It’s a well-known fact that shoppers hate waiting in line. In the USA, SACS Consulting estimates that as many as 90% of customers are prepared to use a Self-checkout (SCO) terminal just to save time. This is reflected in the fact that over the last decade, practically every major food retailer around the world has either installed, or is trialling, SCO terminals in supermarket, hypermarket, and even proximity, store formats.
RBR London estimated in late 2019 that there were already around 120.000 SCOs installed in EU food retail alone. In 2020 more than half the continent’s retailers expected to increase their installed base of this shopper centric checkout format as customers become more familiar and accepting of the technology.
Self-checkouts clearly represent significant benefits to retailers. Increased productivity and an improved customer experience with shorter waiting times driven by more, and cashless, payment terminals occupying less space are just a few of the advantages on offer. Near term projected growth in the number of SCO installations is estimated to have a 14% compound annual sales growth rate (CAGR) up until 2026.
How Common is Stock-Loss and Fraud at the SCO?
However, with opportunity, comes risk. The diminished presence of store staff and the transfer of process tasks and transactional responsibility to customers has also led to multiple forms of increased stock-loss in the form of honest mistakes caused by unfamiliarity with the checkout process, and actions of deliberate theft and fraud in the shape on non-scans, non-payment and flagrant walk-throughs or push-outs in the self-checkout zone…
Retailers openly admit that shrink has increased since the introduction of SCO terminals. Irrespective of whether this is due to “honest mistakes”, or deliberate theft, the end result is increased stock-loss.
An anonymous survey by Voucher Code Pro in the USA found 1 in 5 shoppers claimed that they regularly don’t pay for all their shopped items. In the EU, that figure jumps to 1 in 3 shoppers not paying for everything that they’ve taken to the SCO. Some will even rationalise to themselves that since they’re doing the work of a cashier, they deserve a perk, or two, for free.
One UK study estimates stock-loss at SCO to be around 4%, more than triple the figure for traditional staffed checkouts. Specialists in the sector point to stock-loss at the SCO having doubled in recent years, a situation that has been exacerbated in the last year by the COVID-19 pandemic that led to increased use of SCO terminals by customers keen to avoid proximity or contact with other shoppers.
Additionally, the Efficient Consumer Response (ECR) group released a study suggesting that shrink attributed to SCO terminal use can increase by as much as 10% for every 1% increase in their use.
Theft at the SCO is now so widespread that it even has its own terminology. For example; “skip scanning” in the form of passing products around the barcode scanner, (the “Pass Around”) or covering part or all of the barcode to avoid scanning, using a cheaper code for an item of similar weight (the “Banana Trick”), as in the now infamous case study of carrots at Coles in Australia, or the “Switcheroo”, replacing product barcodes with those of cheaper products. An older form of scan avoidance that has found a new lease of life is the “Cover-up”. Practised at staffed checkouts as well as SCOs, shoppers leave items under a bag or box in the cart, “forgetting” to pay for the item as they pass the checkout.
In the most flagrant instances, thieves will simply walk away from the SCO at the end of the transaction without paying, (the Walk-away) or push a cart or carry a bag of merchandise straight through the SCO area without any attempt at paying at all (the Push-Out), perhaps aided and abetted by a partner in crime carrying a barcode receipt for a token purchase that allows them to leave the area through the exit gate.
Crime and Punishment?
Shoppers and thieves alike are well aware of the lower staff density in supermarket SCO zones compared to traditional staffed checkouts.
They know that staff cannot be equally attentive to all customers, especially with one SCO zone host covering as many as 8 payment terminals.
As with much of technology, the law may be patchy and still have to catch up with the definition of theft at SCO terminal. In the USA, SCO fraud, if intent is proven, can result in a criminal conviction of up to a year. In the EU it isn’t so clear. The non-payment of some of a customer’s purchases in a bag or on a cart (even at a traditional staffed checkout) is rarely, if ever, treated as severely as suspected theft detected by an EAS system, with its associated alarms detecting electronic tags on items that have been deliberately hidden with intent to shoplift.
The low chance of detection by busy staff and the practical absence of potential punishment can make non-payment for at least part of a customer’s purchases all the more likely. Especially when they rationalise that they’re doing the work of an employee.
Avoiding Shrink, The Human Touch
The pressure to deliver more with fewer resources is ever present. Well trained, attentive and proactive SCO zone hosts are of course the first line of defence to avoid theft. The value of the greeter cannot be underestimated in its role as a theft deterrent. It’s well known in the sector that when potential thieves recognise that attentive staff are present, the risk of theft can fall exponentially.
Engaging SCO zone hosts can also assist frustrated customers in their dealings with the checkout process to improve both their customer experience, and that of other shoppers waiting in line.
Sustained staff engagement however, is difficult to maintain. Staff turnover and traffic at times of peak demand heavily influence the efficiency of even the best of SCO hosts to mitigate all the possible causes of loss.
Automated SCO Control?
The increase in stock-loss associated with SCO terminal use has been significant enough to drive a surge in interest from retailers for automated surveillance of the SCO process from scanning to bagging to payment.
The use of Data Analysis, Weight Scales, and CCTV monitoring have all been tried with varying degrees of success. More recently however, interest has increased around the benefits delivered by real time Video Analytics using Deep Learning AI algorithms to detect non-scans, non-payment, sweet-hearting, walk-throughs, push-outs, and even article recognition.
The continual automated learning and improvement process presented by AI Video Analytics offers retailers the first true opportunity to mitigate SCO zone losses by monitoring of 100% of transactions to detect any exception to expected shopper behaviour.
The brand agnostic nature of video analysis software, the ability to work with any of the major brand CCTV camera suppliers, and the capacity to be applied to any format of traditional or SCO terminal are added benefits that give retailers a wide degree of flexibility to mix and match suppliers, often without even having to change away from trusted solutions providers.
Transaction monitoring at the checkout often offers retailers the opportunity to experience the capabilities and benefits of a technology that can be applied to a wide variety of store operations.
And as with people, technology alone is not the answer. As good as Video Analytics are, they serve to leverage the productivity of staff in the SCO zone, not replace them entirely. Deep Learning AI applied to live CCTV video can enable staff to prioritise their actions and direct limited resources to where they’re most needed to ensure a satisfying customer experience, as well as mitigating loss in the most efficient manner possible.
Retail is experiencing a pace of evolution unlike any past time in history where the pressure to deliver more by working smarter, not harder, has never been higher. It’s clear that SCO terminals will continue to grow in use and acceptance. The benefits for retail are undeniable in terms of the gains in both productivity and customer satisfaction. Likewise the technology to definitively mitigate SCO stock-loss available today. What some consider science fiction is a commercial reality capable of delivering the gains that retailers seek. By combining both, retail will undoubtedly reap the expected benefits of the Self-checkout. The Author: Phil Nutter has over 20 years of global experience in Retail, Consumer Packaged Goods and Packaging Industries with Productivity and Loss Prevention solutions. By way of full disclosure he works with iRetailCheck, a specialist provider of Deep Learning Video Analytics provider of retail solutions specifically designed for traditional and Self-checkout process