Self-checkout is on the rise, despite recent reports saying that at least two major grocery chains have abandoned their self-service strategies. It's true that Albertson's and Big Y have ditched their kiosks, but they're in the minority. In fact, transactions at the kiosks are growing by more than 10 percent per year in North America with transactions expected to surpass $1.1 trillion a year by 2015, according to IHL Group.
Although theft could be a deterrent for embracing self-service solutions, most retailers realize that the cost savings still outweigh the losses. And there are a few ways — some cheap and easy, others a bit more expensive — for retailers to help prevent those losses. They include:
Staffing the self-checkout areas
Training employees how to spot theft
Embracing technology to help stop theft
Staffing the self-checkout areas
It may seem like an oxymoron to hire employees to run self-checkout, but the solution was never designed to run without humans. For example, a typical configuration is four or six kiosks next to one another with one employee monitoring the area.
"They are supposed to have that person standing there helping the customer, but a vast majority of these theft issues occur when they're pulled away to bag groceries or something," said Bill Alford, president of International Lighthouse Group, a risk management firm. "That's when you get blatant theft."
Just having a warm body standing near the self-checkouts isn't enough; the employee must know what types of theft occur at the self-checkout. One common way customers steal is by pretending to scan an item; another is when they don't even bother with the scanning ruse and directly move the item from the cart to the bag.
It's true that most checkout kiosks have components that weigh products and will note a discrepancy, for example, if something costs $1, and it weighs 20 pounds. However, each machine has a "skip bagging" feature that thieves use to their advantage, Alford said.
Price switching and entering the wrong PLU codes are also common. Price switching occurs when shoppers simply scan a cheaper item but then put a more expensive item in the cart.
"We've seen a case where someone was at a home improvement store going through the self-checkout and buying huge saws that cost hundreds of dollars and scanning a $10-item and then hitting skip bagging," Alford said. "That happened up and down the Eastern Seaboard."
Entering multiple PLU codes of the same product should be another red flag to retailers. For example, most shoppers don't buy six bundles of bananas, but thieves will use those PLU codes and then take more expensive items, Alford said.
Not only do employees need to be trained to spot these behaviors, they also need to know how to approach a possible thief. For example, employees might be scared to confront a customer in an accusatory tone, and it's not even necessary, Alford said.
"You should treat all customer interaction as a service," he said. 'If you see a product in the cart you say, 'Oh here let me help you; I think you forgot about this.' "If you see someone pick up a product and pretend to wave it over the scanner and put it in the cart you say, 'Oh, let me help you with that. It needs to beep.' Don't try to catch them, try to help them."
All the training in the world isn't going to prevent theft nearly as well as some of the new technologies now available. One of those is Scan-It-All, a loss-prevention solution that uses video analytic technology to monitor POS systems. The program, launched three years ago by StopLift, has been watching thousands of check-out lanes across the U.S. Its founder Malay Kundu said theft occurs at the self-checkout far more frequently than in traditional lanes, whether it's on purpose or from customers forgetting about items.
"Motivation aside, the rate of loss is as much as five times greater," Kundu said.
Kundu's video platform not only serves as proof to convict thieves, it also serves as a training tool. Managers can actually sit down with their employees and show them when customers have stolen from them.
"It's one thing to say employees need to be just trained properly, but they need to know how to recognize stealing," Kundu said. "You can tell someone what to watch for in an abstract way, but it's something different when they see it happen to themselves."
Watch below to see thieves caught in the act:
The deployment of self-checkout solutions should hit about 430,000 units by 2014, according to London-based Retail Banking Research. That's four times as many as the 92,600 it reported in 2008.
Kundu believes that number will keep growing as the technologies to help curb theft improve. In fact, his company will soon roll out a platform that alerts employees in real time when stealing occurs.