Supermarket self-checkout technology approaching tipping point?

June 2, 2014

The supermarket industry is approaching a tipping point where all new chain-owned stores in developed countries will include self-checkout kiosks, technology provider NCR Corp. thinks. The technology is also moving from the grocery segment into other retail markets such as department stores and convenience stores, the U.S.-based vendor said recently.

“We’re starting to get to a tipping point where many Australian, European, U.K. and U.S. chains wouldn’t think of opening a new supermarket without putting in self-checkout,” Dusty Lutz, general manager of NCR’s Retail Self-service Solutions Group, told Kiosk Marketplace. “A few retailers are already putting self-checkout kiosks into every new store.”

Self-checkout is now moving from supermarkets and hypermarkets into other retail segments such as department stores, specialty retailers and small convenience stores, Lutz said. “There is a lot of growth ahead for self-checkout in these new markets as well as in the supermarket sector,” he said. “We’re seeing interest from convenience stores and department stores, though they aren’t as far down the path of self-checkout as supermarkets yet.”

Lutz said that NCR is involved in early trials and deployments of its self-checkout solutions at convenience stores and department stores. In May 2014, NCR announced a self-checkout pilot with Chinese department store chain Rainbow Department Store.

“Self-checkout really hasn’t gone into all the places yet that I thought it could,” said Frank Olea, CEO of U.S. kiosk manufacturer Olea Kiosks Inc. “Grocery stores and home supply stores make sense. But what about places like Hallmark or Target’s cards section? On Mother’s Day and other big days, those places are a zoo, and simple, affordable self-checkout kiosks with a barcode scanner and card swipe but no cash acceptor would really help cut the lines. The retailer could move the kiosk around the store to different locations that need it most at a particular time.”

Double-digit growth

“NCR has been seeing strong double-digit growth internationally for the last few years in the self-checkout kiosk market,” Lutz said. “The driver for the growth of self-checkout is the same worldwide: customers’ dislike of waiting in line at traditional checkouts.”

According to “Global EPOS and Self-Checkout 2013,” a study by London, U.K.-based Retail Banking Research, the number of self-checkout terminal shipments will soar to nearly 60,000 worldwide in 2018 from 27,000 in 2012.

“NCR has retail chain clients in most markets around the world who see over half of their trade going through self-service options,” Lutz said. “Self-checkout is fairly common in the U.K, for example.”

A March 2014 survey of 1,017 U.K. adults by market research firm Viewbank found that only 10 percent had never used self-checkout.

Olea suggested that supermarkets deploy low-cost card-only self-checkout kiosks for their “15 items or less” checkout lanes. “Stores should look for ways to increase self-service in any way they can,” he said. “For their ‘15 items or less’ lanes, they could install simple cashless self-checkout terminals which would cost around a quarter of what cash-accepting and change-giving self-checkout kiosks cost. To say one size of self-checkout kiosk fits all customers is wrong. I use cash probably less than five percent of the time, and I’m not alone in this.”

Customer reaction

During 2013, Walmart installed 10,000 NCR SelfServ checkout systems at 1,200 stores in the U.S. However, three other leading U.S. retailers. Costco, Jewel-Osco and Albertsons removed self-checkouts from their stores in 2013, citing a lack of confidence that the technology benefits their shoppers.

A survey published by retail technology firm Tensator in October 2013 found that one in three U.K. shoppers (out of nearly 400 polled) had walked out of a store without buying the goods they intended to, because of a bad experience with a self-service till. The survey also revealed that 84 percent of those questioned needed staff assistance when using self-checkout and 60 percent of customers actually preferred traditional, staffed checkouts.

“Consumers have very high expectations of a very positive user experience when they use any technology supplied by a business,” said Michelle Marian, Motorola Solutions’ North American retail and hospitality lead. “So the key to success in self-checkout is to ensure ease of use. Shoppers will make their decision about a technology based on their experience of it.”

“Retailers need to work out the right way to market self-checkout technology to their customers and train them so they understand how to use it,” Lutz said. “They also need to be able to accommodate how shoppers want to use the technology.”

“The associate whose job it is to monitor self-checkout kiosks doesn’t have to wait until someone calls her over,” Marian said.  “A trend we’re seeing is that the associate, rather than standing by passively waiting, is equipped with a mobile device that is integrated with the store’s self-checkout kiosks. The mobile device tells her when a customer needs help, for example with scanning a coupon or a driver’s license for age verification. By being proactive, the associate can help customers get through the self-checkout more quickly.”

Choice

“It’s very important to offer customers a choice in how they shop in supermarkets, whether this be through staffed checkouts, self-checkout kiosks, mobile apps branded by a retailer, or retailer-supplied personal shopping devices,”Marian said.

NCR’s self-checkout kiosks can accept Near Field Communications- and QR code-based payments from consumers’ smartphones, and integrate with personal shopping devices such as the Motorola MC17 or Datalogic’s Joya product," Lutz said. “You scan all the items you want to buy with the MC17 and then pay at our self-checkout kiosk."

Demographics

Retailers need to understand that different demographic groups will have different preferences for self-service technologies. “Boomers may use self-checkout as well as traditional checkout, while millennials will have a stronger engagement with mobile devices,” Marian said. “Consumers in more suburban areas will likely have a different approach to self-checkout to consumers in technology-savvy city centers.”

“NCR sees different drivers for self-checkout among different demographics,” Lutz said. “We’ve found that pensioners on fixed incomes really like self-checkout kiosks as they can use them to control their spending and scan items at a pace they’re comfortable with. Millennials like self-checkout kiosks, as they can get out of the store very quickly if they are just doing a small shop. Some people will do their full week’s shopping using a staffed checkout and just use the self-checkout for top-up shopping.”

New technology

“Digital couponing has grown tremendously,” Marian said. “So, with retailers increasingly evolving from paper coupons to digital coupons, it’s essential for supermarket self-checkout kiosks to be able to scan digital coupons from a customer’s smartphone.”

Personalization is also very important in retail, she said. “Consumers increasingly expect their shopping experience to be personalized. Once the shopper has swiped their loyalty card into the kiosk, the system should be able to display all their preferences and the items they buy regularly. This is important as most shoppers tend to buy the same products each week.”

“If a customer uses a loyalty card, NCR self-checkout kiosks can learn the products which they purchase each week,” Lutz said. “So, after they have scanned their loyalty card, the kiosk will display these regular weekly shopping items on the first screen. The customer just has to select any of these items that they are buying today, which will help make their self-checkout experience faster and more efficient.”

Lutz said NCR is developing technology in its lab which will make it easier for shoppers to scan vegetables and fruit. “We’re developing a produce recognition solution which knows all the fruits and vegetables that match a particular item,” he said. “So, instead of looking up a particular fruit or vegetable in a produce menu, you just scan it. The screen will show you all the products matching that item, and you have to select the right one.”

In May 2014, U.K. supermarket chain Tesco launched a pilot of a new high-speed self-checkout solution developed by NCR that uses imaging technology from Datalogic to automatically scan the barcodes of items placed on a conveyor belt.

Four units of the new system have been installed at the new Tesco Extra 24-hour store in Lincoln, U.K.

NCR said three shoppers can use each unit simultaneously to scan, pack and pay for purchases at the same time. Each unit is attended by up to three Tesco employees, who, instead of scanning customers’ purchases and taking payments, are redeployed to assist them with unloading their trolleys onto the conveyor belt.

And, as another example of new technology, at this year's National Retail Federation BIG Show, NEC Display Solutions showcased a self-checkout solution that visually recognized items without a barcode.

So the better the technology, the bigger the push to the tipping point?

Image courtesy of Wikimedia Commons.


Topics: Self-Checkout


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