Self-checkout systems first began to appear in grocery stores nearly four decades ago, promising a new era of convenience for shoppers and efficiency for retailers. The allure of the technology was simple yet powerful: customers could bypass long lines by scanning and bagging their own items, transforming the shopping experience into a faster, more streamlined process.

For workers, the promise was equally enticing. With customers taking on a part of the checkout process, employees could be freed to focus on other tasks, potentially enhancing productivity and service quality in other areas of the store. And for retailers, they could provide a better experience for shoppers with a lower amount of labor. 

At the heart of this promise was the idea of empowering consumers, giving them more control over their shopping experiences while also addressing labor shortages in retail. 

However, as alluring as these promises were, the reality has proven to be otherwise.

The Missed Promise of Self-Checkout

While many retailers have invested millions, if not billions, in self-checkout technology, some are now reversing course. Walmart has removed self-checkout in certain stores. Target is restricting the number of items self-checkout customers can purchase at one time. In the UK, supermarket chain Booths is removing self-checkout from all but 2 of its stores. 

Dollar General, one of the fastest growing retailers in the US, is rethinking its strategy. While the company aggressively expanded self-checkout in previous years, during their Q3 2023 earnings call, CEO Todd Vasos said they relied too much on self-checkout and were now going to be adding more attendants to self-checkout stations. Other large retailers such as Costco and Wegmans have also revised their self-checkout strategies (Costo now requires membership verification and photo identification at self-checkout areas).

Why are so many retailers changing their tune on self-checkout? When self-checkout systems were first introduced, they promised to revolutionize the retail experience. However, the reality has been far from the initial promise. As The Guardian highlights, instead of making life easier for shoppers and stores, self-checkout systems have often done the opposite. 

Self-checkout was supposed to save time for customers by allowing them to bypass long lines. But in practice, many customers find the systems confusing and frustrating to use. According to CNN, self-checkout delivers none of what it promises and has become an emotional trigger for shoppers.

The promise of self-checkout – shorter wait times, better customer experience, lower labor costs, manageable shrink – has just not materialized. Wait times are still unacceptable; the experience is worse with customers saying they prefer a cashier; the technology is, at best, barely tolerable and, at worst, makes the customer abandon purchases; employees are still required and have to manage many potentially unhappy customers. The answer to the technology problems is often to buy more technology, further extending the potential payback time frame, if it is ever achieved. And all those systems require maintenance.

Self-Checkout Meets Reality Check: High Rates of Theft

However, in addition to customer dissatisfaction, the biggest problem is unacceptable levels of theft and loss due to self-checkout. According to some Agilence customers, loss is around 30% higher at self-checkout. Higher rates of theft at self-checkout are well-reported across the industry and confirmed by numerous studies and surveys. 

A study by the University of Leicester of retailers in the US, UK, and Europe found that the use of self-checkout lanes can lead to an up to 122% increase in theft rates, amounting to nearly 4% of total sales. Given tight grocery margins (the profit margin among European grocers is 3 percent), losing 4% of total sales is a staggering amount. The retailers seeing this troubling loss rate estimate that self-checkout systems account for as much as 23% of their total unknown store losses, with 48% of those SCO losses being intentional theft.

This surge in theft is partly due to the anonymity and lack of human oversight provided by self-checkout systems. Customers may feel emboldened to steal when they believe there’s less chance of getting caught. Some customers steal unintentionally because the process can be so cumbersome (A LendingTree survey found that 21% of shoppers accidentally stole an item while using self-checkout, while 15% said they stole on purpose). Moreover, some customers may justify their behavior as a ‘Robin Hood’ act against large corporations, or simply view it as a victimless crime. 

How Retailers Can Mitigate the Problems of Self-Checkout

Despite its problems, given a tight labor market and large investments in self-checkout systems, self-checkout isn’t going away for most retailers. So what should retailers do? They don’t need to throw the baby out with the bathwater. With some improvements in policy, process and technology, they can better achieve the promised benefits. 

Some changes include simple ones like limiting the number of items purchased to fewer than ten – sound familiar? It was called an “express lane” years ago. This facilitates a faster throughput, is easier for attendants to monitor, and cuts down on the likelihood of theft. 

Another is limiting high-risk items. Retailers can restrict self-checkout to items that can be scanned with a barcode – no produce, no bulk items, no proteins, no alcohol. This would minimize mistakes, remove scales (that can break), eliminate employee required interventions such as age verification, and protect expensive items such as beef, seafood, or organic produce from being rung-up “mistakenly” as a lower priced item. Small, expensive items can also be restricted.

Implementing stronger surveillance measures, such as cameras at self-checkout stations, can deter potential thieves. Some retailers are also using AI technology to monitor transactions and identify suspicious behavior. An analytics tool can help loss prevention teams identify patterns of theft and loss at self-checkout in order to take preventative action.

And while part of the promise of self-checkout is labor reduction, having a dedicated staff member present at the self-checkout area can provide assistance, deter potential theft, and add a human touch to the process. These employees should also be properly trained on how to monitor self-checkout lanes effectively, including identifying common methods of theft and knowing when to intervene.

By being honest about the problems with self-checkout, revising their policies, and taking some commonsense actions, retailers can better realize the promise of the technology, while minimizing its downsides and better protecting their bottom line. 

About the author

Brian Brinkmann is the Chief Product & Marketing Officer at Agilence, the leading loss prevention and operational analytics provider for retailers, grocers, and restaurants. Brinkmann is an industry veteran with over 25 years of experience bringing analytics, data mining, machine learning, and AI products to market to improve business and organizational performance.