Future of Automated Checkout Systems

Tune in to the Ripple effffect podcast from the Wharton School. Discover insights from top professors that can create ripples of change in your career and life. Don't miss out. Start listening now. For simplified solutions to save energy and money, check out the PSENG Pcriptive P program. We offer businesses, rebates and interest free repayment options to help maximize energy efficiency in your facility. Visit psEG d. com slash smart ennergy to see how your business can save A few weeks ago, at a grocery store in New Jersey Christopher Andrews reached a breaking point I was shopping at my local supermarket and I was pushing the cart and I had probably thirty to forty items and when I got to the checkout lane I saw several staff and associates and they were standing around And I ask, you know Is this slain open? And they said, no. but self checkouts open. And I looked at my watch. It was nine PM I was tired. I was ready to go home and I thought, I'm not going to spend the next twenty minutes, thirty minutes. doing this after working all day I just walked down to the store If've been in a supermarket in the past decade, you've encountered a self checkout machine The technology comes with a promise. Instead of waiting in a long line operated by a human cashier, You can control your own destiny by scanning, bagging, and paying for things yourself In its ideal form Faster and more convenient than sending your purchases down a conveyor belt to a supermarket employee. Is it really a good deal for shoppers It's essentially transferring what were pay tasks that cashiers do ono unpaid customers. I think a lot of shoppers are left asking you know what's in this for me? Forree Economics Radio Netork. This is the economics of everyday thingsings. I'm Zachary Crockett Today, self checkout. There was a time when customers weren't allowed to do any work at a grocery store If you went shopping at the turn of the twentieth century You'd hand over your grocery list to a clerk. They'd collect everything for you Put it in a bag and tally up your bill That system changed with a store called Piggly Wiggly So piggly, wiggly which was founded by Clarence Saunders in nineteen sixteen, was really the first self service grocery store Again, that's Christopher Andrews In addition to being a disgruntled shopper, He's a sociology professor at Drew University who studies how technology affects the workforce He's also the author of a book titled The Overworked Consumer, which explores the history of self service. Pickly Wiggly's innov was to allow customers to go through the store gathering items from the aisle, which ultimately cut the labor costs and in turn let the store customers lower prices. So At the time, this was really a revolutionary change Self service became the norm in grocery retail The final step of the process, though The check out still required human assistance from a cashier Saunders wanted to change that. He had this dream of a giant robot store. And so he experimented with a store they called Kiddoole or Ky Doz all. And it was essentially a store comprised wholly of vending machines The idea being that we would come in and there would be practically zero staff and were dramatically cut down in the overhead The venture ended up being ahead of its time and it failed But it got retailers thinking about a more automated future. That future arrived in nineteen eighty six when a company called Check Robot introduced the first automatic checkout machine at a Kroger outside of Atlanta For the first time, shoppers could scan their own groceries. A machine would read the barcode and announce the price in a digitized voice The invention was hailed by one newspaper as a revolution in the supermarket onene that would make shopping more efficient for consumers and reduce labor costs for stores. But it took a while for the idea to catch on It was really the two thousands. when it began to take off in significant numbers, This was in the months leading up to the Great Recession. And so businesses saw it st checkout lanes possibly a way to cut costs so they could compete with the Walmarts and the targets. Today, self checkouts are used by ninety six percent of major grocery chains And they account for nearly four out of every ten lanes. For retailers, the machines don't come cheap A four lane setup runs around one hundred twenty five thousand dollars And a large grocery store usually has at least two or three of them Installation, maintenance, and software add tens of thousands of dollars to that cost There's a whole economy of people who help implement these systems. My name is Sarah Alloy. I'm the experperienence retail lead for North America at Publlica Spient. Publicist sapient is a digital consultancy They help businesses, including major grocery chains, find solutions to problems using technology you know, they either love or hate a self check out We like to work with our retailers to kind of take a step back and actually think about how customers want to use somethingomething like a self checkout in the general flow of the store They want to help customers get out of the store, frankly, through checkout as fast as possible. After helping a retailer install self checkout lanes, Publicist sapient will track a bunch of metrics to see if they're serving their intended purpose The type of data we would check would just be time and store, time through checkout. we would look at, you know when you start the checkout to when you would finish couldould you scan an item? What kind of errors might you encounter along the way Do you need help from a human? And what does that data say is self check out actually more efficient than regular checkout It doesn't necessarily create an affordance every time. It's kind of up to is the customer capable of scanning something faster than a traditional employee would be able to do? Andrews says self checkout lanes often create the illusion of efficiency Soft checkout lanes are like a fun house create a time warp effect because We're so busy when we're doing things timeime seems to move more quickly In most cases, we are not, in fact, faster than trained employees. cashers have a lot of informal knowledge about where the barcodes are placed on Tens of thousands of different product packagings. They have memorized all of the codes for the various different forms of produce and fruit and vegetables. Wh we might think of it as a very unskilled job There's actually a lot more to it. and That's why cashiers are often faster than we are in the checkout lane. One thing that might slow us down is the dreaded performance anxiety of self checkout When you're in there, you can feel the clock ticking You can see the eyes of the person behind you When we're bagging our groceries, I think there's this very keen sense that, you know every second we're taking to finish our transaction Somebody is waiting for us and so there is this social pressure to you know, hurry up, hurry up, figure out where the barcode hits O problem isn't just our own incompetence. One consumer survey suggested that nearly seven out of ten shoppers have experienced an error or technological issue in a self checkout lane At some point, everyone has faced an unexpected item in the bagging area message Even less welcome Please wait, Help is on the way All of these problems are made worse by the fact that self checkout is often our only option For shoppers with just literally a handful of items Checkout lanes are great. there a solution to having to wait in those long lines The problem is that because of stores, employment practices We often see more and more people in a sense, forced to use self checkout lanes because there's onene or maybe not even any human operated cashiers open. Why are supermarkets replacing friendly, efficient cashiers with expensive and error prone machines You might think it's to reduce labor costs That's true. Theory In an abstract sense, if you replace six cashiers with six self checkouts and one staff left to assist customers Cut your labor costs at the checkout by roughly eighty percent Reality is a little different After Albertson's installed self checkouts in its stores, its average employee count went up. From one hundred and eighteen workers per store to one hundred and twenty eight The same thing happened at Kroger and Target This is partly because many grocery stores are unionized A displaced cashier who has strong employment protections might just be assigned to another role in the store Self checkouts also often call for additional jobs, Chief among them, security officers Because as it turns out When shoppers are in charge of the scanning They take some liberties Lifting is significantly higher through self checkout lanes. They literally turn us into a nation of shoplifters That's coming up Discover actionable insights with the Ripple Eect podcast. 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Seriously I will look it And we trust you to make smart decisions After all, you listen to this show. see terms at disiscover. com slash credit card Phil Lempert is a journalist and retail analyst, who's been covering grocery trends for more than thirty years He runs a website called Supermarket Guru And for years, he's been predicting the downfall of self checkout lanes There's probably, in my opinion, you know, a good thirty, thirty five reasons to get rid of self checkout Biggest reason, he says is self checkout theft Known in the industry as shrinkage retailers around the country are seeing their bottom line being affected. We're talking about a huge problem. When I talk to the CEO's of supermarkets, it's number one on their list. The shrink factor as more people have gravitated towards self checkout is now four to five times what it was pre pandemic. A lot of people can fool that checkout Various studies have found that theft is far more likely to occur at a self checkout than at a checkout run by a cashier One in seven shoppers admit they have intentionally stolen something at a self checkout which works out to around ten billion dollars worth of goods each year in the US alone Christopher Andrews, the sociologist says that shoppers employ various techniques to dupe the machines One way that's been popularly referred to as the banana trick is by entering a more expensive produce item as something like an apple or a banana In one store I went to, they told me about an incident in which They went to the back of the store and they had Lots more apples. done the system said they should have had And meanwhile, they were missing several of these cases of seafood And what had happened is that because nobody was staffing the self checkout lane, peopleeople were going through entering these cases of King crab legs from frozen lobsters as cheap produce items But not all self checkout theft is intentional. Technology also leads to lots of accidental shoplifting There's different categories of shoplifting. ranging from organized retail theft rings to what they call walk offffs people who walk off with items because they become frustrated I've experienced things you forget to scan They call a bottom of basket or bottom of the cart If you forget to bring that up and scan it and you walk out Tchnically, you've just shoplifted. Wow, okay. Do we note it I don't think we ever really had that discussion about, you what are the legal implications of using self checkout lines If you make a mistake, you could be charged Lempert says there's precedent for this There was a woman at a Walmart store who checked out, I think it was about twelve or fifteen products and she forgot to scan a candy bar and she was then pulled into the back room by security. and threatened to go to jail. for not scanning, you know, a candy bar. Retailers have experimented with various solutions to the theft problem Security guards, surveillance cameras, scales that can sense when the weight of a product is off That won't open until you scan your receipt But customers sometimes bristle at the security measures Consumers are really getting a feeling that the supermarket doesn't trust them at self checkout. And the truth is the supermarket doesn't trust them at self checkout, but you know, it's very off putting When you think about going into a grocery store, which is supposed to be a community place where you have a great experience with all these great colors and aromas in the produce department and so on. and then you go to leave and there's this big Burley security agent Coming over to you for the self checkout And customers aren't just frustrated about being policed They're tired of doing labor for the store. I hear from a lot of consumers that they're saying, you know, if I have to do my own checkout, if I have to do my own bagggging, give me a discount and give me some benefit for doing it. Last year, a bill in Rhode Island proposed giving customers a ten percent discount for using this self checkout to buy ten or more items In twenty nineteen, Oregon attempted to pass a measure that limited grocery stores to just two self checkout lanes Both of these efforts failed Some stores have decided that self checkout isn't worth all of this backlash Last year, the UK based grocery chain booths removed self checkouts from twenty six of their twenty eight locations citing a return to human centered customer service In the US, Dollar General, Walmart, and Shopwright have also pulled back on aggressive self checkout expansion in certain markets Other retailers have never dabbled in self checkouts and have instead leaned into their human cashiers as sort of a boutique offering in the digital age. Here in Los Angeles, there's a chain called Airwan It makes Whole Foods look like a discount store with their pricing and with their offerings. The driving force is having a great customer experience. You know, they wouldn't put in a self checkout for any amount of money The Dutch grocery chain jumbo. has so called slow lanes, where human cashiers intentionally take more time to chat with customers There may be a business case for decisions like this. A recent study found that checkouts with human cashiers lead to more customer loyalty than self checkouts The fact that we're seeing major retailers experimenting with getting rid of self checkouts. says to me that if I was in the self checkout manufacturing business, I'd be worried There have been efforts to make self checkout radically easier for customers Amazon spent several years experimenting with a process it called just walk out At brick and mortar stores, cameras and scanners detected when a product was picked off the shelf, and customers were automatically billed when they walked out of the store Earlier this year, the company gave up on J Walk O and shifted its focus to smart carts that allow you to ring up items as you shop. There are also changes on the horizon for how products are scanned GS one, the organization that maintains standards for barcodes has proposed a new product identifier that looks more like a QR code It's going to be able to tell where the product was made, when it was made, any food safety recall information. I mean, it's just going to have a plethora of data. And you know what those self scanners that are there today, some of which have been there ten, fifteen, twenty years. They can't read this new barcode. And I think you're going to see a major push for people to use their mobile devices to scan those codes to be able to check out to take the money right from our bank account or our credit card and deliver it instantaneously to that retailer Christopher Andrews says that even if self checkout technology is changing One thing is here to stay. The exploitation of consumers unpaid labor