it's only when the store manager visits that they'd actually notice if items were missing.
Lundh said this slightly clunky system isn't designed to focus on catching shoplifters but to service the 99% of people who are not shoplifting.
While Livfs plans to keep expanding in Sweden, its biggest opportunity for growth is licensing its technology to other retailers, Lundh said.
He receives enquiries about licensing every week from retailers across the US and in most European countries.
These enquiries vary substantially. "Anything from a local farmer in Portugal to the second-largest grocery chain in the Netherlands," he said.