LACK OF SELF CONFIDENCE

LAURA KLEPACKI

The concept of customer self-scanning of grocery orders, which has caught fire in some parts of Europe, continues to simmer at U.S. chains.

Industry observers believe that automated self-checkout systems present a significant opportunity to reduce front-end costs because customers, not paid staff, provide scanning and bagging labor. Even cash tendering can be automated.

In addition, shoppers believe self-checkout time is faster -- even if that perception is actually wrong -- because they're actively involved and in control of the process.

Despite the potential benefits, however, many U.S. chains remain in a wait-and-see mode when it comes to the technology. Those who have not invested in systems are watching for hard payback numbers from those who have. And some of those with systems already in place are sitting tight with no plans to expand.

But in Europe, where stores are smaller, hours are shorter and checkout lines longer, advancements are coming quicker.

Advocates of self-scanning there say the speed with which shoppers can process their own orders is a key selling point.

"We know our customers want to spend as little time as possible at the checkout," said Roger Partington, marketing director, Safeway, Hayes, England. "[The system] has been extremely successful at addressing this problem and customers in the trial at the 24 stores have responded very positively."

Safeway plans to introduce the system, which is based on handheld scanners that shoppers carry with them, to 36 more stores in the United Kingdom next summer and eventually roll it out to all of its 150 superstores.

Among those actively testing or rolling out a similar self-checkout system is Albert Heijn, Zaandam, Netherlands, whose parent company, Ahold, helped develop the self-scanner technology and is testing it in the United States at Finast, Ahold's Maple Heights, Ohio-based subsidiary.

Other chains trying the technology include Tengelmann, Wiesbaden, Germany, parent company of A&P, Montvale, N.J., and Superquinn, Dublin, Ireland, a 16-store chain.

"We hope to be able to get people out quicker, to free up the store and make more parking space readily available, which is at a premium," said Eamonn Quinn, marketing manager, Superquinn. "And since we are the only ones who have it now, it can offer us a competitive advantage."

Quinn told SN the technology could save on labor costs, but that is not the company's primary objective.

Because business hours at the test store are 9 a.m. to 7 p.m., and there are only six checkouts, said Quinn, "Our main objective is to reduce the [checkout] lines."

Superquinn has the system in one store today, but may eventually expand it to all stores.

Tengelmann will soon test the system with handheld scanners in a second store while its U.S. chain, A&P, continues to test a different approach to self-checkout: stationary self-scanning systems.

A&P has self-checkout stations at three stores -- in New Jersey, Michigan and Canada -- but has no immediate plans for expansion. The company's first system, in South Plainfield, N.J., was installed more than two years ago.

Testing so far has not yielded any particularly compelling information about what kind of customer might be drawn to the technology, according to an A&P spokesman.

"The people who like to use it don't really fall into small-order or large-order groups. Those who like it, like it -- and those who don't, don't," said Michael Rourke, vice president, corporate affairs.

The future of self-scanning at A&P is still undetermined.

"We have no plans to pull them out of the stores, but we also haven't made a positive decision yet," said Rourke. He said there is potential for wider growth of such systems, but it's not happened yet because of cost and consumer resistance.

"It is something we continue to watch," he concluded.

At the same time, however, two other New Jersey chains discontinued their programs. Both Pathmark Stores, Woodbridge, N.J., and Food Circus Supermarkets, Middletown, N.J., had been using stationary self-checkout stations.

Pathmark Stores, which at its peak offered self-scanning in 10 stores, pulled the programs in all those units as the designated test periods came to an end or the respective stores were remodeled, said Stan Sorkin, vice president, public affairs. The first system went in about three years ago, he noted.

Without offering further details, he said, self-scanning "did not produce the results as outlined in the test proposal."

The possibility of testing self-scanning technology again has not been discussed, said Sorkin. "Having just retrofitted the stores, we wouldn't be entertaining another test. We are waiting for other chains to produce results that would be noticeably more beneficial than scanning with cashiers."

Food Circus, which offered self-scanning in one store for five years, pulled the system out in August rather than incur the costs of a mandatory upgrade, said John Azzolina, director of retail automation.

The cost to upgrade would have been less than $100,000, but the investment wasn't deemed worthwhile because the customer self-scanning checkouts were underutilized, he said.

The placement of the Food Circus' checkout stations -- at the far end of the front end, on the opposite side of the store's exit -- may have contributed to their weak customer acceptance. Azzolina noted.

While it would "probably be a while" before Food Circus would do anything with it again, the company may reconsider self-scanning in the future, said Azzolina.

Glen Terbeek, managing partner of the food and packaged-good industry program for Andersen Consulting, Chicago, sees self-scanning as a natural step toward a streamlined and more efficient system.

"The consumer hates the checkout lane -- even management doesn't like it."

He said the way supermarkets operate checkouts now can be self-defeating: Big-spending shoppers must wait on long lines, while "we reward our 'bad' customers with express checkout lanes."

"People will go to one store or another because of the differentiated shopping experience -- either because of service or attitude or ambiance, or because of self-checkout," said Terbeek.

Superquinn's self-scanning is being offered exclusively to its SuperClub loyalty program members. "It's not geared for somebody who just dropped into the store. The idea is it is for those who are regular customers with you," said Quinn.

He told SN the self-scanning is regarded as a customer service delivered to the best customers. "If you are standing in line for even two minutes, it can seem like a lot longer," Quinn said.

Because the system is so new, the retailer hasn't yet compiled transaction size patterns. However, Quinn wondered aloud if shoppers would actually buy more or less because they have a running tab of their goods.

Theories differ on whether a running total is a good feature for self scanning.

"Although some people say that is a disadvantage, I believe shoppers typically underspend [in the absence of a running total] because they don't want to be embarrassed at the checkout, so the opposite could happen," Andersen's Terbeek.

Shrink due to theft and errors is another disadvantage self-checkout naysayers point out. While safeguards are built into all the self-scanning systems to minimize shrink, it will always be a problem, Terbeek noted. But with the potential to cut front-end labor costs -- which represent 25% to 30% of a store's total labor costs -- retailers might feel that they can live with a little bit more shrink and create a shopping experience that will attract more customers, he added.

U.S. supermarket chains currently testing self-scanning systems include: Price Chopper Supermarkets, Schenectady, N.Y.; Cincinnati-based Kroger Co.'s Louisville, Ky., and Columbus, Ohio, divisions; Shaw's Supermarkets, East Bridgewater, Mass., and Star Market, Cambridge, Mass.

Meanwhile, many other U.S. chains are taking a wait-and-see approach to self-scanning.

Mickey Clerc, vice president, corporate communications for the Winn-Dixie chain, Jacksonville, Fla., which operates 11 divisions, said they also have considered self-scanning.

"We have observed what other people have done. Up to this point the system has been too expensive. We couldn't cost-justify even testing it at this point," said Clerc.

"We would consider testing it. And we will consider testing it when the price level comes to a point we feel could cost-justify it. Then it would be up to the consumer to see if it would go any further."