South Korea's Unstaffed Stores That Count on Honesty From Customers

It's past midnight on the outskirts of the South Korean capital, Seoul, and I feel like having a snack.

But that's not a problem. Just cross the street where my apartment is and you'll find not one, but three stores that sell food and are open 24 hours a day.

I walk into an ice cream shop. I find rows of freezers with different flavors of ice cream, but there are no security guards or salespeople - just the products on display and an automatic kiosk where you pay for what you take.

All I have to do is grab what I want and pay before I leave.

On the same block as the ice cream shop, there are stores that sell stationery, pet food and even sushi. None of them have a single employee in sight.

In the most populated areas of the city center, there are several bars without staff.

"To operate a bar on this scale profitably, I need 12 to 15 employees, but I only hire two people," says Kim Sung-rae, founder and creator of a no-staff bar called Sool 24 - simply, "24-hour alcohol" in Korean.

He says this measure allows him time to dedicate himself to other business initiatives.

Kim used to operate a bar nearby. But revenue didn’t meet expectations, which led him to switch to an unmanned store system. And now, profits are soaring.

Decades of low birth rates and rising wages are the causes of automation.

South Korea has the lowest recorded fertility rate in the world. The average number of children per woman was expected to reach 0.72 in 2023, although it rose slightly last year to 0.75.

To keep the population stable, the fertility rate needs to be at least 2.1. South Korea only last surpassed this level in 1982.

Therefore, the number of people entering the job market has been decreasing.

Coupled with this fact, the country's minimum wage has been rising steadily since 2000. Shopkeepers like Kim now have to pay each employee the equivalent of about $7 (about R$39) per hour.

“The main reason I didn’t have employees was the minimum wage increase,” Kim explains. “There are two ways to deal with this: robotics or automation – and we can simply not hire employees.”

Installing robots requires more money and space, so he opted to keep the stores unstaffed.

The COVID-19 pandemic tipped the scales towards automation. It made it possible to save money on salary payments and was a way to get around the strict social distancing rules in place at the time.

Some people argue that the new generation of workers do not want so-called "3D jobs." They consider them dirty, dangerous, difficult or demeaning.

These are manual jobs in industry, agriculture and, now, retail, which are considered undesirable.

"The young generation tries to stay in metropolitan areas... and they also like to start their own businesses, risk their capital and try... to get high-paying jobs in the high-tech sector," said Cho Jung-hun, a member of the ruling People Power party in the South Korean National Assembly and a member of the Standing Committee on Education.

"Unlike other lawmakers, I don't blame our young generation [for having] this preference," Cho continues.

"Statistics show that we will need to deal with labor shortages in the coming years and it is better to allocate our limited workforce to sectors" with maximized value, he said.

The Korea Economic Research Institute is a private think tank . The institution estimates that 43% of jobs in South Korea are at risk of being replaced by automation in the next 20 years.

This will open up new opportunities for people like Kwon Min-jae, CEO of Brownie, a company that runs unmanned stores on behalf of its owners. He set up his business at the end of the COVID crisis in 2022.

"We run laundromats, ice cream parlors, convenience stores, coffee shops and vape shops without staff," he told the BBC.

Even if the store is unstaffed, it needs to be restocked, cleaned and maintained, Kwon explains.

Initially, store owners did this work. Now, Kwon’s company provides professionals who can maintain the stores.

“We have a group of local employees who can visit several of these stores a day,” he explains.

"The owners' top priority is not to have to deal with the stores and not think about them. They'd rather spend an extra $100 or $200 [about R$562 or R$1,124] a month on us to run the stores for them."

Kwon says he started with just two stores, but now manages more than 100.

Few robberies

South Korea has a very low robbery rate, which makes unmanned stores more successful.

“There have even been cases where people forgot to pay but called me later to pay for their purchase,” says Kim.

"I don't know about other stores, but here, young people feel safe enough to leave their wallets and cell phones behind to guard their tables."

He admits that there may be some losses caused by shoplifting, but they are not enough to make his business unviable.

"I never really count what was stolen," Kim says. "I don't lose any money overall, so it's not important."

"In any case, the cost of saving money is greater than the loss. Hiring security guards will cost more than the savings."

As technology advances, other jobs will become redundant. This is the case for drivers when self-driving cars enter the market.

It is estimated that by 2032, South Korea will need more than 890,000 new workers to maintain the country's long-term economic growth target of 2% per year.

Some organizations, such as the Korean Commercial Employees Union, are concerned about the future of the job market. But shop owners without employees, such as Kim Sung-rae, are very optimistic about the economic opportunities that are opening up for them.

This story is based on an episode of the BBC World Service's Business Daily series.