Business

Self Checkout: Should You Implement It?

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Self checkouts, where a customer rings up their own items, bags them, and pays without a cashier, have been implemented in many grocery chains, fast food restaurants, and chain retailers across the country, with NCR Corporation supplying 68 percent of these systems. Should you jump on the self-serve checkout train, too?

Consumer Reports recently published a survey of how consumers feel about self-checkout. The top complaint of the 62,917 subscribers surveyed was too few open checkout lanes. Nearly 75 percent of respondents liked self-checkout’s ability to save time.

We decided to delve into the self-checkout lanes to determine the good and bad. Here’s what you need to know.


Self-Service Checkout Pros

First, let’s take a look at the pros of implementing self-serve checkout. Notably, it’s quicker, reduces labor costs, and indications are that many customers like it.

Quicker Checkout

A few years back, the Washington Post performed an experiment to see how long it took to purchase 5 items at the self-checkout lanes in various grocery stores around the Washington area. Regardless of the store, they found it took under two minutes to complete each transaction.

The real wait, however, is in line waiting for a register. This is where the self-serve checkout truly shines. Good Housekeeping points out a Danish queuing theory from the 1900s that data analyst Wes Stevenson used to show that one giant checkout line actually reduced the average customer wait time vs. individual lines at each register.

Single lines aren’t always mandatory in self-checkout lanes, but it’s become an unspoken rule among customers. That results in quicker checkout times.

Some major retailers are even taking self-checkout a step further. They offer mobile checkout that uses a customer’s mobile phone to scan barcodes while shopping. Sam’s Club recently introduced its Scan & Go app for Android and iOS, despite the failure of a similar app at Walmart stores in 2014.

If you don’t use self-checkout, you may still be able to speed up checkout times by using a single line for all registers, but customers who aren’t used to it may be confused or annoyed.

Reduced Labor Costs

Since there’s no need for a cashier at every register, self-checkout reportedly reduces labor costs. One employee can easily monitor 6-10 self-service registers, which has retailers divided.

These costs savings encouraged big box stores like Walmart to ramp up self-checkout implementation, though chains like Ikea removed the technology. Labor reduction and job loss is a major point of contention in the U.S. Other companies don’t want to tarnish their brand image.

However, several analysts point out that cashiers aren’t necessarily fired over self-checkout, but rather redeployed to different, more complicated job functions. This means they’re still on the payroll, but performing additional work that contributes to the store’s overall profitability and revenue.

Some retail experts suggest that self-service checkout kiosks should be viewed less as labor reduction. Instead, kiosks serve more as a tool for cashiers to support multiple customers simultaneously. That allows stores to combat traffic spikes and service more customers during busy times.

Some Customers Love It

As Consumer Reports noted, customers generally like self-checkout due to the perceived time savings. Additionally, in 2004, McDonald’s performed an experiment that found customers using self-service kiosks were more likely to supersize their meals, spending an average of 30 percent more on each transaction.

Millennials are particularly comfortable with self checkout, with over 91 percent of people aged 35 or younger having used it.

In restaurant environments, self-service typically takes the form of tablets at the table, as seen in restaurant chains like Olive Garden and Chili’s. A study by Kiosk Marketplace found satisfaction for self-service in restaurants is driven by the ability to customize orders and perform complicated transactions such as splitting the bill.

Although there are definitely complaints about self-service checkout, overall consumers are accepting of the technology, especially here in North America.

Self-Service Checkout Cons

However, self checkout isn’t without downsides. You may have an increased risk of theft or manipulating the transaction, high upfront cost for equipment, there’s less interaction between staff and customers (which can reduce feelings of connectedness or loyalty to a business), some customers get confused or dislike the machines, and equipment issues can cause delays.

Increased Risk of Theft

Since there are fewer employees monitoring self-service lanes, theft is a greater risk. Self-checkout terminals at Walmart and Safeway have recently been targeted by thieves using skimmers. Skimmers are devices that attach to card readers and record the information from swiped cards while a micro-camera captures the PIN. These devices are often used on gas pumps and ATM machines and have now found their way into the self-service checkout machines.

It should be noted, however, that chipped credit cards help reduce skimmer fraud. Chip cards encrypt information at the card level. But, as security evolves, so too do the tools to commit fraud. Skimmers specifically for EMV chip cards, called “shimmers,” may also increase as chip card usage increases.

Several hacker resource sites have pointed out several easy exploits to self-checkout machines. These include switching barcodes, weighing expensive items like steaks as produce (which is much cheaper by the pound) and purposely freezing the system to trick employees into inputting their security code in front of the customer.

When implementing self-checkout, consider also implementing new security measures. Technology solutions such as StopLift’s Scan-It-All platform help prevent self-service theft. It does so by comparing scanned items to video of shopping carts and customers. This allows it to detect unscanned or switched items. You can also make sure that staff is adequately trained to watch for suspicious activity. Additionally, you should inspect machines for signs of tampering, such as skimmers.

High Up-Front Costs

According to a study by MIT, a typical 4-lane self-service checkout setup costs $125,000, although an open-source platform is available that can reduce the costs by nearly 10 times. This doesn’t include the costs associated with added security mentioned above.

By comparison, I recently wrote an article breaking down the cost differences between a cash register and POS system, both of which cost much less up front and over time than a self-service kiosk. Four cash registers will run your business about $2000, while a four-terminal POS system from ShopKeep will cost approximately $2800 per year.

When combined with the increased theft, the cost savings of these terminals might only be recouped by large corporations or businesses with multiple locations.

Less Human Contact

A major concern about self checkout for both consumers and business owners is the lack of human contact. Both Consumer Reports and NCR Corp. found that customers enjoyed the speed but the lack of human interaction was a problem. In NCR’s survey, 43 percent of respondents still wanted an attendant to be available to help resolve issues.

In fact, Ikea, CVS, and Big Y have all removed self-service checkout terminals from their stores over the past 5 years, citing these concerns as one of the major reasons.

Many retailers count on cashiers to upsell customers on accessories, extended warranties, and better products than the advertised doorbusters. By eliminating the one-on-one interaction, it’s not possible to upsell. Additionally, the diminished interaction with staff may lead to customers feeling less of a personal connection with or loyalty to the store/brand.

Lastly, in major cities where parking validation is necessary as a cost-saving measure, self-service kiosks are avoided as they don’t provide this service.

Customer Confusion and Equipment Issues

As the surveys noted in this article showed, although Millennials generally support self-service checkout, Generation X and Baby Boomers are much less inclined to support the technology. Some of this is attributed to the idea that this ‘labor’ being performed by customers isn’t lowering prices at a comparable rate. In other words, older generations don’t want to do the legwork of ringing themselves out if there isn’t a savings in what they’re paying for the goods or services. Other customers may simply not understand the machines or need assistance completing their transactions.

MIT has also explored several issues with self-checkout, including software glitches. The university looked into the infamous “Unexpected item found in bagging area” and “Item has been removed from bagging area” messages. Problems with the scales embedded into the scanner and bagging area cause these messages.

These scales prevent theft and fraud, but they’re often overly sensitive. That means a brush of the hand or loose clothing can trip the scales. This requires the attendant’s attention, which, if it occurs at multiple machines at once, increases the wait time for each customer.

Self-Service Restaurant Checkout

Using self-service checkout for restaurants is a different situation than for grocery stores or retail stores. Customers can place orders and pay through a tableside tablet kiosk, but they can’t cook or deliver their own food. As such, you’ll still need cooks and staff to run food and drinks to tables. However, as mentioned earlier, tablets may provide convenience for splitting checks more easily. Tablets can also alert staff to diner needs rather than relying on the server checking randomly.

Additionally, self checkout options in restaurants are likely less expensive than the systems needed in retail settings.

Conclusion

Although more stores have implemented it, the costs of self-service checkout are high. Additionally, there are security risks. For low-volume, mom-and-pop shops, the service may not be worth it. However chains are already experimenting with the next level in allowing consumers to check themselves out using their mobile phone. Businesses with multiple locations, young clientele, and desire for speedy checkouts may benefit.

Whether or not self-service checkout is right for your business depends on your customer base and business model. Just be aware this disruptive technology enables a level of automation that you’ll need to compete with.

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Brian Penny

BY Brian Penny

Brian Penny is a former business analyst and operations manager at Countrywide and Bank of America turned whistleblower and freelance writer. His banking career also included jobs for Chase, American Express, and client work for Wells Fargo and other large banks. He's interested in all things finance, and spends much of his time for CardFellow writing about financial technology and payment security.In addition to CardFellow, you can find Penny's blogs on Huffington Post, Forbes, Fast Company, The Street, Cracked, High Times, Quicken's Small Business Resource, and Small Business Daily.

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1 COMMENT

  1. from Don Bartels, on February 4, 2018 11:58:57

    I have worked beside these god awful self checkout machines as a cashier at my local super market. Trust me when I say, there is no way a self checkout machine is faster than an experienced cashier. One on one with the same items a cashier will whup the self checkout in speed 100% of the time. I love the fact that you did mention that the perception is that they are faster. Actually, mis-perception is a better word.

    Having witnessed first hand all the grief and frustration that these glorified computers have caused, I have to say that nothing has caused more disruption in supermarkets than these machines.

    Then there is the theft issue. It’s like the inmates running the prison or the fox guarding the hen house. It makes absolutely no sense to run a business this way. In fact some people in loss prevention now call this theft “external shrinkage”. In other words this kind of preventable theft is accounted for by jacking up the prices! Talk about doing things “bass ackwards”. Just because a few misinformed people think they are faster than a cashier. So, basically the stores using these machines are a direct cause for customers paying higher prices. What a shame.