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Costco Self-Checkout Trial Setback After Store Losses

Written by Evan Schuman
April 4th, 2012

A two-year-old experiment at Costco to try self-checkout in a handful of stores has not gone well, with at least one Costco in Idaho pulling the systems out after finding—and attributing entirely to self-checkout—a $60,000 inventory loss in six months, said a Costco management source.

One of the problems with the Costco system in various stores was either inadequate or non-existent notification to customers when a purchase was rejected. For example, let’s say the shopper has 38 items in her cart and is placing the items on the self-checkout conveyor belt, which also weighs the items as they move. If the weight was different than expected, the system would void the purchase and not charge the customer. In theory, the customer would ask an associate for help to resolve the problem.

But many customers, according to a Costco source, didn’t notice the item was rejected, so they placed it in their cart, took their payment-card receipt and left the store. If the associate at the door didn’t notice that a voided item was in the cart, it would go down as a loss. If the associate did notice the problem, it would be hard to not sound like the customer was being accused of shoplifting. “Many of them weren’t doing it on purpose,” said the Costco official.

Self-checkout in general has had a rough time recently, with grocery leaders Albertsons and Kroger pulling back from self-checkout for multiple reasons, including perceived customer-service issues and security. Big Y has also pulled back from self-checkout.

The Idaho Costco store that sent self-checkout packing—it’s in Coeur D’Alene—had four self-checkout lanes for two years and found a curious change after its exit. “Our members (processed) per hour went up, from 50 per hour to 60 per hour,” the Costco source said.

But it was the inventory problems that killed the experiment.


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4 Comments | Read Costco Self-Checkout Trial Setback After Store Losses

  1. Mark Scherer Says:

    Not all self checkout works this way. One self checkout vendor is designed to work this way and it leaves a gaping security problem that can create this situation. There are 3 predominant providers of self checkout in the U.S. and this represents the lowest installed base provider of the 3 and their market share continues to shrink from reports I have seen.

  2. Evan Schuman Says:

    Editor’s Note; The vendor that Mark was referencing is IBM. His point is that other systems make it easier for any weight mismatches to require associate intervention–just like with alcohol or cigarettes or any other age-restricted item–rather than a more passive flag to the customer that the item was excluded.

  3. Ann Grackin Says:

    Another angle on the challenges with self checkout which may come to the retail scene in the next year is the tap and go/NFC smart phones. Though these are all the rage in Japan, we have yet to adopt them in the U.S.. But that will change as the new phones emerge with the chips embedded this year. And the new demographic want to use this type of technology. A large retailer told us that NFC phone customers are getting their identities stolen, even though the self check-out requires proximity– and they do not want to take responsibility for this occurrence in their stores, on their premises. So although they like the idea self check-out they are still experimenting with various approaches.

  4. ed Says:

    For self checkout, item-level RFID or unique barcodes plus real-time tracking appears to be the missing component. Mail delivery companies use real-time tracking of mail with a barcode and assure delivery at a certain time. The public library embed books with RFID and track them through checkout. Retailers and SCO manufacturers are going to have to accept the fact they cannot rely on UPC and really need an item-level identifier that tract that specific product as a unique item from shelving to checkout.

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