Less than two weeks apart, Costco and Sam’s Club both talked about letting customers check themselves out without a cashier. The weird thing is these two rival warehouse clubs have come to opposite conclusions about the technology: Sam’s Club is doubling down on it while Costco is eliminating it.
Sam’s Club parent Wal-Mart Stores is adding 10,000 self-checkout lanes, and has expanded self-checkout to about a third of its U.S. Sam’s Club stores. At an investor conference earlier this month, Sam’s Club CFO Michael Dastugue said self-checkout kiosks and “convertible” registers that can be operated by either workers or customers “provide flexibility to our members on the way they want to shop.” Meanwhile, Costco CEO Craig Jelinek told BloombergBusinessweek that the company was getting rid of self-checkout because cashiers can ring up merchandise more quickly.
It’s a divide that mirrors the love-it-or-hate-it response shoppers have to the technology. A recent Cisco survey says 52% of people prefer self checkout — a roughly even split.
Costco and Sam’s Club parent Wal-Mart Stores both have reputations for being bare-knuckled negotiators to keep prices low for customers, but the two chains otherwise have different philosophies. Sam’s Club is cheaper — a basic membership runs $45, compared to Costco’s $55 — and Costco has been labeled the “anti-Wal-Mart” for targeting higher-income shoppers and for employee-friendly pay and benefit policies.
Self-checkout technology has its benefits and its drawbacks, and retailers have to weigh those against what their customers expect of them.
It’s cheaper. The big selling point of self-checkout is that it sharply reduces the need for cashiers. One cashier can monitor a handful of self-checkout stations, which lets low-margin retailers like grocery and big-box stores shave a good chunk off their labor costs. According to Reuters, Wal-Mart spends $12 million every second on cashiers’ wages at its American stores. For a brand like Sam’s Club, where price is the first, second, and third priority, self-checkout kiosks are a highly visible way to communicate to customers that the company is investing in keeping its overhead down.
Some people like it. Some people much prefer swiping their purchases themselves and paying without ever talking to a human being. It’s partly about convenience, but it appeals to a DIY ethos. “On a psychological level, it might have more to do with the unique element of control that self service affords,” an article in the Harvard Business Review says.
It’s probably no coincidence that one of the earliest successful adoptions of self-checkout was home-improvement giant Home Depot, which promised weekend handymen “You can do it. We can help,” for most of the last decade. USA Today says the biggest growth in self-checkout will be at convenience, hardware, and drug stores.
It’s the future. Some in the retail industry view self-checkout as a sort of “on ramp” to an era when everybody will just pull out their phones and use a bar code reader to scan items while they shop, then pay and walk out without having to wait on line or pass items over a scanner.
While Costco sticks to cashiers, Wal-Mart is one company that sees self-service as the wave of the future, expanding a pilot program it calls “Scan & Go” to more than 200 stores this year. It’s not alone. Last year, Supermarket News reported, “Kroger is trying out self-scanning handheld devices that consumers can use to scan and bag their purchases as they traverse the store.”
Then there are the drawbacks to self-checkout, which some retailers have found out about the hard way.
It helps out thieves. Aside from do-it-yourselfers, shoplifters are also big fans of self-checkout because they’re not observed closely. According to USA Today, “Theft — intentional or not — is up to five times higher with self checkout than when cashiers are working.” Earlier this month, a Florida woman was caught and arrested for trying to sneak out of a Walmart store with more than $350 worth of merchandise, for which she only paid around $40. She told police she didn’t realize she hadn’t paid for the rest of it.
Supermarket chains Albertson’s and Big Y both threw in the towel on self-checkout in 2011. National Retail Federation expert Richard Hollinger told NPR that even though some retailers won’t admit it, theft is a big reason why they’re scrapping self-checkout.
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It can lower customer satisfaction. Cisco’s survey says 52% of shoppers like self-checkout. That leaves 48% who pretty much hate it. Sometimes the kiosks are poorly designed or made, which can make using them an exercise in frustration. Furniture chain Ikea scrapped self-checkout last year after finding that hard-to-use scanners meant it took people longer — and often required a cashier’s assistance — to use self-checkout. “It may work with home improvement or grocery stores, but it’s a little more complicated when you have a flatbed cart with lots of boxes in it,” Ikea spokesman Joseph Roth told trade magazine StorefrontBacktalk.
Aside from mechanical glitches, some shoppers do want to interact with store employees, or feel that self-checkout amounts to, “I’m doing the cashier’s job for free.”