Self-checkout technology may be nothing new – but it’s hot news in retail. The global retail self-checkout market is expected to grow 10.3% year over year until 2024, Loss Prevention Media recently reported.
The ideal technology for busy consumers
This predicted growth isn’t surprising, if you consider some of the biggest consumer trends.
Do-it-yourself has become the norm for today’s consumers. From self-scanning one’s bags at the airport, to booking massages, treatments and medical appointments online, to self-management of personal finances on phone apps, the tendency to DIY has spread to most facets of life. Across ages, genders and geographies, there seems to be a shared preference for figuring things out on one’s own. Not only: many would rather interact with machines than with people. A recent consumer survey by SOTI found that as many as 66% of shoppers prefer using self-service technology over having to ask a salesperson.
McDonald’s recently decided to implement self-serve kiosks, machines where people can order their meal using a screen, in all its 14,000 U.S. locations. The QSR giant tested these machines in selected restaurants, and noticed that sales were consistently higher at the machines than at the manned tills. The reason? Apparently, people are more likely to supersize their portions when a (non-judgmental) machine, rather than a staff member, is taking the order.
2. Rushed lives
Today’s consumers lead busy lives, and have no time to waste. They are used to getting what they want (from information to communications to products) instantly, with a click. And when they shop in-store, they expect to do it at their own pace. They may wish to take their time picking out items – but once they are done, they want to speed through checkout, and be on their way. According to a survey by Box Technologies and Intel in the UK, 90% of shoppers actively avoid stores with long queues. 70% even said they might not go back to a store with long lines!
As self-checkout terminals tend to be more compact than traditional tills, shifting to this technology means retailers can replace one manned till with multiple self-checkouts. It’s a smart way to reduce lines without having to increase the retail space. “Even if shoppers can take longer to scan products than staff members, the retailers who have implemented this technology by LS Retail have been experiencing shorter lines, and seeing more transactions per hour per square meter,” says Hilmar Vilhjalmsson, Product Owner for the self-checkout systems at LS Retail.
3. Smaller hypermarket baskets
Remember the days of the big Saturday shopping trip with the family? Forget them. They are gone. Across the globe, consumers drop by at the supermarket multiple times per week, and buy just a few items at a time. According to global research done by Dunnhumby, today more than 60% of hypermarket baskets contain six or fewer items. The tendency is visible across the globe: small basket visits in hypermarkets are predicted to increase 3% year over year in Asia, 7.5% in Europe, and 11% in Latin America.
Smaller baskets are ideal for self-checkout machines, as these have been shown to deliver the highest time savings when baskets of 10 items or less.
4. Increasing cost of labor
According to Wells Fargo, the three industries that are most affected by rising labor costs are healthcare, finance, and retail. To maintain a healthy revenue without increasing prices – which is not advisable in the era of Amazon – alternative solutions are needed. That’s where self-checkout machines come in. In a traditional setup, you need one employee per till, but with self-serve machines, one staff member can monitor several tills at once. That’s not all. With manned checkouts, one staff member must be at or by the till even if there are no customers – waiting, in case someone shows up. With self-checkouts in place, there’s no need to waste your employees’ time. He or she can use the off-peak hours to receive products, restock the shelves, or advise customers. And if anyone needs to check out quickly, the machine is always active.
If self-serve machines fit so well with today’s consumer and market trends, why has their uptake been so slow?
In the past few years, many retailers have expressed misgivings on self-service technology. Some of the most common concerns include:
- High cost of hardware.
- High cost and low usability of software.
- Shrinkage control. Different factors, from scanning the wrong product, to missing an item, to intentional theft, can lead to lost inventory. It has been argued (although inconclusively) that shrinkage is more frequent in self-checkout lanes.
- Concerns over user acceptance. Some retailers worry that their customers won’t want to use machines, because they are too complicated, or simply because they’d rather have an employee serve them and take care of their needs.
Although these have, indeed, been challenges in the past, those times are now behind us.
1. Slashed hardware costs
Until a few years ago, self-checkout required special hardware, which meant a high upfront investment. Today, this cost can easily be minimized. For example, one of the most expensive pieces of the hardware is the cash-handling part. The question is, do you need to implement self-checkout machines that also accept cash? Ten years ago, six out of ten transactions were cash. Today it’s three in ten, and the number is still decreasing, Forbes reports. A self-checkout till that only accepts card payments, paired with manned tills that take all sorts of payments, can be a cost-effective solution.
If you don’t sell grocery, and therefore don’t need scales at the till, you have even more options for saving on hardware. For example, some IKEA stores in the Nordic and Baltic countries set up effective, low-cost self-checkout registers using a standard computer screen, a barcode scanner and a receipt printer, and IKEA furniture. That’s all! No special hardware – and actually, no special software, which takes us to our next point.
2. No extra software expenses (if you select the right system)
The checkout system used in these IKEA stores doesn’t have a specific interface. As a matter of fact, it is not designed for self-service. The customers check out using the same POS system that cashiers use at the manned tills – LS Central. The best part? This option has proved very popular with shoppers. Which goes to show that if you select the right POS solution – one which is so easy to use, you don’t need any training at all – you can get more benefits out of it than you might expect.
3. Managing the risk of shrinkage
There is a lot of discussion on the risk of customers cheating or stealing at self-checkout machines. Despite all the talk, it’s not yet clear if, and how much, self-checkout affects rates of shrinkage. After all, employee theft is also a factor to consider. For concerned retailers, what matters is that you can take preemptive steps to minimize the risk of fraud.
Some of the best practices include:
- Having a staff member control the self-checkout stations
- Using a camera to monitor the area
- Using scales, which check the weight of the purchase against the expected weight, in combination with an intelligent camera system that can recognize the items being scanned. This kind of system will, for example, detect if a shopper is trying to pass an avocado for an onion, or a PlayStation 4 for a watermelon (this actually happened in France recently. The guy was caught.) If the scanner can’t match the image to the barcode or selected item, the system will alert a staff member.
This technology is great not only to prevent fraud: retailers can also use it to help shoppers find the right item quickly, as the software can for example suggest possible matches in case of non-barcoded items like fruits and vegetables.
4. Users are ready
Today’s customers are not simply ready. They are asking for these options. In the recent report “Store of the future” by electronics provider Phononic, 89% of respondents said that it was important for grocery stores to use technology to make checkout faster. A surprising 79% predicted that, within five years, supermarkets will be mainly self-checkout. And if you have customers who still like to be served, why not give them the option to choose? Self-checkout technology can easily be implemented alongside your existing one, as an extra service. That’s what Kronan, a supermarket chain in Iceland, has been doing – with great success, and high levels of satisfaction among both customers and staff members.
Giving control back to the consumer
Perhaps the most important feature of self-checkout is that it gives consumers a feeling of control.
Customers can check out their purchases at their own pace. And even if this doesn’t mean they will do it quicker than a cashier would, the feeling of saving time can be enough to make customers happier.
Ultimately, what really matters to modern consumers is having the option to shop, pay, queue, leave, how, when and as they prefer. According to research by RIS, today, the most successful stores are those that manage to strike a balance between full-service functions and self-service options. You may think this is not what your customers want – but why not let them choose?
If you would like to implement self-service technology in your store with LS Central, contact us. Our experts will be happy to discuss the multiple options for setup and architecture the system offers.