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Will Self Service Checkouts Boost Your Business?

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Self service checkouts are nothing new. Interactive screens that allow customers to ring up their purchases and pay without the assistance of a sales associate have been around since the 1990s. And according to a 2018 study published in the Journal of Retailing and Consumer Services, more retailers are poised to adopt self service checkouts in coming years. By 2021, 350,000 stores worldwide will make self service checkouts available to customers, a steady increase from just 200,000 stores in 2013.

Oft-cited reasons for adopting self service checkouts include retailers’ desire to reduce the length of checkout lines, decrease the costs of human capital, and allow more space for merchandise displays. But, do self service checkouts actually drive sales? And how do they impact the customer experience? Retailers may want to consider the risks associated with self service checkouts before deciding to add the technology to the mix. Therefore, let’s examine the available findings on self service checkouts to help you decide whether they might be right for your business.

 

For Certain Items, Self Service Checkouts Increase Sales

Companies like McDonalds, Taco Bell, and Cinemark have reported that customers who use self service technology spend more than those who check out with a sales associate, according to Gretchen Gavett’s article for Harvard Business Review. But what’s true for fast food and concessions stands won’t necessarily translate to other retail arenas.

A 2014 study from researchers at University of Toronto, Duke, and National University of Singapore compared sales at a pizza chain after they added an online ordering option in addition to phone and counter service. They found that customers purchased higher-calorie meals and made more complex requests when ordering online. The findings suggest that the change in purchasing behavior may be linked to customers’ desire to remove social friction. Based on this study, it stands to reason that the sales increase in the fast food space could be linked with customers’ fear of facing negative judgment of their unhealthy eating habits.

In addition to a pizza restaurant, the researchers studied how self service checkouts performed when they replaced traditional cash registers at a liquor store. They found that the market share of products with difficult-to-pronounce names increased by 8.4% with self service technology. Again, the findings suggest that the interpersonal exchange necessitated by traditional checkouts may affect the types of products customers purchase. And the desire to avoid social friction extends beyond unhealthy eating choices.

Customers can rest assured that a screen won’t judge them for ordering garlic bread alongside their pizza. But the same logic won’t necessarily hold if you’re a home goods retailer or a health foods store. In fact, customers at such destinations might be more likely to take pride in their purchases, adding healthy or aesthetic items and looking forward to discussing them with a cashier. As such, retailers should think about their product lines and what motivates their customers to buy. If you sell products that your customers might not want to discuss with sales associates face-to-face, you might think about installing self service checkouts to increase the market share of those products.

 

How Savvy Are Your Sales Associates?

Speaking of fast food, McDonalds was an early adopter of self service kiosks in the early aughts, writes Gavett. McDonalds found that the average check size was 30% higher when customers checked out using the kiosks compared to cashiers. In fact, 20% of customers who didn’t initially purchase a drink with their meal ended up doing so only after the machine offered one. Unlike sales associates, kiosks will never miss an opportunity to upsell.

Again, this comes down to understanding your product line and knowing which items might be easily added on once a transaction is underway. You may find that training your sales associates to suggest suitable add-ons is sufficient to drive sales. If you aren’t sure your sales associates will reliably use suggestive selling, you might think about floor placement and ensure that add-ons or any small impulse purchases are in clear view by the checkout line. Short of changes to sales associate approach or visual merchandising, perhaps self service checkouts will be effective if you feel that you’re missing an opportunity to upsell.

 

Self Service Checkouts May Change How Customers Perceive Your Brand

One potentially challenging effect of self service checkouts are their effect on the way customers perceive your brand. Gavett’s article points out that self service checkout technology “sometimes obscures the work that’s being done” for customers. Self service technology is designed to look as fast and easy as possible, which makes it harder for customers to see the effort going into each transaction. Therefore, they might appreciate the service less and see it as less valuable.

One way to combat this challenge is to keep your floor teams active, even if they aren’t managing the transaction. Visible greeters and stock associates are a welcome remedy for customers who want to see the work going on behind the scenes. Even featuring strategic signage anticipating customers’ needs and responding to it may do the trick.

 

The Hidden Cost of Self Service Checkouts

Perhaps the most significant argument against self service checkouts is theft, writes Rene Chun in The Atlantic’s March 2018 issue. Shoplifters use tactics like ringing up an expensive item with a code for a cheaper alternative (such as scanning organic strawberries as their conventional counterpart.) Alternately, shoplifters peel the stickers off inexpensive items and place them over a pricier option, making sure that the swapped items are the same weight to avoid alerting the system in the bagging area.

Chun writes that these tactics are very common, having been employed by 20% of shoppers in an anonymous online questionnaire by Voucher Codes Pro. The survey suggests that customers who wouldn’t otherwise shoplift were more likely to do so when self service checkouts were available to them. Researchers at the University of Leicester found that supermarkets with self service checkouts were creating a “crime-generating environment” in their efforts to cut the costs of human labor. As such, Chun says that retailers including Albertsons, Big Y Supermarket, and Vons have scaled back or removed self scanning altogether. Still, other retailers may re-up staff in order to prevent theft, thus removing one of self service technology’s perceived benefits.

 

Final Thoughts

Self service checkouts won’t necessarily boost your business. Customers place a high value on the social aspect of shopping experiences, which can be obscured when self service kiosks are introduced. Nonetheless, adding a self service option alongside your stores’ human cashiers may drive sales for specific goods, including hard-to-pronounce items or merchandise that, for whatever reason, customers may fear carries a social stigma. If you opt to add self service checkouts to the mix, continue to train your floor teams to greet, engage with, and leave lasting impressions on customers. And lastly, position store personnel strategically and train your retail teams to look out for theft. Or be prepared to incur some margin of loss due to self service-inspired theft.

Explore our blog to read more about things like Blockchain in Retail and How to Sell Absurd Amounts of Designer Denim. If you’re curious about how machine learning can help improve store operations, read more here and here.

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