Early in 2024, Kroger ended its self-checkout-only experiment in Dallas. Other stores, like Target and Dollar General, have also adjusted their self-checkout procedures. According to a July 2024 report from NBC News, Five Below is eliminating self-checkout altogether in “high risk” locations. Certain retailers that embraced scan-and-go mobile app options—notably, during COVID—dialed back the service after the pandemic, pointing to an increase in theft as the reason for discontinuation.
The customer experience at the checkout is vital for enticing shoppers to return. Moving quickly through checkout lanes—along with accurate scanning, convenient payment options, and access to friendly and knowledgeable staff—all impact a customer’s decision to continue patronage.
According to a survey conducted by NCR Voyix Corporation, 43% of consumers prefer self-checkout when buying groceries in-store, and more than half of Gen Z and Millennials prefer self-checkout when shopping for groceries. The 2024 Digital Commerce Index also revealed that one-third of consumers prefer traditional checkout options because of the size of their basket. For them, it’s just easier to have a cashier do the work.
Pending legislation can also impact a retailer’s decision to go the route of self-checkout. A bill introduced in the California state legislature, SB-1446, would “prohibit a grocery retail store or a retail drug establishment… …from providing a self-service checkout option for customers unless specified conditions are satisfied, including having no more than two self-service checkout stations monitored by any one employee and requiring the employee to be relieved of all other duties.” If states were to enact such legislation, it begs the question: Would self-checkout still be worth it?
And yet, despite challenges, there are opportunities to be explored and ways to further enhance the customer experience while achieving the goals of the brand or retailer. Loyalty360 spoke with a selection of supplier members—experts with a deep commitment to helping brands elevate the customer experience—about how self-checkout options can increase loyalty program participation while addressing the challenges of theft and fraud.
Article contributors:
· Chris Barnett, VP of Strategic Consulting, Kobie
· Jasmin King, Manager, Strategic Services and Strategy, The Lacek Group
· Peter Vogel, CRO, vLoyalty
Benefits of Self-Checkout and Communicating Changes
Retailers must decide if self-checkout is a good fit for their stores, one that could potentially address core issues and challenges—like fraud. It can also bring additional benefits. Kobie’s Barnett notes that retailers are adopting self-checkout to reduce labor costs, improve the customer experience, boost efficiency, and remain competitive while also addressing theft risks as best they can.
Communicating any self-checkout information to customers as to who can use the option—i.e., loyalty program members versus non-members—is crucial. Barnett has observed in-store signage explaining changes and retailers leveraging digital channels to reach both non-loyalty and loyalty members.
“For instance, Target recently updated its self-checkout procedures and informed customers through loyalty member emails, app notifications, and clear in-store signage,” says Barnett.
Steps for Combating Theft and Minimizing Shrinkage
While some research suggests self-checkout could increase shrinkage, a combination of technology and good practices can minimize losses. Lacek’s King believes brands can combat shrinkage with technology like weight scales that detect unscanned items or artificial intelligence (AI) cameras that flag suspicious behavior. Additionally, having staff present, clear signage, and open store layouts can deter theft.
“To combat theft at self-checkouts, retailers should focus on employee training, customer education, strategic store layouts, random audits, and incentives for honest behavior,” adds Barnett. “Using tech like AI, machine learning (ML), computer vision, weight sensors, radio frequency identification (RFID), biometric verification, and self-checkout assistant apps can greatly boost security and efficiency.”
Loyalty Program Members Only
With some major retailers considering only allowing loyalty program members to use self-checkout, Loyalty360 asked the experts how the overall customer experience can be—at a minimum—maintained while engaging program members with the benefit. In other words, what can brands do to ensure customers feel valued, and what should they avoid?
For King, those retailers considering loyalty-member-only self-checkout options should remain focused on keeping customers happy.
“First, make program verification quick and explain the benefits (speed, discounts) clearly,” outlines King. “Second, provide enough staff to avoid long lines for non-members. Finally, incentivize program signup to avoid an ‘excluded’ feeling. This creates a win-win: loyalty members get perks, and the overall experience stays positive.”
Barnett recommends that retailers take a page out of the loyalty playbooks of other industries and offer loyalty express checkout to enhance the customer experience when limiting self-checkout to loyalty members. Retailers would still need to clearly communicate benefits and ensure non-members still have efficient checkout options to avoid making them feel excluded.
“The upside is that it would further highlight the value of joining the loyalty program,” clarifies Barnett.
“Any sort of special recognition or extra (or early) access can be an extremely valuable tool to make your loyalty program members feel valued,” adds vLoyalty’s Vogel. “An additional advantage is that many extra benefits or perks often have a low financial cost to the brand while having an outsized effect on member satisfaction.”
Designating Select Self-Checkout Lanes
A representative from Walmart’s corporate communications is on record stating that during times of limited access, some Walmart stores may designate select self-checkout lanes for Walmart+ customers and Spark drivers for faster access and deliveries.
“Designating some self-checkout lanes for Walmart+ customers or Spark drivers can boost interest in Walmart’s program by making it a gateway to more convenience and expedited service, especially during peak hours,” says Barnett. “This messaging—communicated in-store and through digital channels—could get a boost from a limited-time discount on membership to move customers to act.”
Vogel acknowledges that limiting usage of self-service lines to members could be an extremely effective way of driving program awareness as shoppers ask, “How can I use that checkout lane?”
“This could be a powerful conversion tool, as shoppers are willing to join on the spot to get immediate access,” says Vogel. “There’s nothing people want more than fast lines and exclusive access that others don’t have.”
King agrees that the desire for faster checkout is a major pain point for many shoppers. Highlighting the perk showcases the program’s ability to save members time, a key driver for incentivizing new enrollment.
“The approach has the potential to increase loyalty numbers and influence Walmart’s shopper base,” says King. “By offering the tangible benefit of faster checkout, and potentially priority access for deliveries, Walmart makes their loyalty program, Walmart+, more attractive to current members.”
Leveraging the Convenience of a “Scan & Go” Mobile App
Walmart’s Scan & Go mobile app provides significant convenience for shoppers. The benefit, exclusive to both trial and paid Walmart+ members, allows members to scan item bar codes as they shop, choose the “Check out” button in the app when they are ready to pay, and then complete the transaction at the self-checkout. This convenience has been implemented and then rejected by other brands that cited theft as the reason for discontinuing the benefit.
Still, brands can leverage the power of scan-and-go options—creating an enhanced experience for program members—while limiting the risk of abuse or theft. They can start by combining convenience with strong security measures. Barnett sees frictionless security measures as including AI-driven monitoring, visual analysis, and weight sensors at checkout, along with real-time transaction analysis and even spot checks.
“Counterbalance the more overt security oversight by showcasing self-checkout benefits, like convenience and integrated discounts,” instructs Barnett.
King suggests offering scan-and-go capabilities as an exclusive benefit for loyalty members or leveraging program and shopping data to personalize the scan-and-go experience for everyone.
“Experience enhancements could include offering targeted promotions, recommending products based on past purchases, and allowing customers to personalize the experience by pre-setting their preferred payment method or even allowing them to split payment between two methods,” says King.
Moreover, King points out that implementing secure authentication with passwords or biometric identification allows brands to require members to authenticate themselves in a secure way. Incorporating anti-theft measures like increased staff for support and auditing systems, physically or through video surveillance, can limit the risk of abuse or theft with scan-and-go checkout.
Brands Can Fight Theft with AI/ML Technologies
Retailers need to stay competitive as AI and ML technologies continue to progress and change the way consumers shop. While still an evolving capability, Barnett believes retailers can stay vigilant by integrating AI and ML into self-checkout and inventory systems to boost security by monitoring transactions in real time for theft patterns.
“For example, Walmart uses AI-powered cameras to monitor self-checkout lanes, reducing theft and scanning errors,” says Barnett. “Kroger uses predictive analytics and machine learning derived from their self-checkout machines, taking the learnings beyond security to enable a better customer experience.”
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