Will retailers bring self-checkout kiosks to every aisle?

Author: Bill Gerba on 2006-07-13 08:09:40

These past few months, Bryan Harris over at the Self-Service & Kiosk Association (formerly Kiosks.org) has been experimenting with a new format for his "viewpoints" articles, where he proposes answers to questions left over from his previous month's column. It's a pretty neat approach, and even without interactive feedback capabilities I still feel like it's more engaging than their "regular" perspectives articles. This month, Bryan ponders why retail stores don't deploy self checkout systems (or other interactive devices) in the aisles of their stores:

Why don't retail stores deploy systems in the aisles? Many of them, Target for example, have info kiosks deployed [in the front of the store]. Those units, already having a barcode scanner and sitting atop the same inventory database as the POS system, are just a card reader away from becoming little cashless sales devices. Handheld Products and VeriFone both now offer integrated mini-kiosks that can do this, but it's been possible through other means for years. Corporate Safe Specialists manufactures a small-footprint kiosk just for this purpose, that unit includes cash acceptance.

I can think of two reasons why retailers might not be doing this: either they're worried about security, or they think adding additional hardware, like card swipes and receipt printers, would be cumbersome compared to the savings realized by getting customers out of the store faster. What do you think?

Well, since he asked I feel inclined to answer :) I thought about this from the perspective of a grocer and a big-box retailer, which in my mind would be the most likely candidates for any kind of in-the-aisle checkout system. Small specialty retailers wouldn't seem to need the extra checkout locations, and department stores already use scattered checkout stations (or sales reps) as a means to scan and de-badge purchased merchandise. So, limiting the argument to just grocers and the big-box guys, there would appear to be (at least) three critical factors that must be addressed before in-the-aisle checkout could ever take off:

Loss prevention: I think security is the most obvious concern that retailers would have, as Bryan rightly mentions. Loss prevention is big business these days, and for some retailers it's one of the most significant costs of sale. (Case in point: go into any Linens N Things and take a look in the checkout area. You'll see lots of little signs next to each cash register that say things like "What can I do to reduce our average loss?") While a significant amount of loss or "shrinkage" happens unintentionally (e.g. the customer forgets to pay for the case of soda stored underneath his shopping cart's basket), there are of course a good number of people who shoplift -- sometimes a little, sometimes a lot. In a traditional grocery or big-box retail setup, the process of paying and exiting is most often channeled through a single path, which helps to minimize both intentional and unintentional loss. By moving this process to any number of places in-store, this channel is disrupted, and it takes more policing (mentally on the part of the customer, physically on the part of the retailer) to prevent additional loss.

Store traffic patterns: We've talked a few times in the past about the importance of understanding how customers move about in the retail environment. Retailers frequently have conflicting goals that dramatically shape the way their stores are laid out. For example, making a space seem bright and inviting while still stocking a large inventory, or making products easy to find while still encouraging whole-store browsing are the kinds of seemingly impossible tasks that keep store planners up at night. For many large retailers, the positioning of the checkout aisles is a no-brainer: put them close to the exits to confine checkout traffic to one area, leaving the rest of the store free for customer-friendly merchandising. Now think about what would happen if every potential aisle was a checkout aisle. While I'm sure clever people would think of new and imaginative ways to utilize the space near each self-service device, can you imagine the traffic jams that could be caused in a busy store each time a customer decided to check out a cart full of items in the dairy aisle?

Shopper culture: An often overlooked source of issues is the actual behavior of the shoppers themselves. Many people have developed their shopping habits after years of exposure to "modern" retail environments, and for many, checkout at the exit just comes naturally. Unlike digital signage and other "passive" additions to the retail landscape that have been quickly accepted, the checkout aisle plays an active role in most shoppers' trips. There are a fixed number of things to remember, the process is largely similar from store to store, and by and large people understand it and are comfortable with it. Self-checkout has certainly made major inroads in the consumer psyche, though. Just go to a Home Depot on any given evening or weekend, and you'll see a line of people at every self-checkout device in the place. People are smart enough to understand the concept of self-checkout and why it offers benefits. I just wonder whether the potential benefits of in-aisle checkout will be as apparent. For that matter, I wonder if there actually are real benefits to this technology, but who can say without testing? Shifting the shop-inside-checkout-at-the-exit paradigm is going to be pretty tough.

And did I say there were three critical factors? Maybe that's because we all take the fourth one for granted: money. Self-service systems can be expensive, and different types that take magnetic card, RFID, or cash payments will require different levels of service and support. Putting these systems in throughout the store and training additional staff to handle problems as they arise could reduce the ROI - and stakeholder appeal - of such a program. Similar cost concerns arise from the power and network infrastructure needed to mount the devices, along with the reduction in product real estate (since the self-service terminals will take up some space). Paired with the above concerns, the first retailers to test a non-traditional checkout system are going to have to keep track of their progress very carefully, or else risk confusing or alienating their customers and spending a lot of cash in the process.

I'm sure we'll continue to see a greater number of self-service devices and dynamic signs popping up in aisles, endcaps, and other key locations within the store. Chances are, the most successful implementations will utilize multiple devices at each site, providing location-centric functions like price lookup, complementary product recommendations, self checkout, etc. using the sort of central POS database that Bryan mentions in his article. Two of the most interesting examples of whole-store integration that I've seen so far are the Giant Foods' multi-function kiosk network and METRO's Future Store initiative, which provide many of these services. Although the overall feedback on these ambitious projects has been positive (though no word on ROI yet), I'm most interested to learn which device locations, applications, and form factors have generated the bulk of customer value? This information will be a key factor in determining whether mainstream retailers will allocate funds towards in-store devices, and in what fashion. By avoiding costly deployments that generate little value to store patrons and instead focusing on proven high-ROI additions to their stores, retailers will be able to do more business and improve customer satisfaction, and we'll get to see fewer failed projects relegated to the annals of digital merchandising history.