It's Time to Rethink Self-Checkout

After investing more than 30 years and billions of dollars in self-checkout systems, it seems that the retail industry has reached a crossroads. There is a growing wave of sentiment from retailers and consumers that things are not working out for either buyer or seller. The BBC recently declared self-checkout technology to be a “spectacular failure”.

A number of very real issues are causing retailers from across the globe, and down the street, to rethink their approach to the consumer payment experience. 

In this blog, we’ll take a look at several of these factors, as well as review the important role that an effective testing strategy can play in helping retailers deal with constant and inevitable change.

Finding the Right Combination

According to various origin stories, the intent of the self-checkout concept was to help shoppers move through grocery store checkout lines more quickly. And while it took some time for the idea to catch on with both consumers and merchants, the retail industry eventually came to realize that self-service checkout could significantly reduce cashier headcount, saving millions of dollars every year.

Now, after more than 30 years of real-world experience, the industry is facing a number of issues that are causing major retailers to reconsider their strategy for self-checkout – even to the point of removing installed systems from their stores.

Fraud

In a recent Gizmodo article, tech writer Thomas Germain makes the following statement: “Not only is it easy to steal from self-checkout machines, it can be hard not to steal from them”. A similar piece published in Business Insider cites a survey that found self-checkout shoppers are 21 times more likely to sneak items past machines than human cashiers.

Even when shoppers have no specific intent to steal, it happens anyway. The Business Insider essay also quotes a Lending Tree survey that found as many as 1 in 5 consumers walk away with unpaid items unintentionally because the self-checkout process can be so confusing and cumbersome.

Of course, all this shrinkage is a significant cost for retailers – running in the billions of dollars every year. And while self-service lanes are not the only source of this problem, research firm Grabango says that self-checkout carries a shrink rate as high as 3.5% versus only 0.2% for conventional cashiers or more than 16% the exposure.

Cost

Not only do self-checkout systems carry a higher rate of fraud and shrinkage, they are expensive to acquire, install and maintain. So in some cases, a retailer may be replacing its relatively inexpensive cashiers with much more costly engineers, coders and maintenance staff.

In his Gizmodo article, Germain suggests that self-service systems may further increase labor costs because in-store employees responsible for other retail operations are too often taken away from those other duties to help consumers deal with confusing and error prone self-service kiosks. While results vary widely from retailer to retailer, some industry analysts suggest that self-checkout machines actually increase overall costs.

Customer Service Gaps

Further to the previous comments about self-checkout systems being “expensive to acquire, install and maintain” many consumers also find them confusing and difficult to use. Nigel Murray, the Managing Director of Booths in the UK explained to the BBC: “Our customers have told us this over time, that the self-scan machines that we've got in our stores they can be slow, they can be unreliable, they're obviously impersonal.”

This perception of negative customer service is not helped by the fact that many retailers, like Walmart, have begun to use secondary systems, such as cameras and sophisticated missed-scan detection software to monitor shopper activity at the self-checkout lanes. Unfortunately, these systems are also less than perfect, leading to embarrassing and sometimes tense confrontations with consumers who are correctly using the very systems that the retailer asked them to use.

The Only Constant is Change

The rapid shift away from self-service checkout only serves to highlight the dynamic nature of the payment industry. It seems that only a few months ago more self-service seemed to be a foregone conclusion and today the industry is hard on the brakes, looking for better answers.

There can be no doubt that payments is and will remain one of the most competitive and disrupted domains within both the retail and financial services industries. Evolving consumer behavior, legal and regulatory compliance issues, security concerns and advances in technology will continue to drive the rapid pace of change.

Effectively dealing with continual disruption requires a strategic approach to testing that emphasizes speed, accuracy, and flexibility. Organizations with an “Automation First” mindset are well position to ride the ongoing waves of change by taking advantage of the significant benefits that automated testing provides, such as:

• Speed

Testing automation complements and enhances manual testing efforts, enabling teams to run more tests, faster. The increase in speed means that organizations can complete more projects on time - and on budget.

• Efficiency

As valuable (and sometimes limited) resources become more productive, they will be able to spend less time on actual testing and more time focusing on strategic initiatives, like developing innovative new products or fighting fraud.

• Accuracy

Automation helps reduce the risk of human error, ensuring that tests are performed consistently and accurately every time - improving the quality, reliability and security of your payment offerings.

• Flexibility and Scalability

Testing automation provides both the flexibility and scalability organizations need to quickly respond and adapt to changing corporate priorities, new business opportunities and evolving consumer behavior.

• Superior Customer Experience

One of the primary goals of testing is to ensure that your payment systems are always available, secure and easy to use, no matter when or where a consumer chooses to transact.

What the Future Holds

It has been nearly 2,500 years since the Greek philosopher Heraclitus said: “Change is the only constant in life”. This statement could not be more profoundly true than it is today. Even as you read these words, you can be sure that there are dozens of organizations across the globe already hard at work to upgrade, improve or replace the self-checkout systems that have been deployed to date.

And while it is impossible to predict the future of payments, simply knowing that things will be different than they are today means that you can take control of the situation by investing in the tools and technology to optimize your payment testing operations.

Interested in learning more about how to use automation to speed up and streamline your testing operations? Get in touch with us today. Our innovative solutions can help improve the speed, accuracy and efficiency of your payment testing processes.