Can enhanced self-checkout stop shrink?

Discussion
Source: Demonstration video – “Strongpoint SCO powered by Edgify”
Jan 05, 2023

Self-checkout may be quick and convenient, but it is not uncommon for retailers to find that the technology allows an unacceptable level of shrink. Just Walk Out, scan and go and other new forms of contactless checkout run the risk of providing even more room for shoplifting. Recently, to combat the problem, some vendors have been building solutions utilizing computer vision which they anticipate putting an end to self-checkout’s shrink problem.

In-store cameras that use computer vision to catch theft at an enhanced rate and self-checkout kiosks that use analytics to determine if the item being rung up is the correct one, are some of the solutions that vendors are developing to prevent shrink at the self-checkout line, according to The Motley Fool.

A video on YouTube demonstrates how a computer vision-enabled system can automatically select one variety of apple over a similar one, preventing a customer from having to select a SKU number from a list and possibly entering the wrong one — accidentally or intentionally.

The need for some solution, whether technological or operational, that will reliably cut down on shoplifting, is growing as major retailers like Target and Walmart experience huge losses — in the hundreds of millions, in Target’s case, according to the New York Post.

The National Retail Federation (NRF) placed shrink at around $94.5 billion for 2021, or 1.4 percent of retail revenue. Shrink experienced a massive 47 percent surge in 2020 after growing steadily at a compound annual rate of seven percent between 2014 and 2019.

The problem has also grown alongside inflation as shoppers find themselves more motivated to cut costs by any means necessary, according to Loss Prevention Magazine. In the second half of 2022, U.S. retailers reported a 26.5 percent increase in organized shoplifting, and UK retailers reported an 18 percent uptick in theft. In nine out 10 cases, shoplifters targeted self-checkout registers. The industry also saw an increase in first-time shoplifters with no criminal background, leading experts to believe that higher costs are driving people to steal.

DISCUSSION QUESTIONS: Is technology the answer to reducing shrink at self-checkout stands? Do the results typically justify the expense of deploying these systems?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Enhanced checkout systems will be able to reduce honest mistakes like misidentifying produce, but it won’t help with the real problem of dedicated thieves."
"Computer vision can help, but it’s very expensive and not all retailers have the financial wherewithal to purchase and implement it."
"I don’t see the reward being worth the expense."

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15 Comments on "Can enhanced self-checkout stop shrink?"


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Mark Ryski
BrainTrust

Yes, I believe that technology will ultimately reduce shrink at self-checkout — the key word here is ultimately. Self-checkout represented some 30 percent of grocery transactions in 2021, so it’s not going away. When it works, it works well, but the shrink issue is very problematic (read costly) for retailers. Self-checkout has been around for 30 years and it’s only gaining more transactions. It will get better and in this case, technology is the answer.

DeAnn Campbell
BrainTrust

Technology can help with shrink but, at the end of the day, human oversight is still the most effective deterrent to shoplifting. Costco’s receipt checkers at store exits and live cameras that indicate real time monitoring will deter more people from stealing at self-checkouts than more complex solutions.

Bob Amster
BrainTrust

The way that the industry is complicating self-checkout with technology is beginning to look like the U.S. tax code. It may be time to go back to the achievable through simplicity.

Paula Rosenblum
BrainTrust

Honestly, I don’t think so. If the shoplifting is really being done by organized crime rings, they will simply find new ways to defeat new technologies. I don’t see the reward being worth the expense.

David Naumann
BrainTrust

Several of the latest self-checkout models have incorporated computer vision and AI to increase the accuracy of scanning and ensuring all items are scanned. This should help reduce shrink and the same technology could be used at cashier checkout lines to speed the scanning process and increase the accuracy of difficult items like produce.

Ken Morris
BrainTrust
Self Check Out (SCO) is the yin and the yang of a retailer. On the one hand you have hard to find in-store associates who are demanding higher salaries, and on the other you have a process change that allows the customer to check themselves out quickly and avoid the queue. The problem is that it invites shrink. Technology exists for grocery to identify anomalies but it doesn’t work yet for soft goods. Membership in loyalty programs is a deterrent, and RFID can be used to read all items in a basket at once without handling the individual items and synchronized with exit pedestals to flag unread merchandise. RFID is the right answer for combating shrink for some, but not all, retail categories. When possible, though, it both speeds self-checkout and makes it more secure. Plus, RFID enables real-time inventory management and authenticated returns. Store staff should be specially trained to spot theft at self-checkout areas. This is not necessarily stuffing coat pockets, but failing to scan or scanning lower-priced items and other tricks. Perhaps… Read more »
Jeff Weidauer
BrainTrust

Enhanced checkout systems will be able to reduce honest mistakes like misidentifying produce, but it won’t help with the real problem of dedicated thieves. Any new technology will soon be met with a countermeasure. The only way to change that is human interaction, which might ultimately cost less than trying to make the tech work.

Dave Wendland
BrainTrust

I agree, Jeff. This is a moving target and iterative improvements may help on the technology side; but human oversight may be the only way to truly control the theft issues (especially around organized crime rings that are beating the current systems).

David Spear
BrainTrust

Self-checkout is here to stay. Retailers who use it must incorporate some level of human interaction along with the tech to keep shrink from radically increasing. Computer vision can help, but it’s very expensive and not all retailers have the financial wherewithal to purchase and implement it.

Steve Montgomery
BrainTrust

As self-checkout technology improves, so will the skill sets of those that want to deliberately try to defeat the systems. Having trained personnel oversee the self-checkout area is likely the best was to reduce shrink at this time and will be until someone invents a fool proof system which I don’t foresee happening for some time.

Shep Hyken
BrainTrust

The concern for shrink at self-service has always been a concern, and it will continue to be so. There are different tactics and technologies that are being implemented to reduce theft. Unfortunately, the thieves will always be looking to thwart any and all anti-theft efforts. As for cost, always consider the cost versus benefit. There are some companies that have invested more to prevent theft/shrink than the actual loss incurred.

Craig Sundstrom
Guest

“The National Retail Federation (NRF) placed shrink at around $94.5 billion for 2021”; not to (over) fault Matt, but I hate when people do this: cite some huge number, of which the actual problem at hand is only a small fraction … it’s just a form of sensationalism. Self-check is a $5B or $9B or whatever billion the actual number is problem; the total of shrinkage really isn’t relevant.

Back to the question: yes, technology can help. But my opinion is this is a typical case of overthinking: the easiest improvement is the simplest — if not the cheapest — better human staffing/monitoring of the stations; and no tech solution is going to work without it.

John Karolefski
BrainTrust

Most honest shoppers do not like using self-checkout terminals because there is always a problem (“Help is on the way!”) The only shoppers who like self-checkout are the folks who consistently get away with shoplifting goods. Shrink will continue even with enhanced terminals.

Rich Kizer
BrainTrust

Every week I shop a grocery store at least twice and most weeks I make at least three visits to a giant grocery store. I look for changes in layout, staff presence and, yes, I watch very closely the self checkout area. Staff continually tells me there are some theft issues, only some, but because they staff at least five roaming people in the area at all times, everyone tells me it is more positive than negative in the check area. In other words, their attention is stopping theft. And it is just a matter of time until there is technology good enough to stop theft. Until then, retailers eat the expense of a few additional members. They just may pay for their salary this way until the solution is found.

Jared Kligerman
Guest

It will certainly be part of the solution. There are more “employee-less” stores like Aisle 24 and KaleMart24 up here in Canada and many others (including Amazon) in the U.S. who are refining the abilities of tech out of necessity. This will help make the tech more effective and likely a bit more friendly on budgets.

wpDiscuz
Braintrust
"Enhanced checkout systems will be able to reduce honest mistakes like misidentifying produce, but it won’t help with the real problem of dedicated thieves."
"Computer vision can help, but it’s very expensive and not all retailers have the financial wherewithal to purchase and implement it."
"I don’t see the reward being worth the expense."

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