SELF-CHECKOUT: THE NEXT FRONTIER

Julie Gallagher

Now that it has become a mainstream offering in the supermarket industry, what's next for self-checkout?

For one thing, more self-checkout lanes. According to the Food Marketing Institute, 45.6% of food retailers have installed self-checkout lanes in at least one store, compared to 17.5% in 2002. FMI and other observers expect more retailers to follow suit. "In the next 10 years, the number of self-scanning lanes will begin to outnumber the ones staffed," said Michael Sansolo, senior vice president, FMI, in the Speaks presentation at the FMI Show in Chicago earlier this month.

Also at the FMI Show, Tom Murphy, president of Colorado Springs, Colo.-based Peak Tech Consulting, referred to a survey in which 36% of shoppers asked, without prompting, why their store offered no self-checkout lanes. "Not having self-checkout in a store is similar to not having an ATM in a bank," said Murphy, who helped equip Kroger with its first self-checkout lanes as an IT executive there in the 1990s.

Why do shoppers like self-checkout? Murphy said it's perceived as faster than regular checkout lanes, even though that is not really the case. "I once witnessed a lineup to use self-checkout, while an express lane was wide open," he said.

Self-checkout, of course, appeals to young people weaned on technology. "The younger crowd loves it, and parents like to get their kids involved in the process," said Steve Rolston, store manager of Sherm's Thunderbird Market, a one-store operation in Medford, Ore. Murphy pointed out that some seniors on fixed incomes have shown an interest in self-checkout for the additional control it offers.

While self-checkout has made undoubted strides in the last few years, it is still a relatively young application, and may be entering a new phase marked by change and innovation, on the part of both vendors and retailers.

For example, Fujitsu Transaction Solutions, Frisco, Texas, has unveiled a U-Scan Max self-checkout system that features a dual takeaway belt designed to enable two shoppers to use a single unit in different stages of the self-checkout process. A divider placed along the center of the takeaway belt keeps items separate, allowing one shopper to scan items while another shopper bags items from a previous order, cutting down on wait time.

Carlisle, Pa.-based Giant Food Stores, a user of Fujitsu's U-Scan self-checkout systems in close to 90 stores, this quarter will be the first retailer to pilot the U-Scan Max.

For 21-store Clemens, Coltsville, Pa., self-checkout has been a work in progress. The chain began offering self-checkout in one of its stores a year and a half ago, said Roy Powell, director of information systems.

The store is equipped with self-checkout hardware from NCR, Atlanta. One of the units is larger than the other two and includes an input belt. Customers can unload their groceries onto the belt before scanning, rather than reaching into their basket between each scan.

"Most people with smaller orders gravitate to the smaller units and people with fuller baskets will user the bigger [self]-checkout," said Powell.

Pleased with its initial self-checkout installation, the retailer has since installed self-checkout units in two more stores, and is planning to install the units at two additional locations.

Yet, Clemens still plans to apply lessons learned to the design of its installations. "We discovered that we really need to think better about where the units are located in relation to the customer-service area," acknowledged Powell. "We'd like to see what is going on with the self-checkouts from there."

Effective monitoring capabilities may also be a security requirement. Though Murphy and other observers do not consider shrink to be a serious issue for self-checkout, precautions still must be taken. "Sometimes customers try to beat self-checkout systems by using expired coupons," said Powell.

Lakeland, Fla.-based Publix Super Markets, which installed self-checkout technology several years ago, is taking another approach to self-checkout monitoring. The chain recently began testing Fujitsu's iPAD mobile attendant, a wireless handheld tool designed to give supermarket employees the same functions as a stationary attendant station.

The pocket-sized mobile iPAD, which is equipped with a scanner, magnetic card reader and telephone capability, allows an associate to support up to six self-checkout units from anywhere, helping to cut down on the time customers spend waiting for assistance when intervention is required.

Another change in the self-checkout arena is using self-checkout software from one vendor on another's hardware. That's what Greenville, S.C.-based Bi-Lo has done, installing Quickcheck software from ECRS Software Corporation, Boone, N.C., on its existing Optimal Robotics (now Fujitsu) self-checkout hardware. The Java-based self-checkout software's flexibility may allow Bi-Lo to more easily incorporate additional self-checkout features in the future.

Targeting Small Retailers

While large retailers like Kroger pioneered self-checkout implementation, vendors have begun catering to the self-checkout needs of smaller retailers.

For example, Plano, Texas-based StoreNext Retail Technologies, a joint venture of Retalix and Fujitsu, markets a fully integrated Fujitsu U-Scan self-checkout unit to smaller retailers. It eliminates the need for independents to integrate the self-checkout unit into an existing point-of-sale and payment system, making the implementation more affordable.

Sherm's Thunderbird Market in Medford, Ore., began taking advantage of StoreNext's offering in September, according to Store Manager Rolston.

The cost of the self-checkout technology is becoming more affordable for independents. Individual units run between $20,000 and $23,000, plus annual hardware and software maintenance, stated the 2004 North American Self-Checkout Systems study, from IHL Consulting, Franklin, Tenn.

It reported that a return on investment is often achieved between 12 and 15 months after installation in the form of improved customer service, the ability to redeploy labor and reduced employee-related shrink.

"Prices will continue to drop a little more, especially with vendors competing against one another," said Lee Holman, vice president of product development, IHL.

Mobile Self-Checkout

One of the newest -- and most radical -- innovations in self-checkout is allowing shoppers to scan products as they shop the aisles with handheld devices or tablets attached to the shopping cart handle. Shoppers simply download their running tally at the self-checkout lane or regular checkout and pay. Often, they have already bagged their groceries when they reach the front end.

Food Lion and Albertsons have been leading the way with tests of handheld scanners. Stop & Shop has taken the lead in the shopping cart tablet arena with its Shopping Buddy device, installed in three Massachusetts stores since December 2003. The chain has announced that 20 additional stores will be equipped with the device this year, beginning in July. The Shopping Buddy allows an array of other marketing and service functions.

The Shopping Buddy has spawned a cottage industry of similar devices this year. In January, Wincor Nixdorf released a device called the Portable Store Assistant, which is being piloted by Dohle Retail Group at its HIT Vision-Store, in Munich, Germany, a test bed for retail technology.

In February, Fujitsu and Klever Marketing unveiled the U-Scan Shopper, a shopping cart system expected to be beta-tested this summer. And most recently, at this month's FMI Show, Springboard Retail Networks, King City, Ontario, introduced its Concierge electronic shopping cart system, which also includes a touchscreen display and bar-code scanner. It will be tested in Canada and the U.S. at the end of June, the company said.

Not for Everybody

Despite the major inroads made by self-checkout systems in retail, both in supermarkets and other retail outlets, not every retailer is entirely sold on the systems, nor are they for every shopper.

Bentonville, Ark.-based Wal-Mart Stores recently decided to remove self-checkout lanes from its new 160,000-square-foot supercenter in Jane, Mo. The four-month-old store caters to retirees, as well as a younger crowd. When older shoppers began rejecting self-checkout, the store decided to take it out. "The customer voted 'no,' so we didn't waste any time," said Del Sloneker, divisional vice president, Wal-Mart.

Despite self-checkout's benefits, certain retailers are averse to a shopping experience where customers can go into a store, not say one word to an associate, and make their purchases, noted Lee Holman, vice president of product development, IHL Consulting.

Sometimes, shoppers are turned away by self-checkout systems that don't operate smoothly and require frequent associate interventions. IHL Consulting's 2004 North American Self-Checkout Systems study included information about how one shopper's experience with the process gradually turned sour.

"Two years ago, she would not go to a grocery store that did not have self-checkout," said the Greg Buzek, president of IHL and an author of the study, referring to his wife. "Now, she refuses to use them unless the lines are really backed up. All as a result of the number of [employee] interventions required."