Tag: self checkout

OM in the News: Ditching Self-Checkouts?

“Retailers Scale Back Self-Checkouts to Curb Irritation—and Theft” is The Wall Street Journal  (May 5, 2024) headline.  Self-checkout was introduced to reduce the cost needed to staff registers adequately, with companies such as CVS Health deploying them 20 years ago. With self-checkout, one worker can monitor and help shoppers at several registers.

Shoppers using self-checkout machines at a Kroger store in Louisville, Ky.

It seems that problems with technology are prompting companies including Target and Walmart to change operations or ditch the stations. Dollar General, Five Below, and grocery chain Schnucks, have limited how many items customers can bring to self-checkouts to avoid bottlenecks and alleviate headaches for staff. Walmart pulled self-checkout lanes from a handful of stores in recent months based on feedback from associates and customers.

While the primary intention is to improve customer service and checkout efficiency, companies expect some reduction of theft as well. Self-checkout accelerated during the pandemic, when human-to-human contact lessened. But self-checkouts have contributed to increased “shrink”—a Chapter 12 term used to describe losses from theft, lost inventory or damaged goods—because shoppers make mistakes or steal. Retailers, hesitant to spend more on staffing, are deciding if they prefer to reduce labor costs or combat shrink.

About a fifth of people who used self-checkouts said they accidentally took an item without paying for it, according to a survey of 2,000 shoppers last year. Some 15% of self-checkout users admitted to stealing an item on purpose. On social media, some users have posted videos of shoppers scanning a lower-price item instead of the higher-price item that should have been scanned.

“Shoplifting used to be mostly invisible,” said a trade group exec. “What we are seeing today are methods that are open and brazen.” Some Walmart stores are designating self-checkout lanes for Walmart+ customers, who pay a membership fee of $98 a year. Walmart added more self-checkouts to stores years ago but quickly found that they came with challenges including higher levels of theft and consumers’ fumbling with the technology. In response, it quietly disabled the weight sensors at self-checkout scanners because they triggered too many “wait for assistance” messages that annoyed shoppers and staff.

Classroom discussion questions:

  1. If theft is an issue, what can retailers do to minimize it?
  2. Do students prefer self-checkout? Why?

Video Tip: Self-Checkout Lines–Growing or Shrinking?

Is the honeymoon period with the self-checkout register officially over? What once was a convenient alternative, quickly became the only option in many retail stores, as it was sold as an efficient, cost cutting solution meant to move customers in and out of stores quickly.

No doubt the age of the self-checkout register, which began in the 1980’s but exploded in the 2000’s in supermarkets and convenience stores is here to stay. But now even some of the largest retailers are re-evaluating the actual use of them. This includes chains like Booths supermarkets in the United Kingdom as well as Walmart, Wegman’s, Five Below, and Costco in the U.S.

Coping with criticisms from annoyed customers is one key reason. Another one is theft by way of checking oneself out of the store. This is occurring, either directly or indirectly, as thieves know exactly how to use checkouts. For example, Costco had discovered that customers who were not members of the club were using membership cards that were not theirs to ring up their own purchases.

Costing large retailers and small retailers their profits is typically the trigger for stores to change their ways. In the case of the big box stores like Costco, they can absorb the “shrink,” known as the loss of inventory. They still have the bandwidth to figure out a better approach to utilizing self-checkout registers.

A study of stores in the U.S., Britain, and some other European countries, discovered that shops that offered self-checkout suffered a 4% loss, which is more than twice the rate in the retail industry. This type of loss is the reason Booth supermarkets announced “that it is going back to old-fashioned human beings to check people out,” according to CNN Business in this 2.5 minute video. It is also the reason Walmart removed these registers from some stores in New Mexico as well as modified the self-checkout lanes in other stores to accommodate more employee attendees.

Classroom discussion questions:

  1. What are the advantages and disadvantages of retail self-checkout?
  2. How does this differ from self-checkout in restaurants and hotels?

OM in the News: Retailers Make Big Bets on Tiny RFID Chips

A customer uses the RFID-based self checkout system at the Uniqlo store in New York

At all Uniqlo’s stores in the U.S. and Canada, shoppers can checkout simply by placing their goods in bins of automated stations. Unlike the self-checkout process at many stores, customers of the casual apparel retailer don’t need to scan individual items or look up prices on a screen—they can simply drop their items in a bin and pay.

This next-generation process is powered by radio frequency identification readers inside the checkout machines, which automatically read hidden RFID chips embedded in price tags. Uniqlo (Asia’s top clothing retailer) embeds these chips into their price tags—allowing it to track individual items from its factories to warehouses and inside stores. That data is critical for Uniqlo in improving the accuracy of inventory in stores, adjusting production based on demand, and getting more visibility into its supply chain, reports The Wall Street Journal (April 8, 2023).

Newer and cheaper RFID chips, reader hardware, and software are enabling retailers to implement the technology at lower cost and with more precision.  The cost of RFID tags has fallen from 60 cents a tag a few decades ago to 4 cents a tag, and reader hardware has improved in range and accuracy.

An article of clothing in the self-checkout system.

RFID has resulted in significant reduction in out-of-stock items on the Uniqlo sales floor, and has contributed to improving customer satisfaction. While the most common use for RFID is improving inventory management (a topic we address on page 496 in Chapter 12), the use of RFID at self-checkout machines is gaining traction as more apparel retailers explore ways to apply the technology once their merchandise has been tagged. Most apparel brands plan to implement RFID this year or next.

The unique benefit of an RFID-based checkout system is that it is faster and more accurate than barcode-based self-checkout machines. Many retailers still rely on printed bar codes, which require manual scanning and are more limited in the data they carry.  Since Uniqlo rolled out the machines, customers have reduced their wait time at checkout by 50%. Computer vision (see page 291 in Chapter 7), a form of artificial intelligence that analyzes images, is still too expensive for widespread use for self-checkout and inventory management.

Classroom discussion questions:

  1. How does RFID work? What are its strengths and limitations?
  2. Why is RFID implementation speeding up at retailers?

OM in the News: The Disappearing Supermarket Self Check-Out

Self checkout machines at supermarkets require a lot of human intervention
Self checkout machines at supermarkets require a lot of human intervention

Computers seem to be replacing humans across many industries, and successfully so in the service sectors such as bank and hotel lobby ATMs and airport kiosks, reports The Wall Street Journal (Oct. 6, 2013). But these tasks—along with more routine computerized skills like robotic assembly lines—share a common feature: they’re very narrow, specific, repeatable problems, ones that require little physical labor and not much cognitive flexibility. In supermarkets, self-checkout machines’ deficiencies illustrate the limits of computers’ abilities to mimic human skills.

The human supermarket checker is superior to the self-checkout machine in almost every way. The human is faster. The human has a more pleasing interface. The human doesn’t expect us to remember or look up codes for produce, she bags the groceries.

Self check-out works well enough when you want just a handful of items, when you don’t have much produce, when you aren’t loaded down with coupons. What’s so cognitively demanding about supermarket checkout? Checkout people all point to the same skill: identifying fruits and vegetables. Some supermarket produce is tagged with small stickers carrying product-lookup codes, but a lot isn’t. It’s the human checker’s job to tell the difference between green leaf lettuce and green bell peppers, and then to remember the proper code. “It took me about three or four weeks to get to the point where I wouldn’t have to look up most items that came by”, said one clerk.

National supermarket chain Jewel-Osco is getting rid of self-checkout lanes from some of its stores. The firm said it’s an effort to reconnect personally with all of its customers despite the higher costs the shift entails. Theft is also a concern driving some grocers away the unmanned check-outs, as are hassles such as liquor and other purchases that require an employee to step in. Self check-outs generally have one staff member assisting customers at 4-6 stations at once.

Classroom discussion questions:

1. Why are some stores eliminating self check-out?

2. Why is this an OM issue?