Retail self-checkouts: From convenience to controversy?

Russ Hawkins, President and CEO, Agilence explores the self-checkout dilemma.

When self-checkout systems first began to appear in grocery stores nearly four decades ago, they promised unparalleled convenience for shoppers and operational efficiency for retailers.

The technology’s appeal was straightforward yet compelling: Customers could avoid long lines by scanning and bagging their own items, speeding up the experience, while retailers could provide a better customer experience with less labour.

By shifting part of the checkout process to customers, employees could focus on other tasks, boosting productivity and service quality.

However, this promising potential has proven more complex in practice. In 2024, self-checkouts are seeing a huge backlash, with many grocers and retailers having grown frustrated with the huge amounts of theft at self-checkout lanes.

Some are beginning to remove self-checkout lanes entirely.

Today, self-checkout is entering its period of reckoning.

Self-checkout meets reality check

While many retailers have invested millions into self-checkout technology, some are reversing course.

Walmart has removed self-checkout in certain stores, while Target is restricting the number of items self-checkout customers can purchase at one time.

In the UK, supermarket chain Booths is removing self-checkout from all but two of its stores.

Dollar General, previously an aggressive advocate of self-checkout, now claims that it relied too much on self-checkout and is now adding more attendants to self-checkout stations.

Other large retailers such as Costco and Wegmans have also revised their self-checkout strategies. But why are so many retailers changing their tune on self-checkout?

There are two key drivers. One is frustration among customers and retail employees, many of whom claim the technology is not as convenient as promised.

According to a June 2024 survey conducted by Redfield & Wilton Strategies for Newsweek, 43% of shoppers support the removal of self-checkouts from retail stores.

Outlets ranging from The Guardian to CNN have highlighted how, rather than make life easier, systems have become an emotional trigger for shoppers.

However, the biggest problem is the unacceptable levels of theft and loss associated with self-checkout.

High rates of theft

Just how much theft is happening at self-checkout lanes? It depends on who you ask.

Elevated rates of theft at self-checkouts are well-reported across the industry and confirmed by many studies and surveys – but many offer different numbers.

One study found that 39% of grocery shrink comes from self-checkout. In fact, Business Insider claimed that theft is five times higher in self-checkout lanes.

Anecdotal conversations with retail and grocery LP professionals will reveal different numbers at different companies – and that’s about the known levels of shrink.

One study conducted by the University of Leicester of retailers in the US, UK and Europe found that the use of self-checkout lanes can lead to an up to 122% increase in theft rates, amounting to nearly 4% of total sales.

Given tight grocery margins (the profit margin among European grocers is 3%), losing 4% of total sales is a staggering amount.

The retailers seeing this troubling loss rate estimate that self-checkout systems account for as much as 23% of their total unknown store losses, with 48% of those SCO losses being intentional theft.

This surge in theft is partly due to the unique psychology of self-checkout theft, due to the anonymity and lack of human oversight.

Customers may feel emboldened to steal when they believe there’s less chance of getting caught.

Moreover, some customers steal unintentionally because the process can be so cumbersome – a LendingTree survey found that 21% of shoppers accidentally stole an item while using self-checkout, while 15% said they stole on purpose.

Moreover, some customers may justify their behaviour as a ‘Robin Hood’ act against large corporations or simply view it as a victimless crime.

How retailers can mitigate the problem

Despite its problems, given a tight labour market and large investments in self-checkout systems, self-checkout isn’t going away for most retailers.

According to the Associated Press: “Love it or hate it, self-checkout is here to stay.”

With some improvements in policy, process and technology, they can help mitigate theft and better achieve the initial promise of the technology.

For the time being, nothing replaces a human touch.

While the concept of cashier-less retail such as Amazon’s (currently discontinued) “Just Walk Out” are being developed, one of the best defences against theft remains an attentive human attendant, whether they are a store associate, security personnel or an asset protection/loss prevention officer.

Simple policy changes can also help, such as restricting the number and types of items allowed to be purchased at self-checkout terminals.

Restricting high risk items, as well as anything without a barcode (produce, bulk items, etc.), can help minimise mistakes and common theft schemes.

Implementing stronger surveillance measures, such as cameras at self-checkout stations, can be a helpful deterrent against potential thieves; they can also provide data to be reviewed later.

Security scales in the bagging area of the self-checkout kiosk are also a common anti-theft tool, alerting both the customer and the attendant when an item is added to the bagging area without being scanned.

Used in conjunction with a video-integrated data analytics platform such as Agilence Analytics, scales and video systems can also be an important data source for preventing future theft.

Data patterns can point to potential issues with specific customers, items and or attendants (as well as provide video evidence for cases) that can help minimise shrink exposure.

Some retailers are also using AI technology to monitor transactions and identify suspicious behaviour.

AI can help combat self-checkout theft by utilising advanced machine learning algorithms to detect suspicious behaviour and anomalies during transactions, such as scanning irregularities or unusual purchasing patterns.

Additionally, AI-driven surveillance systems can enhance real time monitoring and provide alerts to store personnel when potential theft activities are identified, thereby improving security and reducing losses.

By being honest about the problems with self-checkout, revising policies and taking some common sense actions, retailers can better realise the promise of the technology, while minimising its downsides and better protecting their bottom line.

About the Author

Russ has spent over 35 years in the technology industry, helping established organisations and small start-ups reach their full potential by driving change from the “inside”.

Russ is responsible for developing the overall strategy and leading the growth of Agilence, which helps retailers, grocers and restaurants improve their operational effectiveness and uncover preventable losses using the data already in their hands.