Tag: self check-out

OM in the News: Self-Checkout Era May Be Ending As Major Retailers Shut It Down

 

 

For over a decade, self-checkout was the retail future, speed, convenience, and cost savings. However nine of the largest retailers in the world are kicking these systems to the curb in an unbelievable reversal, reports MSM.com (June 30, 2025).

The numbers are brutal. Theft at self-checkout can be up to 65% higher than at regular lanes, with shrinkage hitting 3.5% of sales compared to just 0.21% with human cashiers. One study found 15% of users admit to stealing at kiosks, and 44% say they’d do it again. That adds up to over $10 billion in losses for food retailers each year. It’s not just career criminals. With no one watching, people blur the lines, blaming tech errors or telling themselves it doesn’t hurt anyone. With self-checkout transactions 16 times more likely to involve theft, stores are realizing the convenience comes at a staggering cost

As retailers like Dollar General and Walmart scale back self-checkout, the industry seeks a new approach balancing efficiency with personalized service. Self-checkout may save on payroll, but it comes with theft, tech breakdowns, customer frustration, and weakened brand loyalty.

Dollar General has taken one of the boldest steps away from self-checkout. Last year, the chain yanked self-checkout from 12,000 of its 20,000+ stores, dropping its earlier push toward 100% self-service locations. Its CEO  blamed “shrink,” or inventory loss, calling self-checkout the company’s biggest obstacle. Remaining kiosks now cap purchases at five items.

Five Below quietly pulled self-checkout from its highest-risk stores, revealing a tough truth, automation doesn’t work everywhere. Returning to staffed lanes did more to curb theft than adding extra security. The data showed that some neighborhoods saw massive spikes in shoplifting when kiosks went unmanned. So the company tailored its checkout systems based on local risk.

Walmart is testing a new tactic: limiting self-checkout access to Walmart+ members in select stores. It’s a bold shift that makes automation feel more like a premium perk than a standard option. The move helps reduce theft by tying kiosk use to verified customer accounts.

Amazon’s grand vision for cashierless shopping hit a wall last year when it dropped “Just Walk Out” from its Fresh grocery stores. The tech, which was supposed to track purchases automatically, relied heavily on human reviewers, over 1,000 people in India checking transactions manually. Some 70% of purchases needing intervention.

Classroom discussion questions:

  1.  Do you think self-checkout is going to fade away?
  2. What technology is needed to improve the system of self-checkout?

 

Guest Post: Self-Service and OM

Professor Howard Weiss, who developed the Excel OM and POM decision support software that we provide free with our text, provides his monthly Guest Post.

For decades, one of the Garden State’s most distinctive features is a law that prohibits motorists from pumping their own gas. Indeed, New Jersey is the only state with such a ban.

The New Jersey legislature, in a surprisingly bi-partisan effort, is considering enacting a law that would allow gas station owners to offer self-service at the gas pumps. The first self-serve gas pump opened in 1964 in Denver Colorado but nearly 60 years later New Jersey remains the only state without self-service as an option. From the standpoint of operations management, implementing self-service is something that the legislature should have passed years ago. Chapter 7 in your Heizer/Render/Munson textbook points out the advantages of flexibility in the production process– but flexibility in the service process can be just as important.

Consider the advantages of some self-serve operations:

ATMs installed at a bank increase the number of servers in the bank’s queueing model by the number installed, which means that customer waiting times are reduced. Self-service also allows for 24-hour service and service on weekends rather than just 9 to 5 weekday service. In addition, using ATMs increases the location options for banks. Labor costs are reduced because self-service means companies are using unpaid servers, the customers, rather than paid servers.

In the 1990s, retail self-service checkout systems were developed and now many supermarkets and big box stores such as Walmart or Costco have replaced traditional waiting lines with self-service waiting lines and have been able to fit more self-service lines in the same space as was used for traditional lines. Again, there are significant labor cost savings since instead of having multiple clerks, only one needs to be present to handle customer problems with the scanning devices. In the 2000s, airlines began using self-service kiosks that have the same advantages as retail check self-service.

The concept of self-service is not new beginning with the invention of the vending machine. In the 1930’s Horn and Hardart restaurants had self-service food dispensers. Laundromats have always been self-service. An irritating example of self-service is the automated telephone system directing callers to the next person/level.

More recent examples of self-service are the web sites where one transacts business by ordering from a web site or making reservations. The most  modern example of self-service are the Amazon supermarkets without any checkouts.

Classroom discussion questions:

  1. What are some examples of self-service that you have used recently?
  2. What are the disadvantages self-service?

 

OM in the News: Wal-Mart Checks Out Mobile Checkout

How can operations management play a role in cost savings at Wal-Mart? Check out this quote from The Wall Street Journal (Sept.1-2, 2012): “The company says it spends $12 million per second on cashiers’ wages in the U.S.”  At $12 million per second, it is no wonder that Wal-Mart is testing a checkout system that allows shoppers to use their mobile phones to scan items as they walk through stores and pay at self-service kiosks, skipping the cashiers’ lines.

Called “Scan and Go,” the mobile-payment app is the latest attempt by the Wal-Mart OM group to reduce long checkout lines.  The system does not yet allow customers to pay with their mobile device, but is meant to make scanning easier for them. Wal-Mart also just announced plans to add more self-checkout lanes, as only 1,600 of the 4,500 Wal-Mart and Sam’s Club stores in the U.S. include this option.

Retailers have been using self-checkout for more than a decade to try to reduce labor costs and speed up transactions, but not all chains have been happy with their experiences. Companies like grocery chain Albertsons and housewares giant IKEA  are actually eliminating self-checkout, citing lost revenue, theft, and lack of interaction with customers. Many shoppers also complain the self-service systems are balky.

The scanning idea could serve as a loyalty program for Wal-Mart, which does not issue discount cards to customers in exchange for the ability to collect data on their shopping habits. Scanning will allow the firm to collect data on what customers buy and how long they spend in stores–and to send shoppers coupons for competitive products in real-time as they scan items. “If you scan peanut butter and immediately a $2-off coupon pops up to buy a competing brand, Wal-Mart can change customer’s behaviors right there in the aisle,” says an industry consultant.

Discussion questions:

1. What are the advantages of mobile scanning/checkout?

2. Why are self-checkouts not universal?