BrainTrust Query: Self-Checkout – What Should Drive the Retailer Decision?
The self-checkout continues to be the subject of fierce debate within the retail community. The controversy is propelled by the multiple dimensions of the issue to retailers, manufacturers and shoppers.
Studies conducted by Dechert-Hampe show that self-checkouts are now found in two-thirds of all supermarkets in the U.S. and represent a fourth of all checkout lanes. An estimated 25 to 33 percent of all supermarket transactions now are via self-checkout. They can also be found in an increasing number of other store formats including drug stores, c-stores, mass merchants, hardware and office supply.
The self-checkout has arrived and while there are still issues to be addressed with the technology, the basic concept has gained wide acceptance. Furthermore, in-store interviews confirm that a large segment of shoppers have embraced self checkout technology based on its convenience and speed. Many shoppers prefer it, finding it particularly useful for small baskets.
The impetus for self-checkouts was originally driven by the retailer operations groups who saw the opportunity to employ technology to cut costs and improve efficiency of the checkout. However, many retailers report that actual labor savings were "soft" and ROI disappointing.
In addition, operational issues such as weight checks and shrinkage continue to be a concern for many retailers. ABC and USA Today recently ran stories on the "crime wave" at the self-checkout. This has caused a minor panic and spawned more interest in technology for loss prevention.
Unfortunately, merchandising solutions for the self-checkout have lagged behind the technology. Studies show that consumers are less likely to shop for impulse items at the self-checkout. Coupled with poor merchandising approaches, this has resulted in a significant blow to the impulse sales at checkout.
Albertsons and Big Y have both announced that, after due consideration, they are abandoning the self-checkout. They attribute this action primarily to the failure of the self checkout technology to provide the exceptional customer service they seek and the resulting impact on the customer relationship.
On the other hand, Walmart has announced they are expanding self-checkouts in pursuit of greater savings and lower prices. Stop & Shop has also announced plans for expansion of their SCAN IT! checkout system in both the handheld format and the mobile application.
Retailers have started to recognize the need to offer a variety of transaction choices to the shopper consistent with their preferences. Ultimately, they will have to compete in the marketplace based not only on their products and prices, but also on the transactional choices they offer. It is a complex decision, with a major impact on both financial results and the nature of the customer relationship.
- Maximizing Opportunities at Self Checkout – Dechert-Hampe white paper
- Big Y bags self checkouts – TheDay.com
- Walmart Adding DIY Checkouts – RetailWire
- Self-checkout lanes boost convenience, theft risk – USA Today
Discussion Questions: Do you believe self-checkouts undermine or support exceptional customer service? What solution(s) do you see to the loss of impulse purchases due to their increased use? How do you see mobile technology affecting the future of self-checkout?