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Preventing loss at the self-checkout

Self-checkout is a powerful tool for retailers, but it can just as easily be a liability if not implemented properly. Joe Davis, director of loss prevention and operations strategy for Encapsulon, offers these thoughts on building your own best practices for self-checkout.

November 7, 2005

When faced with technology purchase decisions, many retail executives, IT and security professionals may wishfully think "wouldn't it be great if this technology automatically integrated with all the other systems in my store?" Sales people frequently hype the benefits of an intriguing new product and how it will streamline the business or enhance customer service. It is easy to get caught up in the vision and to set high expectations for new technology.

Unfortunately, it's seldom that easy. Expectations often fall short of the actual results seen once the technology is deployed. In many cases, the problem is not a failure of the technology, but a failure on the part of the buyer to recognize what it takes to select and deploy the new technology effectively.

One example that comes to mind is when I bought a guitar. I spent hours on the Internet learning about the best quality instrument I thought would meet my needs. I recall going to the store, finding that top-of-the-line guitar, and listening to an eager sales associate - 10 years my junior - play a range of spot-on tunes with the instrument I was about to purchase. Fast-forward seven years and that guitar hangs next to a framed picture of my fishing trip to Hawaii. I can effectively play the same amount of music with either.

Of course, the problem was not that there was something wrong with the guitar. The problem was that I did not foresee how much time and practice would be required on my part to actually play those same spot-on tunes that the sales associate had played. The difference in performance was the operator and the amount of time we each had dedicated to learning to properly work with the instrument.

Ideally, retailers should spend as much or more time planning for new technology implementation as they do counting the savings they expect to see once it is in place. Self-checkout kiosks are one such technology that has tremendous potential to offer savings as well as improved customer service. Retailers who purchase self-checkout kiosks can capitalize on the benefits by properly planning and managing the implementation for their specific business situation. While new technology may deliver a return-on-investment, it may also introduce new and challenging potential loss-causing issues. In this article, I will offer tips to help retailers obtain the highest ROI from self-checkout technology by considering key preparatory and implementation factors that minimize the risks of loss-causing incidents.

Take time to plan and evaluate

The planning process should start with an analysis of the problems the retailer needs to resolve, measurable goals the retailer hopes to achieve, as well as the role of the new kiosks. Retailers should consider how the use of kiosks will impact their organizations culturally and how they will ensure adoption and proper use. Training programs should be put in place for all associates who will be supervising kiosks and helping customers use them. Finally, milestones should be set in order to measure progress along the way. The amount of up-front work may seem extensive and exhausting, but it is sure to guarantee success on the back end.

Control supervisory privileges

The next step in maximizing the benefits of self-checkout kiosks is assigning only associates who are knowledgeable about existing systems and processes to oversee them. Ideally, operators and supervisors of new technologies are the same experienced associates that have proven their abilities to handle customers and transactions effectively.

A second measure is to control supervisory functions at a self-checkout kiosk, particularly in the period immediately following implementation. Associates who don't fully understand the technology or become frustrated with it may quickly override transactions in the interest of customer service. Supervisors should control transaction override privileges to prevent loss. While it is important to reduce loss-causing exceptions in this manner, it is also important to ensure that these measures do not negatively impact the customer experience. Thorough training and quick access to a supervisor can help minimize these risks.

Provide adequate training

Proper training of those individuals selected to work with kiosks is another key to the success of the new technology's implementation. New associates should be trained on the traditional POS system before being trained on the self-checkout kiosks. Associates need to be comfortable working with the technologies most fundamental to the business before being put in charge of new or experimental solutions.

Training programs should not only address how to use the system, but also provide a comprehensive review of the most common issues associates may run into using the system, so they understand the fundamentals and can safely troubleshoot and resolve problems themselves. Nothing is more frustrating to customers than trying to use a self-checkout kiosk and spending more time there than they would have going through a regular cashier line. The idea is to offer speed and convenience. Therefore, associates managing these kiosks should know how to deal with issues and exceptions quickly. Thorough training programs go a long way to alleviating loss due to unintentional mistakes on the part of associates.

Customize exception reports

Exception reporting is commonly used to identify potential loss-causing transactions and operational issues in the business. While the retailer may identify and report on precisely the right exceptions within the traditional POS system, such as credit card refunds and transaction overrides, different transactions may be important to identify in the kiosk environment. For example, suspended transactions are common at a self-checkout kiosk, but not at a traditional operator-run POS station. An occasional transaction suspension may happen at a traditional checkout if a customer forgets her checkbook, for example. However, suspended transactions are much more frequent in the kiosk environment and likely indicate a problem other than the occasional forgotten checkbook. Where self-checkout is concerned, frequent transaction suspensions may indicate that it is not clear to customers how to complete payment after scanning all the desired items. Another possible explanation is unethical behavior on the part of the customer or the monitoring associate. A customer may approach the self-checkout with multiple products for appearances, scan several less valuable items, slip the desired product in a bag and then walk out of the store without ever completing the transaction.

Exception reporting designed specifically for the self-checkout kiosk would flag multiple suspended transactions that never progressed to payment. A manager could review these exceptions to identify and correct the problem. Customizing exception-reporting criteria for kiosks ensures important problems are not overlooked.

Integrate secondary technologies

Secondary technologies implemented with kiosks can multiply their effectiveness and also reduce loss. Just as kiosks make the shopping experience more automated and efficient for the customer, the kiosk should make the organization of its information an easy and efficient task for management. Complementary technologies like digital video and electric article surveillance (EAS) can help management to easily simplify data, manage information flow and deliver a more efficient self-checkout solution. 

For example, the integration of cameras into the kiosk gives retailers live video that can be used for loss prevention, customer service, monitoring and employee training.  Video is a key integration tool that provides context to managers regarding operational, training and loss issues taking place at the self-checkout kiosks.  Coupled with POS data, video can provide context to what is occurring during day-to-day transactions at the kiosk.

EAS is another technology commonly integrated into checkout kiosks. With EAS integration, retailers can expedite the check out process while still enabling the store to have EAS systems in place. With this technology, customers scan their own merchandise and, by placing it in a bag on the far side of the kiosk, automatically deactivate the EAS tag. It is important for retailers to consider which technologies they might like to integrate before ordering the POS system to make sure it has all of the necessary capabilities to support their needs.

Thinking back, maybe I was not the musician that should have purchased that top-of-the-line guitar. Something about seeing a tool in the hands of an expert made it all seem so easy. I had not considered how much time that young sales associate had dedicated to learning to play. As I learned, that is a requirement for yielding music from even a top-of-the-line instrument.

About the author

Joe Davis, a veteran in the retail LP arena, serves as director of loss prevention and operations strategy at Encapsulon, a software and solution provider that helps organizations gain a competitive advantage by streamlining operations, reducing loss, and increasing profitability. Its flagship product, the Retail Software Suite, is a patented web-based platform that allows retailers to manage critical events and increase visibility, control and effectiveness of loss prevention and operations programs.