By Nikki Baird, Managing Partner
11/6/2007
Self-checkout (SCO) has had its ups and downs. From being praised to being vilified by retailers and consumers alike, it appears that our relationship with SCO is love-hate: you either love it or you hate it.
Love it or hate it, it’s here to stay. Not only is it increasing its penetration in grocery, it’s expanding beyond that traditional base to make headway in big box specialty (Fujitsu recently announced a deployment at Canadian Tire). Precursors to SCO are even finding their way into department stores with price checkers mounted throughout the stores and some major department store retailers reorganizing themselves with consolidated checkout stations closer to store entrances.
But the real tipping point for me came last week at Retalix’s user group conference. I attended a panel session headed by Jarrod Welch from Reasor's, an independent grocery chain centered around Tulsa, OK, and John Sweigart from Redner's, another independent out of Redding, PA. The reasoning that they – and other independent retailers in the audience – gave for their adoption of SCO was eye-opening. Redner’s is even on their second generation of SCO.
The rationale for these independents for investing in SCO is that many of their customers are already trained on using self-checkout, and so are coming to expect that SCO is part of the shopping experience – at least for groceries. To these retailers, SCO is a customer service play required to keep up with larger chain competitors. They view it as a customer service benefit, increasing the amount of choice a consumer has over how they go about buying their groceries. Both of the panelists said that they did not reduce labor when they implemented SCO, but reinvested labor dollars that SCO freed up into keeping more full service lanes open during high volume hours. Both also mentioned that the benefits came primarily from increasing the checkout capacity in the front of the store without taking away selling square feet.
The panelists shared their experience, emphasizing some lessons learned the hard way:
- Provide all of the same services at SCO that consumers are used to getting at full service registers. Reasor’s had not enabled cash back from debit transactions at SCO at the very beginning, thinking that SCO customers would not be heavy users of the option. They quickly realized this was not the case. Consumers expect all of the same services at SCO as at any other register.
- Pay close attention to spacing and placement. Both panelists emphasized this. There needs to be enough space within the “pod” of self-checkout stations so that carts can maneuver – not less than seven feet and more like eight. Also, environmental factors can play a role: Reasor’s, with their locations in “tornado alley” found that high winds impacted the function of the scales. For independent retailers, placement and spacing is particularly important because of the expense of installation. Reasor’s didn’t discover the issue with wind until after several stores had been installed – no small percentage of their total chain. While they could correct it in future installations, it’s a hard hit to have to go back in and fix the earlier installs.
- Take the time to educate your customers and employees. The panelists noted that it’s important to educate consumers – to use signage and lane lights to make sure that consumers understand that SCO is an option for them, and to help them understand that SCO is not a replacement for standard express lanes – that there will be no reduction in service options available to them at checkout. Employee buy-in is also important. Redner’s encountered employee resistance to SCO because employees thought that the implementation was targeting labor budget. Redner’s had to make sure employees understood that labor budget was not being cut – that SCO was being implemented to boost customer service and overall checkout capacity.
There were two other fascinating topics raised at the session. First, Redner’s security team had asked that the retailer keep only self-checkout lanes open between 12am and 6am. The reason? The cash handling required for SCO is minimal – only the till in the employee-facing section of the pod (and not in any of the payment stations) is at risk from theft. However, customers complained when only SCO was open, so the retailer compromised by keeping one full service lane open, along with the SCO lanes.
The second topic is around impulse items. IHL recently released a study showing that heavy use of SCO has a negative impact on the sales of impulse items because SCO doesn’t typically merchandise impulse items in those lanes. The panelists – and additional retailers in the audience – disputed that. One panelist had not seen an impact on impulse items one way or another, but hadn’t specifically looked for it. The other panelist had not seen a negative impact. A retailer in the audience commented that while it is true that SCO typically doesn’t contain impulse items – though some retailers have started adding impulse items in and around the SCO area – his company found that the loss could be made up by adding impulse items to other lanes. The retailer used to keep candy- and gum-free lanes available as a service to customers looking to avoid the temptation. With SCO automatically candy-free, this retailer was able to add impulse items back into the previously barren full service lanes – and offset the difference by increasing impulse item sales at the full service registers.
Self-checkout is increasingly a fact of life, but even through this year still has a reputation of a “new” technology. Independent grocers face the stiffest competition, the least amount of capital available for investment in technology solutions, and the least amount of risk tolerance for experimenting and testing new concepts. When these retailers speak of SCO not in terms of ROI, but in terms of staying competitive, it’s clear SCO has passed the tipping point.
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