Oct. 24, 2023 at 2:24 pm

Is self-checkout worth it? The pros and cons for retailers, shoppers

October 24, 2023no commentNo tags

Julie Domina loathes self-checkout.

The 50-year-old real estate agent says they glitch too often and worries the technology is making checkout more difficult for the elderly and visually impaired. And while she’s used to dealing with unmanned kiosks during trips to larger chains like Walmart and Albertsons, she’s disappointed to see them popping up at the local grocery store in her hometown of Newcastle, Wyoming, a town of just over 3,000.

“They just aggravate me,” Domina told USA TODAY, adding, “If I’m going to be checking myself out, I want to get a discount because that means you’re not paying an employee to check me out.”

Although opinions on self-checkout are mixed, many retailers are leaning into the technology. Some Kroger supermarkets are operating entirely via self-checkout. Kohl’s earlier this year announced plans to add self-checkout kiosks to 250 stores. And fast-fashion brands like Zara are rolling out self-checkouts at select stores.

But other chains appear to be reconsidering their approach, with certain stores removing the technology or staffing up self-checkout lanes to prevent theft. The shift comes amid reports that raise questions about just how much value self-checkouts bring to retailers and shoppers.

“Different industries have different responses from consumers (on self-service),” said Ron Larson, a visiting associate professor of economics at Luther College in Decorah, Iowa. He noted that it works great in certain areas like pumping gas, but “just because it works in one industry doesn’t mean that’s going to work in others.”

The shift to self-checkout

While self-checkout technology has been in supermarkets since the 1980s, usage surged during the pandemic, when retailers were struggling to hire and customers wanted less human interaction. The share of transactions through self-checkout lanes hit 30% in 2021, almost double that from 2018, according to data from the Food Industry Association.

The technology has been viewed as a way to lower labor costs and improve efficiency by taking up less space than manned checkout registers, according to Neil Saunders, managing director of the analytics company GlobalData. And while some shoppers despise the tech, others prefer it and believe it’s a faster alternative – even if there’s little data to support that.

Other customers “do not want to interact with a sales associate so they can have a hassle-free experience,” said Hanna Lee, assistant professor at the University of South Carolina’s Department of Retailing.

But there are also concerns.

Failures aren’t uncommon with the devices, despite their high price tags. And while self-checkout is meant to help cut down labor costs, this has yet to pan out in the data.

Albertsons, which started installing self-checkouts in nearly all stores in 2019 after giving up on self-checkout nearly eight years prior, had an employee-to-supermarket ratio of nearly 118-to-1 in 2019, according to figures in its annual report. By February 2023, that ratio had increased slightly to about 128 workers per store.

In 2012, as Kroger was adding more self-checkout devices in its new stores, the supermarket chain had a ratio of about 139 employees per store compared to 158 per store as of January. At Target, the ratio as of January was about 226 employees per store, compared with 190 per store in early 2016.

Albertsons and Kroger did not respond to requests for comment.

Federal data also shows that the number of cashiers in the country has remained largely unchanged over the last decade, although the Bureau of Labor Statistics expects a 10% decline by 2032.

“I think many companies believe they’ve saved their money with self-checkout, but it’s going to vary by store. And the stores that have tried to go all the way, I think they’ve realized that it’s not a good idea,” Larson said. “The key is to give people an option.”

Theft concerns around self-checkout

Self-checkout kiosks are also known to contribute to shrink – an industry term for missing inventory from theft, broken items, administrative errors and other factors.

Retailers have been sounding alarms on shrink recently, with a number of companies putting the blame on a spike in organized retail crime. Self-checkout isn’t often brought up as a concern, despite data that shows it can have an effect on shrink.

A 2018 report authored by Adrian Beck, emeritus professor at the University of Leicester’s Department of Criminology and academic advisor to the ECR Retail Loss Group, found that stores with the average number of self-checkout machines could expect to see shrinkage losses 31% higher than the industry average, and those relying on an above-average number of unmanned kiosks could see shrink rates 60% higher.

“Retail businesses, and their partners, need to rebalance their assessments of the benefits that can accrue from investing in (self-checkout-related) technologies,” the report reads.

While some losses may be from people using self-checkout to steal, others are from user errors by customers who weren’t trained to use the machines. Maybe the shopper didn’t notice that an item didn’t scan before bagging it, or keyed in the wrong item when weighing their produce.

“There’s a combination of mistakes and genuine fraud,” Saunders said, who believes self-checkouts are responsible for “some of the rise in theft. Certainly not all of it.”

Companies reconsider self-checkout strategies

Some companies seem to be reconsidering their self-checkout strategies.

Walmart has started removing self-checkout at select stores. Costco has started asking staff to crack down on checking membership cards in self-checkout lines, with Chief Financial Officer Richard Galanti in September noting that inventory shrink had increased by a couple of basis points “in part, we believe, due to the rollout of self-checkout.” And Target is testing self-checkout lanes limited to 10 items or fewer at select locations “in order to reduce wait times and better understand guest preferences,” according to spokesperson Brian Harper-Tibaldo.

Walmart and Costco did not respond to a request for comment.

This isn’t the first time companies have backtracked on self-checkout. Kmart removed self-checkout kiosks in 2003 due to machine costs and theft rates. Costco also removed self-checkout in 2013 and Albertsons announced plans to remove it in 2011 (although both companies have since reintroduced self-checkout).

Experts who spoke to USA TODAY said they expect to see more companies turn to self-checkout, but warned that retailers should be careful not to wipe out manned registers altogether.

“I think that the prevailing wisdom right now is to give consumers a choice,” Larson said. “The strengths that supermarkets have had in the past is they’ve been able to have some human interaction. I think they’re realizing they need to keep that, at least for customers who really appreciate that.”

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Is self-checkout worth it? The pros and cons for retailers, shoppers

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