Skirmishes on the Self-Scanning Supermarket Frontier

The point of sale moment has long been one of the retail industry’s chief obsessions and has seen a long wave of experimentation and technology innovation.

Self-scanning checkouts have proliferated across Australia in the last five years at the two big grocery chains – Coles and Woolworths – as the operators seek to cut labor costs and also try and get customers moving through the stores faster.

Today, more than 50% of customers use the self-scanners. The traditional checkouts are generally for older, technology resistant, shoppers and also for people with so much shopping in their trolley that self-scanning would be a nightmare.

A New Can of Worms

So far, so good. But in reality, the self-scanning technology has introduced its own problems.

Shoppers are continually complaining about wrong readings from the machines, where a common alert is “unexpected item in the bagging area," even when there is nothing there. This requires help from staff, which undermines the original business case.

More seriously on the downside for retailers is the fact that technology has introduced new opportunities for pilfering and shoplifting.

Estimates vary, but one recent research project claimed that 7% of shoppers admitted to not scanning an item, while 9% said they had scanned items at a cheaper price.

All up, shoplifting costs the Australian retail industry AUD 9.5 billion a year, and the self-scanners have changed the modus operandi of theft and introduced a new layer of temptation. It is all about outsmarting the technology using old fashioned shoplifting tactics.

When the scanners were introduced, it was claimed they would reduce store losses and thefts, because self-service eliminated cash handling risks and miscalculations.

So, while they might deliver the benefit of shorter queues and less crowded shops, the self-scanners have actually created another layer of technology implementation as the retailers have introduced cameras to watch the customers.

It is almost as if the technology has solved one problem and created another, in addition to being prone to error and not as good as it was hyped up to be.

Tech Behind Being Caught Red-handed

Woolworths has been installing new surveillance cameras at some stores and has introduced weigh scales at the self-serve areas, while Coles trialed monitors with real-time footage of shoppers scanning items.

It has created a startup opportunity, as well. Sydney company Tiliter Technology has trialed checkout cameras with a product recognition system so sophisticated they can tell the difference between types of apples.

It seems that if people think they are being watched, even by a camera, then they are less likely to attempt to shoplift.

To this end, retailers in the U.K are trialing "avatars," which will look up at shoppers as they scan. This is based on research from Abertay University in Scotland, where it was found that adding a computer-generated face to a screen reduced the risk of theft.

The study “has partially demonstrated that social presence had an effect on dishonest behavior using visual agents, in that instances of dishonest behavior were reduced with the humanlike agent.”

From the retailer's perspective, the positive is that even though they need a new pair of eyes on the customer, they are the "virtual" eye of an avatar, so no wages are involved.

POS in Your Pocket

Ultimately, the self-scanning technology may prove to be a transitional one as retailers move to remove even more friction from the point of sale.

Self-scanning has less friction than queuing for 20 minutes at a checkout waiting to be served, but what if there was no checkout at all?

Woolworths is taking steps in this direction with trials which began in June at several supermarkets in inner-city Sydney.

Limited initially to rewards scheme members, the pilot project is trialing a phone app where customers scan items on their phone and pay, although there is still some friction in that a payment kiosk is required.

The Scan&Go mobile phone app allows customers to scan items as they pick them up and put them in their trolleys.

It has been deemed a success, with one store reporting that more than 70% of customers who used the app continued to use it on repeat visits.

Developed in-house by the Woolworths digital team, the technology is so far designed as a complementary option to give customers a third choice after traditional and self-serve checkouts.

That may be the case, but it does point the way forward to a day when shopping will be entirely frictionless, and customers will simply have to take goods out of the store to pay for them.

In that retailers’ nirvana, there would be no pilfering because all the sensors and the systems would be so robust. But as we have seen, that day is a long way off.

In the meantime, the staff is still running to help customers when the false readings from the bagging area come up, while cunning thieves are again subverting the system.

Then there is the issue of point of sale data from the new systems, particularly from those such as Scan&Go, which use smartphones.

But that one is for another time when retailers get their current technology – finally – to perform as designed.