SELF EXAMINATION

KIM ANN ZIMMERMANN

Retailers recognize the potential of self-checkout systems to improve customer service and reduce front-end labor costs.

But adoption of the technology remains limited, even as long-time users take steps to expand their investment in self-checkout.

Some of the country's largest retailers, including Kroger Co., Cincinnati, and A&P, Montvale, N.J., have recently rolled out self-checkout systems to additional stores. Other chains, such as Winn-Dixie Stores, Jacksonville, Fla., are currently evaluating which stores will be next to implement self-scanning systems.

Supermarkets and vendors cite several factors, including a reduction in the cost of the technology, as well as improved customer acceptance, as reasons for increased investment in self-scanning projects. But worries over shrink remain high as retailers analyze the costs of installing such systems on a wider basis.

"[When evaluating new technology,] what we look for are ways to improve efficiency while lowering our costs [including shrinkage]," said Mickey Clerc, spokesman for Winn-Dixie.

SN's third annual State of the Industry Report on Supermarket Technology, published earlier this year, indicated that 21.6% of respondents planned to test or launch customer self-scanning devices in 1997. In 1996, only 6.5% of those surveyed indicated they would test or implement self-scanning systems.

Enhancements to self-checkout technology may make it more attractive. Next-generation systems will include links to frequent-shopper programs, alerting a customer that an item would be discounted if they presented a frequent-shopper card, for example.

Many vendors are testing improvements, such as full-motion video capabilities, which could be used for instructing consumers and presenting marketing messages. Also on the horizon are voice recognition systems designed to speed the identification of non-barcoded or unreadable items.

In addition, vendors say it is becoming more common for self-checkout systems to allow the customer to pay for the purchase using a debit or credit card without requiring a cashier. Previously, some systems have required a cashier to pay for the transaction.

Vendors are also working on more sophisticated security systems that would compare the weight of the scanned items, based on their bar codes, to the actual weight of the customer's shopping bag. And while the retailers interviewed by SN are using stationary self-checkout systems, handheld portable systems for customer self-scanning are also available.

Customer acceptance is becoming less of an issue as people become more accustomed to self-service technology, noted Tony Hollrah, store operation service manager for the Louisville, Ky., division of Kroger Co.

"While customer acceptance is always something we need to evaluate, people are becoming more computer literate," said Hollrah. "People are using PCs at work and at home, so they are not intimidated. Look at how automated teller machines have become part of our everyday lives."

Kroger's Louisville division currently has nine stores with customer self-scanning. In addition, self-scanning was recently installed at two stores in the Denver-based King Soopers chain, which is also part of Kroger.

While Hollrah declined to discuss the company's plans to implement the technology in other locations, Kroger has announced its intention to implement self-scanning stations in five more stores by the end of the year, and in 22 stores over the next two years.

A source familiar with the Kroger implementation said the project was moving forward as scheduled.

"The idea of putting in self-scanning is to improve our service level," Hollrah said, "But we also have to justify the investment."

Winn-Dixie has had customer self-checkout in two lanes of the company's Jacksonville, Fla., store for almost a year, Clerc said.

"While one test does not prove that self-scanning will work in multiple locations, it has worked well enough for us to expand self-scanning to additional stores," he said.

While Clerc would not provide details on the company's plans for self-scanning, he said Winn-Dixie is currently evaluating the expansion of the technology. "We are now in the process of identifying those stores that would be the next to install self-scanning," Clerc said.

At A&P, self-scanning was installed at the retailer's Bayonne, N.J., store, which opened last month.

The company has had customer self-checkout lanes at its South Plainfield, N.J., store for more than two years.

Michael Rourke, senior vice president at A&P, said there are no specific plans to implement the technology in other locations, but the retailer will be making determinations on a case-by-case basis. He said the company will be looking at factors such as the cost of implementation and consumer acceptance.

"South Plainfield has been successful, and Bayonne seems to be successful so far, but we have had a few other tests which have not been as popular," he said.

Rourke noted that about 35% of the transactions at both locations are being handled at the self-scanning checkouts.

The inability to cost-justify self-scanning was the reason Pathmark Stores, Woodbridge, N.J., pulled out of a project more than two years ago, according to Harvey Gutman, senior vice president for retail development.

"We just did not see an adequate payback on the system when we calculated the additional space required and shrinkage we experienced," Gutman said.

He noted that the system did not allow the company to reduce labor or the number of cashier-staffed checkouts. "Customers still required assistance and a cashier needed to watch the self-checkout station," he said.

He said Pathmark will monitor developments in self-scanning systems, but that the company has no plans to evaluate the technology again in the near future.

"We had some customers who liked the technology very much," he said. "It is something we will keep an eye on and when we feel it will be cost-beneficial, we'll look at it again."