Strategies for Retail Excellence: Self-Checkout Optimization, Shrinkage Solutions, and Embracing Technology

Self-checkout has become a hot topic in the retail landscape. While it has offered convenience and empowerment to customers, it has also presented opportunities and challenges for store owners. In recent weeks, retailers have started to make decisions about the future of self-checkout in their stores. Dollar General and Kroger have removed self-checkout from some stores after having to deal with shrink and trying to better the customer experience. Amazon.com also announced it's removing Just Walk Out technology from its Fresh stores and is pivoting to a different format — shopping carts with built-in checkout screens and scanners.

It's clear the technology may not be suitable for all locations and customers, so the question arises: How can retailers optimize self-checkout, combat shrinkage, and embrace evolving technologies to stay competitive?

Understanding Customer Behavior

Consumer preferences play a major role in self-checkout. While some customers appreciate the speed and convenience of self-checkout kiosks (according to one survey, 43 percent of shoppers want to handle transactions independently), others want the human interaction that comes with manned checkout lanes. For example, for older shoppers, scanning and weighing items can feel cumbersome and out of reach; using a regular checkout solves for this.

However, retailers must be aware. Fifteen percent of shoppers have admitted to past incidents of theft and 44 percent of self-checkout thieves said they would do it again. These statistics can be frightening for retailers, and underscores the importance of tailoring self-checkout processes to meet diverse customer needs while addressing security concerns.

Implementing technology such as a point-of-sale (POS) system allows retailers the opportunity to ask about customer preferences through brief surveys and use that feedback to ensure they're offering a user-friendly experience for all.

Combatting Theft and Shrinkage Challenges

Self-checkout theft has contributed to losses totaling 3.5 percent of sales — 16x higher than the loss observed in regular checkout lanes. The lack of monitoring at self-checkout kiosks further complicates the task of tracking theft and inventory loss, especially during busy periods. From customers forgetting to scan items to outright theft, self-checkout kiosks cost grocery stores millions each year.

Technology is critical in this context, with innovations such as weight sensors, surveillance systems, and artificial intelligence-driven insights contributing significantly to preventing theft and managing inventory.

Considerations for Retailers

A comprehensive POS system can enhance self-checkout security in various ways. By integrating this technology and video surveillance systems, retailers can monitor self-checkout transactions in real time.

Real-time inventory tracking also allows retailers to monitor items as they're scanned at self-checkout kiosks, enabling them to detect any discrepancies between inventory records and purchased items. Moreover, analyzing transaction data analysis and video footage helps uncover trends, patterns or anomalies indicative of theft.

Additionally, implementing role-based access control within the POS system limits employees' functionality based on their roles, preventing unauthorized actions such as price overrides or transaction voiding at self-checkout stations. This proactive approach reduces the risk of theft or fraud.

Unfortunately, people still find a way around these measures. So, what’s the solution? Retailers might consider scaling back self-checkout or enhancing security measures. Ultimately, you must carefully assess the trade-offs of self-checkout: Does its convenience outweigh the potential risks of shrinkage and theft in the long run?

The Future of Self-Checkout

A blended approach currently offers the most advantageous strategy. This entails maintaining a mix of traditional and self-checkout lanes, each contributing to an optimal shopping experience. A smooth and glitch-free experience is key.

Stores can reduce labor costs and address staffing shortages, while customers who prefer a contactless experience and wish to avoid lengthy queues can utilize self-checkout kiosks at their preferred pace.

While self-checkout remains a fixture in retail, its future remains uncertain as it's not universally applicable. As AI and machine learning continue to advance, self-checkout technology will evolve. It’s inevitable. However, the decision to implement or remove self-checkout kiosks hinges on retailers’ specific requirements and customer preferences.

Luke Henry is the vice president of IT retail at POS Nation, where he leads the development of innovative cloud-based point-of-sale solutions for small to medium-sized grocers.