In this series, Steve Young will share his experience in the retail IT trenches as an early adopter of self-checkout solutions. Steve will provide insights on best practices for operationalizing the technology and the importance of finding the right balance between control and ease of use that leads to a successful implementation for both the retailer and the customer.
Gain insights about the Scan-Bag-Go mobile shopping applications implemented at both BJ’s and Stop & Shop under Steve’s leadership, including how the applications delivered incremental sales, reduced labor costs, increased loyalty/retention, and improved the retail customer experience.
Spend 10 minutes reading this post for inspiration and tips on a smooth transition to modern self-checkout.
Let me start with a single word: “EVERYTHING” when it comes to the customer’s memory of their in-store experience. Chain Store Age reported just last month (October) that self-checkout is the most-used retail technology, and shoppers want more of it — both in stores and in more stores: “No other area of the store has changed as dramatically as checkout, and the move to automation is supported by shoppers.”
I’d even bet in-store shoppers would align with eMarketer’s finding that 83% of online shoppers say a good checkout experience is the most important part of their in-store experience. A pretty big statement, but I suggest it would be a mistake to dismiss the relevance of in-store checkout as overstated. Today you could too often think of it as the anticlimactic ending of a store shopping experience. For most shoppers, the “thrill” of shopping is reveling in the way products are presented through artful merchandising and sorting through items to find exactly what you’d like through accurate inventory.
However, when shoppers are satisfied with their basket, the pleasure of the shopping and browsing experience can flip to dread as they approach checkout, praying for a speedy finish, so they can move on to enjoy their purchases instead of standing in line. If the ending of the in-store experience doesn’t live up to the expectation for speed and efficiency, the store visit and brand engagement quickly move from satisfaction to “maybe I’ll come back, maybe I won’t.” Loyalty is too precious of a commodity to risk with sub-standard checkout experiences.
In the case of convenience store shopping, the result of a negative checkout experience would likely translate to loss of a sale. Bluedot’s survey indicated 57% of consumers will leave and skip a purchase if there is a line. Even worse is the lingering effect of a brand not living up to its promise.
The market drivers behind the rise of self-checkout are clear:
A plethora of research reveals how shoppers feel about self-checkout as well:
There’s significant research about how real customers are using self-checkout. IBM reported its study (in collaboration with the National Retail Federation) that 58% of customers have used self-checkout tools. Raydiant reports that almost half of the shopping population will use self-checkout exclusively when it’s available. Another 30.6% use self-service checkout kiosks some of the time and would usually change their checkout habits based on the nature of the items they were purchasing, and the length of the cashier line. Only 3% of respondents said they don’t use a self-checkout ever, and they don’t want to.
Raydiant also found that around 59.8% of respondents would prefer to use a self-checkout service when completing a transaction in store, compared to 34.5% of respondents who would prefer a human assistant. The real kicker: 49.4% of respondents would be more likely to visit a store with a self-checkout option over one that did not offer this service. In today’s competitive landscape, you certainly don’t want to lose an important advantage.
A 2021 survey by Toshiba and PYMNTS found around 80% of shoppers are interested in a non-traditional checkout experience, 66% of whom said their top preference was self-checkout. Speed was one of the top reasons for choosing this transaction method, along with not having to wait in line. Customers with children are largely interested in non-traditional checkout methods. When asked how self-service checkout might be improved, around 49% of customers said they would like the opportunity to check the price of an item before purchasing it. Around 39% of customers said they would like an app to help them find items in store, and another 39% said they wanted access to discounts and coupons when shopping.
While SOTI found that around 73% of shoppers in their survey were already in favor of self-checkout options before the pandemic began, the pandemic prompted 87% of all customers to prefer shopping in stores using self-checkout and touchless options. Raydiant notes this change isn’t simply a fad; 34.1% of customers saying they expect a major increase in how often they use the technology, with many citing concerns about the spread of germs in the retail environment.
As good as the case is for adding a self-checkout option, there are some pitfalls that are easily avoided with advance planning and communication. The critical foundation element for success is to ensure that your self checkout program is unified across your organization. That means you have executive stakeholder representation from IT, Store Operations, Asset Protection and Store Planning during the planning, implementation, and post-implementation phases.
From there, where do you start on the program? Retailers should begin by leveraging their BI data to break down and create transaction profiles. You need to understand the percentage of transactions that are 12 items or less and what percentage of those transactions pay by cash versus other electronic payments. This information enables you to do some modeling to establish how many SCO lanes you will need and what percentage can be cash versus cashless.
Proper positioning is also an important consideration for maximizing customer utilization. Most grocery stores have 2 entrances and they are referred to as a “strong side” entrance and a “weak side” entrance. The strong side entrance is where the main flow of customers enter the store, usually into the produce department, and the weak side has less traffic entering and leaving the store. Grocery retailers have had the most success positioning their self-checkout lanes as first in line on the weak side of the store’s traffic flow because this is typically where the customer finishes their shopping trip. This same logic applies to any store format and retailers should ensure they spend time aligning self-checkout to their store layout plans and/or ensure their solution inherently features mobility and flexibility — a topic we will cover in more detail in future posts in this series.
Beyond technical logistics, retailers need to ensure they don’t forget the human side of self checkout. The Self-Checkout Attendant is an extremely important role for the overall success of your self checkout deployment so you want to select attendants that have the same qualities as your front-end supervisors. They serve as the store’s ambassadors to help customers when they have issues and monitor the operation of these lanes to reduce the risk of theft.
Research shows that customers use self checkout because they want to get in and get out quickly without interruption. If they have an issue, they expect a quick response from a friendly, knowledgeable attendant to resolve it. Although some interventions are necessary, for things like age verification, retailers should analyze intervention data to understand root cause and where opportunities exist to modify the experience in order to remove or reduce unnecessary interventions for improving the overall operation and customer shopping experience. An important note here is that flexibility in the software architecture is critical to empower retailers to continuously adjust the self-checkout experience based on customer feedback and data. As this series continues, I will cover how modern systems have changed these capabilities and how retail teams can now take ownership of the entire self-checkout experience by bringing headless point of sale solutions into their store tech stack.
While traditional self-checkout has been limited to smaller transaction sizes, Scan-Bag-Go technology caters to all transaction sizes. In looking at how they can take the self service experience even further, retailers need to consider several factors when assessing this retail store technology.
The power of Scan-Bag-Go technology is that it allows the retailer to have a one-to-one conversation with the customer as they shop. In my experience, leveraging personal targeted offers at the point of purchase significantly influences purchase decisions that drive incremental sales. When I first deployed this technology at Stop and Shop, we really thought this was going to be attractive to younger, tech savvy customers. But our Consumer Insights Team found it transcended across all customer segments. We learned that many older customers were on a fixed income and they embraced the technology because the running total allowed them to track their spending as they shopped and avoid the issue of having over-spent their budget when they got to the checkout.
Many retailers who have deployed Scan-Bag-Go solutions opt for the solution to run on consumers’ own mobile devices. Over the years, camera technology has improved dramatically, making barcode scanning much easier. Although it requires an additional capital investment and ongoing maintenance, there is a strong case to be made for the retailer supplying devices for customers to use. My experience showed that trial and adoption was 10-12% higher in the stores that supplied retailer-owned devices versus stores that offered only a consumer-owned option.
So what can go wrong? A majority of shoppers have had a self-checkout system fail—67% Raydiant reports—and that sour taste can impede future use. Around 25.1% of customers said they avoid self-checkout kiosks if they know the technology can malfunction. To minimize the potential for these issues, test, test, and test some more by having your associates use the service a few weeks before formal launch to uncover potential bugs, and continue to have them periodically use it to keep the deck stacked. Understanding that any tech can fail, have a plan in place to award customers loyalty points, discounts, or free items should they experience a technical glitch—a sweetener.
According to Shekel Brainweigh Ltd, around two-thirds of consumers now frequently use self-checkout machines as part of the shopping experience. Around 90% of consumers said they would like self-checkout machines to be more intelligent, with features like the capability to automatically identify items. Survey findings reveal around 80% of customers needed assistance at least once during the self-checkout experience. Additionally, 60% said they would be more likely to use self-checkout technology if improvements were made to the system.
Most consumers can probably relate to wishing a self-checkout kiosk knew they were buying bananas and how much a pound they were without the need to search through product lists. The same can be said for systems that can recognize complementary products that a customer might need to maximize their purchase and ensure they leave the store as satisfied and ready to enjoy their purchase as much as possible.
PSFK found that although consumers want more technology in the store environment to help with their checkout experience, they still want access to human assistance when necessary. This brings us back to the earlier point of needing to ensure that the right self-checkout attendant personnel will meet the diverse needs of your shoppers:
While Raydiant found the most common reason to avoid self-checkout was unreliable technology, 30.9% of customers also said they were extremely worried about the cleanliness of touchscreens. Another 36.4% felt somewhat concerned. Until contactless checkout options are available, the self-checkout attendant can help keep systems in top shape and wipe away these misgivings.
The numbers point to a preference for contactless self-checkout:
As you plan and execute your self-checkout program, ensure you are powered by a technology infrastructure that can support key initiatives like contactless to avoid creating a tech island and adding to legacy silos that limit the power and reach of your self-checkout strategy. If one thing is clear, the implementation and growth of self-checkout needs agility and flexibility at its core (The power of modern store and point-of- sale platforms will be covered in detail in upcoming posts.).
Retailers no doubt view shrink as the most critical concern when deploying self-checkout solutions. The self-checkout technology you choose must have the right level of security controls built in to protect the shrink line, especially for those retailers working on very thin profit margins.
With traditional self-checkout lanes, both weight verification and camera systems have been standard security components, but emerging AI solutions are offering additional protection against fraud. The human element is also critical to a successful self-checkout operation. As discussed earlier, your self-checkout attendant is key to this critical area as well. Selecting and training the right type of associate to staff these lanes goes beyond just customer service and is a key part of the operational aspect of protecting your investment and your brand. Also make sure you maintain the right level of attendant coverage. In my experience, the best practice calls for a minimum of one attendant for each 4-6 open lanes.
There has been much discussion recently on the value versus risk of Scan-Bag-Go technology solutions, with one major grocery retailer deciding to pull the technology from their stores as a result of increased theft. I have successfully deployed this technology at two major tier 1 retailers and we did so without increasing shrink. There was a tremendous amount of scrutiny and analytics done at both retailers over sustained periods of time to ensure that we did not expose the shrink line to theft.
Like I mentioned earlier, with any self-checkout solution, you need to have proper levels of control. With Scan-Bag-Go, it is even more critical. Random audits provided by most systems might seem sufficient from a statistical perspective, but for retailers with extremely low profit margins, this is not good enough.
Retailers must have the ability to validate users and turn off privileges for those with negative audit results. Retailers should consider building a trust factor for those customers that continue to have 100% audit results by auditing less frequently over the course of time versus more frequently for those who fail audits. Once a customer fails an audit, it should trigger audits on their next 2-3 shopping trips. If they continue to have negative audit results, their privilege to use the system should be revoked.
In addition to random audits, there are transaction-related activities or inactivities that should trigger an audit. Some things to consider:
Most people are honest, so make the checkout and audit process fast and easy for both customer and store attendant. Provide the attendant with a mobile device they can use to scan the barcode at the paystation or the customer’s receipt for a minimum of 5 items to verify they were accurately added and paid for. Once again, the power and agility of your technology infrastructure should not be overlooked as you plan and execute a sustainable self checkout experience.
With a broader perspective on the benefits and potential of a well-executed self-checkout strategy, consider Sensormatic Solutions’ third annual “U.S. Holiday Consumer Sentiment Survey” in which more than three-quarters (78%) of respondents cited price as one of the top three reasons they might choose to shop in-store this year. This continues to show the importance of having a modern and streamlined store experience. Other top responses that are bringing customers back into stores include:
How are retailers responding to these trends? RIS News’ recently published study findings on the grocery industry echoed the shift in customer behaviors outlined above.
Grocery has been an innovator of the self-service experience and these trends of where their next investments will go continue to signal that self-service technology is ultimately becoming a must-have offering for nearly all in-store experiences. Subscribe here to get our next post in this series delivered to your in-box, where I dive into the technology architecture that’s driving modern self-checkout options, how it relates to overall point-of-sale strategy, and how to gain the technical agility and control to decide exactly what your self-service experience should look and feel like for your customers. Learn how the right self-service technology creates a unique store experience that makes your brand shine and maximize ROI by empowering your customers.