DIY Becoming Shopper Mantra in Stores

By George Anderson

Put more kiosks and self-checkouts in stores and consumers are bound to use them. That’s the logical conclusion drawn from a report by IHL Consulting Group, which projects consumers in North America will spend $525 billion this year at self-checkout lanes, kiosks and other self-service technology devices. That figure represents a significant jump from the $438 billion consumers spent going the self-serve route in 2006.

Greg Buzek, president of IHL Consulting, said in a company press release that the use of technology to enable consumers to serve themselves is just getting started.

“We expect that expenditures made at self-service kiosks will rise by about 20 percent this year and another 18 percent in 2008,” said Mr. Buzek. He projects that sales at self-checkouts and various types of kiosks could push $1.3 trillion by 2011.

“Consumers enjoy self-service and increasingly seek out retailers that offer the technology,” he said. “Retailers and other businesses are finding that self-service kiosks can significantly increase customer loyalty, as well as customer satisfaction.”

Discussion Questions: What do you see as the primary factors behind retailer use of self-service technologies? Do you think we will we see formats in the future that are primarily self-serve with employees on hand for the purpose of dealing with tasks such as stocking shelves, store maintenance, security, and dealing with equipment malfunctions?

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MARK DECKARD
MARK DECKARD
16 years ago

I’m in agreement with Raymond and Laura.

Optional is key, and keeping someone staffed overseeing several kiosks to help if there’s a problem. And often there is.

For me, it’s about speed. Checkout is #1, but if it’s backed up and I have just a few items, I’m a DIY’er.

Phillip T. Straniero
Phillip T. Straniero
16 years ago

I think this type of technology actually appeals to consumers because they are given a sense of being in control of the checkout process and there also appears to be an element of time savings/customized service associated with self-checkout, kiosks, etc.

I also think this appeals to a more technically-savvy time-starved population and obviously provides a labor savings opportunity for the retailer.

I believe this trend will continue as it hopefully offsets the labor required to service consumer demand in the various service departments around the perimeter of the store.

Jeffery M. Joyner
Jeffery M. Joyner
16 years ago

It is true that more and more consumers are getting comfortable with the various self-service technologies being offered by retailers. Just look around. The number of occurrences that the average consumer has against self-service is growing rapidly. This is particularly true in major markets.

I suppose this is inevitable. It is not difficult to draw a correlation between the vast numbers of retailers who now offer “self-checkouts” with the way the petroleum industry has changed. Although it seems like a lifetime ago, it really wasn’t that long ago when one could drive up to a gas pump or “filling station” and expect someone to come out and dispense gasoline into one’s vehicle. In fact that person was often asked to clean the windshield and check the tires for proper inflation. Look around–those days are gone. The good old gas pump attendant has been replaced with technology.

There is little reason to think that this will not occur in retails stores as well. In fact the consumer’s acceptance of this will help retailers alleviate some concerns around attracting competent and willing hourly labor to manage registers. It will also great reduce concerns around associated pilferage in some regard. Of course other issues are raised around the honesty or competence of the consumer to scan all products but technology will no doubt solve for that too.

The bottom line is that self-checkouts are not only coming; they are here and will grow. So retailers, consumers, manufacturers and marketers should embrace this change and continue to establish new and innovative ways to make self-checkout a pleasant and rewarding experience.

Ryan Mathews
Ryan Mathews
16 years ago

The answer to the first question is to control labor costs. The answer to the second is that we’re not quite to the robot store era yet.

Mark Lilien
Mark Lilien
16 years ago

Shoppers will use self-service checkout as long as it suits their convenience. Waiting on a checkout line is the #1 complaint of shoppers everywhere. Unfortunately, self-service checkout isn’t a magic solution: customer lines still abound and most opportunities for upsell are lost.

Doron Levy
Doron Levy
16 years ago

I recently performed an independent focus group on self-serve checkout lanes and my conclusions were quite surprising. In the 20-30 age group of females, 67% of the group said they had used self serve lanes and would NEVER use them again. Males in that age group were at 54%. As the groups got older, the percentages got higher. The majority of comments I received were that ‘self-serve lanes do not provide the customer service that the consumer was looking for’. In some manual observations of major chains that employed these types of checkout lanes, I noticed that when customers could not find help on the floor, the first place they would go is to the front of the store to ask a ‘cashier’ for help. Well now there is a big machine there instead of a person.

Retailers need to rethink this whole self-serve checkout process as traditionally, the ‘cashier’ was the last person that the customer sees and they could be missing out on upsell opportunities as well as that closing interaction that can complete the customer’s experience. My research indicates that consumers are actually responding negatively to automated machines in the stores they shop and I have mentioned that to my clients that have considered these machines and the reaction is always of surprise. ‘Doesn’t the customer want speedier checkouts?’ is the generalized question I get. Of course the answer is yes but not at the expense of customer service. A solution I have come up with is utilize self-serve lanes in combination with ‘cashier lanes’ to give customer’s choice. The caveat is that if you have a highly trained cashier who can and will try to upsell the customer (and this works in any retail industry and anyone who tells you different is trying to sell you something), those who pass through self-service are actually lost sales that are walking right through the door.

Raymond D. Jones
Raymond D. Jones
16 years ago

I think it is a bit more complicated than just “build it and they will come.”

Depending on the customer and the task, shoppers may either value personal interaction with a customer service employee or abhor it. We have all experienced seemingly interminable waits at checkout lines to buy just one item. On the other hand, who has not been frustrated by the use of automated voice systems by the airlines and cell phone companies.

We have done quite a bit of shopper research relative to self-checkouts. This has been a key part of our Front-End Focus research, sponsored by Mars, Wrigley, and Time-Warner.

There is clearly a place for self-checkout and kiosks, when they are available for the convenience of the shopper, and they are not forced to use it. We definitely see a generational split where older shoppers enjoy the personal interaction with a checker but young people want to avoid it.

The banking model may provide direction. Banks offer drive-through, ATM, and online service as well as tellers and personal banking. You may not use all of these options but you certainly want your bank to have them available.

While the drive to reduce labor costs through technology is understandable, retailers should recognize the value of each type of service to customers.

Nikki Baird
Nikki Baird
16 years ago

Self-service has really gone through a major evolution. What started out as the company web site stuck on a computer in a shadowy corner in the store is becoming something that is helpful and engaging to both consumers and employees. The generation of kiosks being deployed today has shifted from generic to specific–specific applications for use in specific areas of the store (think wine selector, printer ink locater, perfume selector), and is being designed for a specific role in the sales process, not as a blanket replacement for sales people. This kind of evolution bodes well for the future of kiosks–we’re actually learning from our mistakes, and consumers have been pretty patient with us.

And the next generation has the potential to really raise the bar on customer interaction–by pulling in or leveraging consumer devices (cell phone), interacting with products or smart shelves, and increasing their value to the retailer through integration to digital signage/advertising, and insights about shopper habits gathered through interactivity. I think self-service has only really scratched the surface of its potential in retail.

Laura Davis-Taylor
Laura Davis-Taylor
16 years ago

I’m with Raymond 100%. Although our firm is focused on in-store media technology, I feel strongly that this is a blanket statement with many fuzzy areas.

Like any other technology, self-service kiosks and DIY plays are only as good as what they provide and how the shopper experiences them. There are TONS of horrible installations out there that completely overlook good usability and providing a simple, rewarding experience in context with shopper needs. There are also many kiosks and DIY examples that are on the other end of the spectrum, truly helping the shopper and putting a smile on their faces! The two most important rules? (1) Make them optional and (2) remember the old adage “it’s not the gun, it’s the bullet!”

Bernie Slome
Bernie Slome
16 years ago

I would use it on occasion for speed. Most of the time, I prefer customer service and interaction; however, if I am in a supermarket, I want speed. I want to get out fast. As it is, I bag my own groceries. If I only had a couple of items, I would use the self-checkout.

Warren Thayer
Warren Thayer
16 years ago

Just curious…. Has anybody yet studied whether or not self-checkout increases shrink? I don’t have a clue about the answer to that, but it’s occurred to me. As to the questions, Ryan’s right.

Shaun Bossons
Shaun Bossons
16 years ago

I think it’s fairly obvious that the more self-checkout lines there are, the more they will be used. As long as the lines at the self-checkout remain smaller than the human operated tills, people will continue to dash through them. I have even been to stores where there is only self-checkout available late at night to support the 24 hour shopping strategy, ensuing reduced labor for the store. It’s also fun watching people use them for the first time–with a look of complete distrust on their faces!

Li McClelland
Li McClelland
16 years ago

In reading the actual press release the definition of self service is a little muddier. Much of what they talk about with respect to “kiosks”–food ordering, postal services and ticketing–appear to be what we used to call “vending machines.” It is true that it is quick and easy to buy a book of stamps from a machine, a round trip CTA train ticket to downtown Chicago by inserting money into a machine, or a Coke and a candy bar from a machine. But that just does not really seem to be all that new or revolutionary. Shipping a FedEx package by doing it yourself from a terminal, ATM banking, or pumping your own gas at self service pumps are more recent offerings that clearly relate to labor cost reductions for the providers and speed and security for the customer.

The self service checkout lanes at the grocery store, department store or home supply store, however, are much harder sells for most customers. Try to find anyone who has used them who has not encountered at least one bad (and perhaps embarrassing) experience. An option? Yes, that’s great. But the more these self service lanes are foisted upon people the more they will rebel. Farmers markets are the exact opposite of sterile, self service checkouts. These markets are flourishing and not only because of the food.

Kai Clarke
Kai Clarke
16 years ago

This is a concept that is finally hitting its stride. Things like kiosks and self-service checkout stands are great ways to increase customer satisfaction, decrease the amount of time spent in line and drive velocity through stores. There are no downsides to using modern technology combined with consumer demand to provide a faster, lower-touch environment.

Mark Burr
Mark Burr
16 years ago

Several quick and random thoughts based on my experience:

Self-checkout will grow, and it should. Customers expect it to be there even if they don’t use it on that particular trip or at all. They still expect it to be there.

Whether it is or is not faster (and it’s not) customers think it is, thus they choose it for that reason only, in many cases. It is a real case where perception is reality. The stopwatch loses out to the interactive. Because the customers are engaged, the time elapsed seems shorter.

Should it be the only option? No. Will it be? Maybe in some places, but in more traditional formats I think neither now nor ever.

In regards to the study shown by a commentator, every piece of data studied effectively both by vendors and by independent researchers is to the contrary. Especially in those age groups. In my own environment, I have seen all evidence to the contrary. In particular, older customers and price conscious shoppers especially like it due to the fact that they can watch the receipt closer at their own speed. In more sophisticated and higher income demographics, in my experience, it goes even higher.

In regards to shrink, and I can speak only from my own experience and from studies, that indicates it actually reduces shrink in those lanes versus a typical cashier lane. Why? There is a perception that it is measured and watched, and that is a factor. Also, there are distinct controls built in that weighs the items and in the system I am familiar with actually measures the product on the belt as well. Further, customers identify products such as fresh produce far more accurately than a typical cashier. They know they bought Romaine, whereas a cashier might ring up leaf lettuce. There are studies–and my own studies–that actually have the percentages, but I would have to dig them out to quote them and I wouldn’t want to be inaccurate. The system never forgets to remind the customer to check the bottom of the cart. The cashier can forget and often does, and also misses items. The customer is slower and is not being measured on ‘items per minute’ and tends to very carefully scan each and every item. There are a lot of factors even beyond these as well that help the system to control and even reduce shrink over and above the normal lane.

I have also yet to see a self-checkout lane press the ‘no sale’ key on its own and open its drawer outside of a transaction. It simply won’t happen. Further, it counts the change every time.

While there are labor savings, the investment in self-checkout systems is also substantial–very substantial. Yet, the labor savings, in time, produces a fine payback. Even with the savings, there is enhancement to service levels simply due to the fact that you have more lanes open all the time.

Where retailers miss the boat from my view is that they see a labor savings far greater than needed to achieve payback. Instead of re-investing some to their advantage, they take it all. Retailers miss a great opportunity to actually offer customer service at their check-outs.

Consider this: in a typical check out, the customer is already emptying their basket, placing it on a belt, and then in more than 50-60% of all transactions, paying with an electronic form of payment (credit/debit) when using a regular checkout lane. In many cases, they are bagging their own goods as well. So, in the big stretch to self-checkout, they are only scanning an item. It’s not a significant difference from a regular lane. Where retailers miss the opportunity is taking the staff that would be in the lane and using part of that savings to offer real assistance and value at the check out. A real greeting. A real follow up to ensure that they purchased everything. A real opportunity to have a customer ambassador as the last person they connect with. A typical ‘manned’ check lane is not really customer service; it is an extra set of hands. Creating real service at your checkout takes a whole different approach to taking advantage of technology and offering the customer a completely different connection with a store associate that is trained and has the characteristics to enhance the customer experience. If you can do that, then asking the customer to scan an item as they place it on the belt isn’t really self-checkout, it’s a connection.

I was never a fan or advocate of these systems. I am as ‘old school’ as they come. However, based on experience, I now understand that if a retailer implements these, executes well on a daily bases, and takes an opportunity to offer a better ‘experience’, they’ll see a win-win for themselves and their consumer.

Mel Kleiman
Mel Kleiman
16 years ago

Retailers do it for 2 reasons:
1. People who use technology are proven to buy more.
2. It reduces labor cost.

Consumers use it for three reasons:
1. Retailers don’t have enough employees to serve them so they use technology to get out of the store faster. (They have less checkers available to help me so I have to use self-checkout in self-defense.)
2. Technology is smarter then most employees and can help me make a better buy decision.
3. It gives people a feeling of being in control.

Bill Robinson
Bill Robinson
16 years ago

Most shoppers, in most stores, are comfortable with technology whether it’s the web, kiosk, PDA, or self-check POS. For these shoppers it is easier and more desirable to do it themselves. Sometimes, the retailer makes it fun and informative. Technology then contributes to the experience of shopping.

My theory is that self-service shopping will soon be pervasive. Retailers who are not engaged will soon be catering to the doddering few.

Camille P. Schuster, Ph.D.
Camille P. Schuster, Ph.D.
16 years ago

L.L.Bean has had a telephone connected to the catalog call center for years. For consumers who wanted something that wasn’t available in the store but was available through the catalog, it was a way to purchase what they wanted without having to have all inventory in each store. Certainly that is one effective reason for an in-store kiosk.

In addition, if checkout lines are long an in-store kiosk is a way of ordering the product if you are not concerned with having it the same day.

In-store kiosks also allow consumers the opportunity to browse a larger inventory than just the products in the stores.

Will all consumers use the kiosks? No. Will the consumers who use a kiosk use it on every visit? No. Will some consumers find the kiosks a way to purchase more merchandise occasionally? Yes.

Kunal Puri
Kunal Puri
16 years ago

Wouldn’t it be interesting if the retailer offered to share the cost savings of self-checkout (no need for a checkout cashier) with the customer–say a coupon that worth 10% of the bill amount applicable for the next purchase only at the self-checkout counter….

I believe this would increase the buzz and the usage around self-checkouts and probably take them past the tipping point.

Stephan Kouzomis
Stephan Kouzomis
16 years ago

Here is a perfect example of a study telling us: a)who is the consumer that this research coveres; and b)which products/retailers are being researched.

Nothing is self evident in our business and complex consumer worlds anymore! Food outlets; Big Lot stores; Blockbuster; maybe, Home Depot; Target; these might be retailers that add or increase kiosks and similar self-service equipment.

Very interestingly, there is too much a range of consumer needs, desires and wants to say, in general, consumers will spend more with “robotic” self-service tools/kiosks.

Issues like involvement level of purchase; time element; sales associate service needs; and shoppers who are tired of no personal/face-to-face interaction, etc., aren’t the ones who are prone to this research study’s subject.

So yes, there is opportunity for self-service kiosks. But, the business/retailer better know who their consumers/shoppers are, and what they demand.

Maybe, this study is targeting the international markets?

Achieving labor reduction savings is no reason to deface, if you will, the ‘face to face’ encounter that has lost its way. There is a point of diminishing returns and we all know it. And the Baby Boomers–and myself–want knowledgeable and friendly associate service for all products purchased.

Hmmmmm MAD MARKETING says NO to “robotic” efforts from retailers.

Gregory Belkin
Gregory Belkin
16 years ago

I have always been a big fan of self-service kiosks and checkouts…anything to make the checkout process faster and easier.

My 2 cents, however, says that these things still need a lot of work. They never seem to work, and I keep hearing “Please rescan your item. Credit, two dollars, forty five cents.” Hah! That gets annoying, and sometimes I get frustrated and go find a human.