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Self-service technology in retail: new report addresses challenges and opportunities

A typical retailer can experience an increase in stock loss of 1 basis point for every 1% of sales that go through fixed self-checkout (SCO) machines, according to a new report.

The study by tech vendor NCR and ECR Community Shrinkage and On-shelf Availability Group, suggests a typical store with 25% of their sales value going through fixed SCO could see additional stock losses of 0.25% of sales value. A prior ECR report found that grocery retail losses are about 0.67% of sales, on average.

However, as a growing number of retailers explore the use of self-service and frictionless checkout processes, the in-depth report – which is authored by Adrian Beck, Emeritus Professor at the University of Leicester – shines a light on how SCO technologies can be controlled.

It warns that monitoring data on the risk of loss relating to SCO, as well as adopting a more joined up approach to SCO management and control, is crucial to ensure losses stay at a minimum.

The report is based upon data collected from 13 major retailers operating in Europe and the US, including analysis of 140 million ‘Scan and Go’ transactions, 17 million transaction audits, video analytics of €72 billion of fixed SCO transactions, and comparative stock loss data from thousands of retail stores.

The aim of the report is not to scare retailers off using the technology, instead it looks to put forward a set of strategies that may help to minimise stock loss so they can better achieve operational and customer service benefits of SCO.

John Fonteijn, chair of the ECR Community Shrinkage and On-shelf Availability Group, said: “Retailing is becoming ever more dependent upon a host of technologies, many of which are increasingly focused upon improving the customer journey.

“This report will help retail organisations to continue to reap the benefits that self-scan technologies can bring while doing so within a sustainable business model.”

Dusty Lutz, vice president & general manager for store transformation solutions at NCR, added: “As the industry is moving at an ever-faster pace towards frictionless checkout, the various self-scanning technologies are a key strategic element in retailers’ store development plans.

The report shows that there is an opportunity to leverage emerging computer vision and artificial intelligence technologies as a more effective and less resource-intensive solution to simultaneously help improve both security and customer experience. For example, our latest security solutions can help detect when a shopper is attempting to substitute an expensive steak for the price of bananas, or tries to leave half of their items in their cart without scanning them.”

Self-serve is very much a hot topic in retail today, with Amazon Go’s arrival and innovations in China led by Alibaba and JD.com prompting western retailers – the grocers in particular – to explore their own versions of technology that doesn't require staff-operated checkouts. Of course, self-service in grocery has existed since the 1990s. 

And as Diebold Nixdorf’s ‘TechStyle’ event in London at the beginning of November highlighted, there are growing opportunities for fashion retailers to follow Zara's lead and use self-service in their stores. More accurately, it is a blend of self-service and assisted service to help speed up transactions and to reduce the number of till staff needed at what is becoming an increasingly costly time for the industry.

Diebold Nixdorf’s newly packaged technology, comprising a desk with four self/assisted checkout points, was showcased at the event alongside a range of other in-store technologies predicted to support the future look and experience of fashion retail.

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