Learning the convenience store business from the ground up, John Douang has developed a cashierless grocery market concept proving popular with education and multifamily accounts in eastern Canada.
Aisle 24 is the fastest growing cashierless “grocery market” in eastern Canada.
There’s no telling what creative ideas can be born in a family convenience store. Especially when a young family member acquires a love for technology.
Today, Aisle 24, based in Toronto, is the fastest growing chain of automated “grocery markets” in eastern Canada, with plans to expand to the U.S.
Founder and CEO John Douang was two years old when his family moved to Canada from Thailand to open a convenience store. He learned the business from the “ground up,” studied business management and began his career working in software engineering and development.
Douang, assisted by his wife, Marie Yong and his brother, Josh, launched their business under a different name in Canada in 2015, about one year before Amazon Go made its U.S. debut.
Douang, however, did not have a multi-billion-dollar organization behind him. The Aisle 24 journey began with vending machines.
The company began placing vending machines equipped with telemetry enabled remote machine monitoring in multi-family residential buildings in Toronto.
“We were heavily focused on customizing these grocery vending machines,” Douang told this website in a phone interview. “We focused on the ability of a customer to go to our machine and get the necessary products that they would need to make a meal.”
Using machines from Jofemar Corp., a Spain-based vending equipment manufacturer, he placed the machines in 12 multi-family locations, some of which had as many as four machines depending on available space and what the customers at the locations wanted.
“Milk was a huge seller in our machines as well as eggs, butter and bread,” he said. “So we were visiting our locations multiple times a week.”
The business was profitable, which was unusual for vending machines focusing on perishable food.
“We were doing about 10 to 15 times what a standard snack vending machine would do in a month,” Douang said.
But being a retailer at heart, Douang was more interested in pursuing a full store concept, albeit one that was 100% unattended.
His journey took a twist when he happened to share his idea for an unmanned store with a real estate developer who was building a culinary arts center for a local college.
“They didn’t want to go with a traditional foodservice like what Compass Group (parent company of Canteen Vending Services) and Aramark and these guys do,” Douang said. “They wanted something different and wanted to stand out.”
Douang came up with the concept of a controlled access store inside the common 400-square-foot area of the building. The customer would download a mobile app and register an account to gain access to the store. The customer could then select the products from shelves and scan them at a kiosk and pay with a credit card or stored value card.
He presented his concept to the developer who wanted it right away and presented him a $25,000 check.
Douang wrote the software himself and used consumer grade hardware from Costco. “We were using off-the-shelf type products,” he said.
In September 2016, in partnership with the developer, Knightstone Capital Management Inc., Aisle 24 launched its first cashierless grocery store at the Centennial Place student residence at Centennial College.
The store includes surveillance cameras to discourage theft.
Aisle 24 proved popular with Gen Z and millennials who are comfortable with mobile shopping, Douang said.
The store served 1,800 to 2,000 users each semester including students, faculty and staff. On move-in day, many of the parents loaded their students’ accounts with funds.
Education continues to be a focus for Aisle 24, Douang said, but the company has since expanded to focus on free-standing stores in urban areas.
They have also gone beyond offering food to include personal care items, home goods and electronics accessories.
Multifamily buildings, meanwhile, continue to be a focus. Aisle 24 offers two models.
A resident format store ranges from 325 to 800 square feet that goes inside a building in a common area.
“We help the owners of these properties convert the space into a resident format store that can help them generate additional revenue,” Douang said.
The “community” format is larger — 1,000 square feet and more. There is a minimum of two kiosks for community markets with 1,500 to 1,800 square feet of space.
The number of checkout kiosks depends on the size of the location and the amount of activity. The company uses Samsung Electronics kiosks and some generic models.
A store normally requires 15 to 20 hours per week of management, much of which includes monitoring processes remotely.
One particularly busy downtown Toronto store has operational staff onsite daily for an hour or two attending to restocking, remerchandising and cleaning.
The search for innovation continues. Douang is currently looking at options to increase security effectiveness, but he is not keen on facial recognition.
“I don’t think everybody is all keen and okay with a lot of these facial detection things,” he said. “There is a huge increase in the consumer’s wanting to know what’s happening with their data.”
Douang has spoken to the federal privacy commissioner in Canada about biometric identification technology and expects it will eventually become accepted. “They (consumers) need to start to be comfortable” before that happens, he said.
Unlike some automated convenience retailers, Douang is not using smart shelf sensors on account of the cost.
“When you’re looking at a low-margin industry like grocery and convenience, bottom line is most important,” he said.
Aisle 24 does not prepare any of the food it sells. Local health and safety restrictions make this a challenging proposition for many locations.
The company began franchising in 2020 and now has 75 franchisees nationwide, most of which have multiple stores. There are also five company-owned stores and several more under construction.
Douang is currently spending a lot of time developing data analytics to help franchise operators to operate effectively.
“We’re very focused on how we can use the access camera system and what data we can extract from these things and how the AI platform can then extrapolate this data into something that is easy to read and easy to action,” he said.
He is also looking at platforms to do product delivery.
Doung’s biggest surprise throughout his journey has been the expectations of his customers.
“We’ve learned so much from our customers in terms of what they expect when they’re provided with a service like this,” he said. “How we deal with customer service is paramount in gaining loyalty. There is a lot of upkeep that needs to happen.”
“I think that this is the future of things,” Douang said. He sees expanding to thousands of locations in Canada and ten times that amount in the U.S.
Photos provided by Aisle 24.
Elliot Maras is the editor of Kiosk Marketplace and Vending Times. He brings three decades covering unattended retail and commercial foodservice.
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