The front-end is in many retailers' cross-hairs as a target for immediate technology upgrades.
using open systems, using attractive displays, quiet thermal printers and an easy-to-use interface that speeds training of new cashiers. Retailers are also integrating payment systems and advanced loss prevention programs.
Self-checkout is seeing widespread acceptance this year, but the roundtable participants noted that labor savings isn't the only benefit. Customers come to see it as an additional convenience, speeding them on their way, especially with smaller orders. Handheld scanning systems are under consideration, but the first uses are likely to be with employees using them to shorten front-end lines, or for perimeter departments and sidewalk sales.
SN: What are the most important recent technology developments for the supermarket point-of-sale?
HERMAN: Open systems have finally become a reality for point-of-sale. Almost all the vendors offer point-of-sale solutions. That really allows you to protect your hardware investment with these PC-based solutions.
Right now, we are evaluating what we should be offering in terms of point-of-sale systems. We are in the process of going through a review. One of our requirements going in is to make sure that these were PC-based systems, and they were open. So that if you do get into a situation down the road, and there is another software solution, you don't have to completely throw out your hardware and your software solution if you want to change to something different.
PINK: In our opinion, most companies have gone a little backwards in terms of functionality at the point-of-sale. While systems have become more open, and that makes the data more accessible, it has also made the systems more vulnerable to normal system crashes as they run on more conventional operating systems.
The data is more accessible to us to create value with, but the systems are more fragile. So it is a technology development that I'm not sure is for the good.
In the past there were proprietary operating systems, and all they had to do is sit there and make sure that lane could scan groceries. Now we are seeing deployment on NT servers and with Microsoft-type operating systems in the lane, and you are picking up the same problems you have on your desktop. I'm not sure the lane is an appropriate place for them.
So for us, this kind of open environment has brought good and bad. It is easier for us to get to the data with standard types of tools, but it makes it not as reliable. Point-of-sale is something that you want to turn on and not have to think about. People just want to get out of the store. They are in the lane, and we don't want to see errors and have to reboot and all of that stuff.
BUTLER: The most recent development that has been very important for us has been the integration of payment systems. We are completely rolled out with new technology at our point-of-sale, and one of the benefits was the integration of those payment systems, so the checker doesn't have to enter the payment twice. It's all seamless and very nice for the customer. It is faster and more accurate.
In our previous point-of-sale systems, we had to enter sales on the cash register, and the customer entered the amount on the payment terminal, and it was always a reconciliation problem.
MILLER: The customer interactivity is a fantastic advance. For example, I've seen the ICL system, like the one Big Y is using. Even a non-POS manufacturer, Verifone, now has a magstripe reader for credit cards that has a built-in touchscreen. I think we are going to get real creative as an industry on how to empower the customer at the POS with these kinds of technologies.
The on-line database -- now that we are starting to see frequent shopper validations through a central database, rather than a local file at the store -- really enhances the frequent shopper offering and brings it a step closer to being able to deliver a true customer-specific marketing program.
SN: How are the more advanced front end technologies improving the environment for customers and cashiers?
PINK: Some of the new devices that we have used, like DynaKey from NCR, have given us the ability to cut down training time for cashiers. We have the same turnover problems that the rest of the retail world does, and the faster we can get a checker up to speed, the better off we are. But like everything else, there is a downside. The experienced checkers do not like the DynaKey-type of environment. They prefer the old one because they are fast. But we have more new checkers than experienced ones.
HERMAN: PC-based systems, with large customer displays and thermal printers, really help to make the systems more user-friendly for the cashiers and the customers. The cashier prompts make it easier for new cashiers to learn their jobs. The customer display allows customers to follow their orders as they are being scanned, and savings information is easy to see on the display, as well as on the customer receipts. The new printers support a clean receipt at the end of the order that can group purchased items in a logical sequence, with items and their frequent shopper discounts next to each other.
MILLER: Look at what the thermal printers have done. Number one, one of the most overlooked benefits of thermal printers is the reduction of noise at the front-end. That's something that is going to be harder to quantify as a return-on-investment, but anything you can do to make a more pleasant shopping experience for the customer is appreciated.
The speed of the scanners with the modern technologies -- whether it is a 360-degree scan, or a bi-optic scan, with the thermal printers -- is improving the speed of the front end. With the credit authorization now being on-line, you have the ability to swipe cards, and then have the customers enter the identifying information while the transaction is in progress. It contributes to a faster front-end checkout.
With the labor market being what it is, we have less of a luxury of having experienced cashiers. We sometimes have to settle for the less experienced cashier, and sometimes the more transient type of employees. Using a POS system with interactive displays and keyboards has had a profound impact on usability at the front end.
For the customer as well, the new generation of customer displays, whether it is the VGA monitors or the flat panels, gives them more information, which I think forms a confident bond between us and our customers. With the customer-specific approach to messaging, now you can start to drive some of your promotional efforts, some of your customer messages to individuals or to customer classes, rather than the mass. That is starting to be appreciated by customers.
SN: Self-scanning at the front end is being rolled out by many chains. What opportunities does this present?
HERMAN:I see an acceleration of customer self-scanning implementations. These solutions do save cashier labor and work especially well for the express checkout orders. Also, most customers like these systems and they believe that they spend less time in the checkout process.
The systems are pretty user-friendly, although when you launch them in a store, you do need to assign someone to hand-hold the customers through the process. But typically, once you have done it, it's pretty easy to do it again. And there is a cashier monitor available, so if there are questions or concerns, there is always someone at the ready.
It is still relatively new, and you are seeing more and more choices out there. People are trying to get focus not only on just the express orders, but the total order. And I think we need to see more of a depth of implementation than what we currently have before we will see anything radically different down the road.
BUTLER: We have had self-scanning in a couple of pilot stores for slightly over a year, and the experience has been good. We have another pilot getting ready to go with a newer version and we are real excited about that. The version that we are getting ready to test allows us to accept just about every type of payment except checks. We look forward to rolling it out in more stores toward the end of next year. We want to do some key stores and test it a little bit more in some of our other markets.
In our particular case, we have selected NCR self-scanning and we have NCR point-of-sale, so it has been a real seamless situation. From an accounting standpoint, it's just like another lane, so it's very good in that respect. It has been a convenience for our customers. It has helped us in some peak traffic times when we have customers that queue up. And we limit our self scanning only to express customers, although it would probably handle a higher number of items. This newer version is going to allow us to accept coins and electronic benefits.
I think we are going to see it at some point in the future in every single store that we operate. We thought early on that it would just be a niche for those stores that have high credit card use, but that turned out to not be true. We are seeing it being used for cash and credit. PINK: We almost put that in the store we are getting ready to open now, but decided not to. However, we are going to put self-scanning in the store that we will start construction on in March.
At first, we looked at it from a financial perspective -- how much labor could we save? But that's not what this is about. For us, it's about two things. One, it's about customer service. There are customers who like that feeling of being able to get out of the store faster by doing it themselves. So even if it seems somewhat contrary to customer service, there are customers who really want that ability to move through quicker, and if by doing it themselves they can do that, then that's great.
The other aspect is labor. As another supermarket executive said, "It is just getting harder to find cashiers." It has nothing to do with how much we are paying them. It has to do with putting enough bodies in the store to make it work. He said with self-scanning, "I can have one body and cover four lanes. Whether qualified or unqualified, the problem for us is just attracting enough people."
We have very low unemployment here in Utah, it's in the low 4% or high 3%. That's a real valid reason to look at it. There is a segment of people who like it, and it is hard for us to get enough to fill the positions we have open. Obviously, you have tremendous shrink upside potential on self-checkout, and how well that is going to work out, I'm not sure.
There is a cost consideration when you have three or four people being replaced by one, obviously you get a labor savings. But the real benefit is we get a different kind of customer service that certain people want.
MILLER: We are not yet using it, but we will. I think that the innovators have paid their dues and have proven the concept. There is a challenge with integration of the self-checkout subsystems to the retailers' legacy POS systems, and that does represent a technological hurdle.
The fact that different retailers have different POS applications, different hardware, different credit authorization, really limits the number of cookie cutter self-checkout systems out there. That has been an key inhibitor to the growth of the concept.
NCR came out with their solution, offering a convertible scanner environment that allows the customer or cashier to share scan duties based on the time of day. That really opens up some doors for retailers based on the type of POS system they have in place.
I don't think labor itself is going to be the key driver of success and payback on a front end. Customer empowerment, where the customers are in charge of their transactions, is actually going to be appreciated more by the customer, and drive the growth of the self-checkout. Labor will benefit as a result, but if we put a self-checkout system in just to save labor, we won't have a successful program.
SN:What potential do you see for portable handheld scanning for checkout?
HERMAN: This technology really hasn't taken off in the United States. The major concern is providing sufficient security protection without alienating the customer when orders are audited. Until you really find a good way to solve that problem, you are going to a limited roll out in this country.
BUTLER: Several chains have experimented with it, but at this point in time, we don't have any desire to test it. We are watching it to see if there is a good fit for us. But there is that fear of the shrink involved. In many cases, they do spot audits, but I don't know how effective that really is. You give the customer this service, then you pull them aside and say, "We're going to audit you." If a customer knows that is going to happen, they are probably not even going to use it.
MILLER: I love the wireless idea. The flexibility that we get for merchandising and selling at the customers' convenience is something that wireless brings to us. It has given us some enhanced customer service during holidays, for example, where we package meals for Thanksgiving and allow customers to buy a product without waiting for it in line.