Now Is Not the Time to Retreat from Self-Checkout (SCO)
I know that you’re trying to protect your interests, but pushing customers toward staffed checkout lanes could push them away. So, let’s talk about ways to stop SCO-related shrink.
We all knew that it was going to feel a little scary to your team when you first opened self-checkout (SCO) lanes to your customers. We also knew it was going to take a lot of trust – and verification – that customers were doing the right thing. That’s why you have spent an exorbitant amount of time developing, investing in, and refining loss detection and loss prevention policies, tools and tactics, which I think we can all agree have worked very well for many years. You’ve had to make adjustments, sure. But the overall effort to mitigate point-of-sale (POS)-related losses, especially at SCO, has been successful.
That said…I appreciate that a rise in SCO-related losses may have you wondering if it’s time to reconsider your SCO strategy. I’m sure you or someone in your organization is asking, “Should we reduce the number of SCO lanes, or even continue to offer SCO options, given the losses occurring there?”
I’ve seen the most recent numbers. I know the rising losses you’re reporting in your stores right now, many of which are being attributed to SCO or the POS in general. I’ve heard stories from associates and shoppers about how easy it is to walk out without paying or to swap lower-priced items in for more expensive ones at SCO. I’ve seen the videos on social media where people are coaching others on product switching at SCO. I’ve sat down with retailers like you and observed shoppers – and SCO transactions – to understand how else losses seem to be occurring so that we can figure out how to further adjust those loss detection and loss prevention strategies. And I know, in many cases, we’ve realized losses are stemming from innocent mistakes shoppers make. A mis-scan, for example, or a forgotten scan. Of course, intentional theft and fraud attempts at SCO are on the rise, whether driven by organized retail crime (ORC) or individuals.
But I’m a firm believer that there is always a way to strengthen your defenses and, in this case, to combat the losses. You don’t have to retreat to save yourself. In fact, retreating from SCO (as I know some retailers may be talking about) could lead to losses in other ways.
Year after year, shoppers all around the world have made it crystal clear: they prefer retailers who offer SCO options. Three-quarters of consumers surveyed in Zebra’s 16th Annual Global Shopper Study said “self-checkouts improve the customer experience.” Seven in 10 said they prefer to be able to check out anywhere in the store. This is something they care about! In fact, they care about it so much that 58% of shoppers say they are concerned right now by the lack of SCO options provided by retailers. Last year, only 53% of shoppers felt this way.
So, even though you may be able to reduce some of the losses occurring from SCO theft, fraud and mis-scans by driving customers to traditional checkout lanes and creating a control point, you may inadvertently create a choke point that will deter your most loyal “green” shoppers along with your red shoppers. If your green shoppers know they can’t go through SCO to pay, they may not come in your store at all – or they may abandon their basket if they have to wait too long to pay with a cashier.
So, from my perspective, if you have a growing number of customers worried that retailers aren’t investing in self-checkout – that it will degrade their in-store experience – then you should be just as worried about what happens if you remove SCO options as you are about adding more SCO options.
If you have already spent money on mobile computers, scanners, software, cameras and other SCO-enabling technology – or on reconfiguring your store layouts to accommodate SCO lanes or personal shopping solution (PSS) displays – why risk the losses you might experience by ripping that all out? Why do something that you know is going to upset customers, and perhaps your most loyal customers? Why retreat before at least trying to figure out why and how the current SCO experience is contributing to shrink and consulting with someone about potential solutions?
If there’s a door open somewhere that’s allowing theft, fraud or innocent mis-scans (or missed scans) to increasingly creep into your environment, let’s figure out how you can shut it and lock it so that you can feel comfortable in your decision to keep offering SCO options.
I’m confident that with all the unique physical and digital solutions that retail-focused tech companies are coming up with today, there is likely a way to strengthen your defenses and mitigate nearly every shrink risk currently lingering at the SCO so that you don’t have to retreat on SCO and your customers don’t feel compelled to retreat to retailers who do offer SCO.
Now, I know your vulnerabilities will likely be a bit different from your competitors, and grocers will experience different threats than convenience stores or sporting goods retailers, for example. However, there are some commonalities in SCO-related shrink that retailers across the board are reporting, so let’s talk about those. More specifically, I want to call out a few things you should consider changing so you can go on the offensive against fraud, theft, mis-scans, and even the most innocent mistakes shoppers make that cut into your profits, such as missed scans.
Threat: Product swapping
Countermeasure: Cameras – or some sort of computer vision system. It’s possible that a scan-and-go/PSS shopper will attempt to scan a cheap battery or generic toothpaste and then put a premium brand version in their bag. They may not think they will get caught since they have batteries or toothpaste on their receipt and in their bag. However, a computer vision system can check branding and compare the visual against the data point on the receipt. The same is true with the smart cameras built into SCO kiosks and scanners. A shopper may approach with two tubes of toothpaste or two packs of batteries, scan the cheaper one, and only bag the more expensive one. They may just leave the cheaper item there or actually hand it to the associate working SCO that they don’t want the less expensive item after all. Either way, an overhead camera can catch that the item they ultimately put in the bag (the more expensive one) doesn’t match the one scanned in front of the SCO scanner’s camera (the less expensive one). Or if the shopper types in the PLU for conventional bananas but the camera sees the tag and realizes they’re organic, that can be flagged. But you need to make sure your SCO scanners have cameras with these visual item recognition capabilities built in.
Threat: Incorrect SKU input (i.e., typing in the SKU or selecting the option for conventional produce when they have organic items)
Countermeasure: Cameras, cameras, cameras. Built into the scanners, I mean. If a vision system sees that the item sitting in front of it doesn’t match with the item the shopper is claiming they have in their cart, the system can flag it to them or call over an associate to help the customer identify the right SKU.
Threat: Incorrect weight
Countermeasure: Many grocers are requiring that SCO shoppers place items in a bagging area that checks item weight after each scan, with the exception of heavy or bulky items such as a 24-pack of bottled water. This may be the best way to confirm that the bagged item weight matches the scanned item weight. I know some retailers allow shoppers to bypass this step and say they’re leaving items in their carts. So, if you’re one of them, you should have the transaction flagged to associates before the customer pays so they can do a quick comparison of the items in the shopper’s cart and the items listed in their scanned item list.
Threat: Incorrect quantities
Countermeasure: Scales can once again help with this. So can vision systems or, depending on the item, RFID tags. There’s a great discussion on how RFID can help detect losses on almost every good sold today here.
Threat: Missed scans (whether accidental or intentional)
Countermeasure: Many grocers require shoppers to place items on a shelf or in a bagging area that calculates weight. This can certainly help if a customer places an item in their bag that they believe they properly scanned but didn’t. However, I know there are ways to bypass this weight confirmation. So, this is where RFID really comes in handy as it can flag to shoppers (and associates) when an unpaid item passes the reader at the exit. If you can’t or don’t want to put RFID tags on some items, vision systems can work in a similar way as explained in this discussion.
Threat: Total bypass of the point of sale (POS)
Countermeasure: There are several ways to tackle this. Some of the least invasive would be to put RFID tags on items that would automatically be read at exit points. If they weren’t paid for, then an alarm could go off. Maybe staff would be dispatched or maybe the alarm would trigger a camera to take a picture of the person as they leave, or their license plate depending on your store’s layout and proximity to the parking lot. While it may not stop them from walking out, it would help you know who to watch out for next time and help law enforcement catch and prosecute thieves. The RFID tags would also help you track fraudulent return efforts, such as when someone comes back in to return a tagged item in the hopes of getting cash or store credit. The second that tag is read, your team will know it’s stolen merchandise and be able to alert authorities while the person is in the store.
You could also install gates like this one which use cameras to confirm a shopper has paid. If they have, the gate opens. If they haven’t, it stays closed until they pay. There is also a ton of advanced camera technology that uses computer vision to see what shoppers have in their carts and help facilitate proper scanning and payment. This halo camera is a good example.
Of course, if you offer a scan-and-go self-service option like a personal shopping solution (PSS) device, there are several ways you can confirm the customer scanned every item they put in their cart. You can have an associate do a cart-to-receipt comparison at the door. You could strategically place cameras, or use the location detection tech in the PSS device, to see their movements, capture the items they put in their cart and intelligently (via AI) match their cart items to their paid items via back-end data comparisons from the cameras and the POS software. Or you could compare the customer’s cart items using computer vision tech stationed throughout the store against their digital payment record to ensure they’re a match. (Hear more about how this might work in this Industrial Automation Insider podcast episode.)
Threat: Incorrectly priced items
Countermeasure: This isn’t necessarily just a SCO problem. It’s just as easy for a shopper to go through a staffed lane and pay a lower price on an item than you intended to charge. However, mislabeled items might go undetected more at SCO because there isn’t an associate there to say, “Why is the tag on this 15lb turkey priced at $3? It should be more like $23.” The shopper could legitimately scan the tag and pay for the item without doing anything wrong. The source of the shrink was really the meat department associate who mislabeled the turkey. However, you can’t do anything about it once the customer scans the tag and pays for the turkey. Now, if you wanted to be able to intervene in those situations, you could potentially use an AI tool that monitors each scan, compares the price to the “normal” price as denoted in the inventory system, and halt the transaction/flat an associate for help when an anomaly like this is detected. But even if an associate caught it, is it your store policy to raise the price to the correct level and risk losing the sale? Or would you just honor the label price and ensure that the meat department is more careful with labeling in the future? The choice is yours, but there are ways to catch these inaccuracies at the POS if you want. The technology exists.
Threat: Associate overrides on markdowns/price changes
Countermeasure: This could happen at any register: an associate trusting a shopper who says the shelf price was showing lower than it’s ringing up for. The best way to mitigate fraud in this sense is to have the associate request a shelf price check before making the manual change. If the shopper is right and the shelf price is lower, associates can honor it. If it’s not, then the associate can let the customer know and give them the choice to remove the item if they no longer want it.
The Biggest Threat of All: Thinking SCO Is Your Biggest Threat to Profitability
There are so many places beyond the POS where you’re taking losses, many of which may not even be on your radar yet. This is a real eye-opener:
I know the Loss Prevention Research Council could probably point out even more areas that you may not be paying enough attention to. So, the next time someone suggests it’s time to retreat from SCO, take the time to quantify your losses from all sources. See how SCO compares to other parts of your operation. Then consider the potential losses you’ll experience if you take away SCO options – the losses that will be spurred when customers who only pay via SCO take their business elsewhere or abandon their carts when they see long lines at staffed registers. Also factor in the losses you could prevent if you made just a few changes to how your SCO experience is designed, monitored and controlled from an internal perspective. Are you making it easy for people to walk out without paying for items, either accidentally or intentionally? Could you put more inventory tracking mechanisms and price accuracy controls in place to reduce those preventable losses?
My assumption is yes, because there are plenty of retailers around the world who see far more extensive use of their SCO offerings than you probably do and report far fewer losses.
If you’d like to learn more about how they’ve turned SCO into a point of differentiation versus a point of vulnerability, reach out and I can either share more about what they’re doing or connect you directly with them. I can also connect you with some of our partners who are coming up with some very cool technologies to help deter losses without creating the level of friction that will push green shoppers away. Contact me here when you’re ready.
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Matthew Guiste, Global Retail Technology Strategist, Zebra Technologies
Matthew is a veteran retail practitioner with more than two decades of experience across software, and hardware vendors, as well as working directly for retailers. He is passionate about combining strategy, design, and technology to transform retailers and create experiences that customers remember and care about.
Today Matthew is the Global Retail Technology Strategist for Zebra. Previously he spent 10 years at Starbucks and worked for Blue Yonder Software and AT&T Wireless. Matthew earned an MBA from the University of Washington.
