Report: Self-Service To Account For More Than A Half-Trillion Dollars In 2007

Written by Evan Schuman
July 21st, 2007

The one-size fits all approach is very hard to resist. It sings of convenience and a hassle-free shopping effort. In retail, it’s more often than not a myth.

I learned that the hard way when we were buying clothes for my daughter, when she was quite young. It seemed odd how very young girls were wearing two-piece bathing suits until someone explained it was one of the few garments for that age that truly was one-size-fits-all. (To a point.)

The one-size fits all strategy also fails when used by retailers to police retailers. The PCI credit card security standard is fighting to overcome retail resistance and a surprisingly high percentage of its problems result from a one-size-fits-all mentality. Any group that can include Wal-Mart, HomeDepot, 7-Eleven and Bill’s Hardware Store (down the street from me. Really nice guy) and tries to impose a single set of security rules on all of them is asking for consistency troubles.

The same problem exists today for Web analystics. Recent changes by Nielsen/NetRatings and ComScore are shifting the focus away from “number of pageviews” to “how much time the visitor spent on the site.” Given techniques today that allow multples pages to be shown without a click, the idea is not a bad one. But lumping all Websites into one category and making the change for them all is a really bad idea.

For almost all information-intensive and entertainment sites, a visitor that stays a long time is probably a very happy visitor. But what about a research site? A lengthy stay might mean that the visitor is having a hard time finding the answer they seek.

For an E-Commerce site, that long visit might mean a lot of unhappiness. Heck, it might even mean a terrible and convoluted layout and design, plus very slow page response times. Long visits can mean very different things depending on the nature of the site.

Another wonderful example of the flaw of the “one size fits all” rationale comes from a new report about the self-service/self-checkout space.

North American shoppers are on track to spend more than $525 billion at self-checkout lanes, ticketing kiosks and other self-service machines in 2007, an increase from $438 billion in 2006, according to a new study from the IHL Consulting Group. The firm predicts that self-service revenue will increase another 18 percent next year, eventually topping $1.3 trillion by 2011.

But IHL President Greg Buzek took the results one step further, saying that consumers not only use the systems, but actually want them. ?Consumers enjoy self-service and increasingly seek out retailers that offer the technology,? Buzek said.

Not necessarily. In hardware environments?consider Home Depot?the accuracy and speed are not discouraging factors and the customers tend to embrace them. But in grocery environment, I must respectfully disagree with Greg. In talking with an awful lot of grocery consumers, self-checkout lanes are generally avoided and are the checkout option of last resort. They may use it?and that use will undoubtedly increase?but suggesting that grocery consumers are happy about it seems quite a stretch.

Greg himself concedes that his survey didn’t differentiate the kind of retailer being considered in the question, so the answers can’t be segmented that way. By mixing them together, it prevents any analysis of how self-checkout is likely to be received for any particular retailer.

Is self-checkout dramatically more efficient for the retailer? Absolutely. Does it necessarily represent a downgrade in customer service? That’s a trickier question.

I think it’s without dispute that the way it’s executed by many chains?especially grocers?is absolutely a reduction in customer service, in the same way that self-service in gas stations represented a major customer service reduction for those retailers.

I happen to be based in a state (New Jersey ? please, no jokes) that forbids “pump your own gas” efforts. But the net effect has been that gas station attendants pump gas but have done away with what used to be typical services. I can’t remember the last time I bought gas and was asked if I wanted to have my oil checked, let alone see my windshields (front and back) cleaned without anyone being asked. (Uh-oh. I’m starting to sound like Andy Rooney. I better get back to geek talk.)

So, yes, the way it’s typically executed, self-checkout often does lead to reduced customer service. But it certainly doesn’t have to mean that. Information kiosks?strategically placed and intelligently programmed?can indeed make customers feel valued and can sometimes help them make purchase decisions in a way that typical store associates couldn’t.

Like everyone else in retail tech, it comes down to the thought, creativity and effort that goes into the technology?as opposed to the technology itself?that will determine whether your customers embrace it, are repelled by it or choose to live with it.


12 Comments | Read Report: Self-Service To Account For More Than A Half-Trillion Dollars In 2007

  1. Dan Says:

    Completely agree. It’s a bit of a stretch to say that consumers want these systems just because companies are making them readily available. People will transact with whatever options are available to them. Sometimes self-checkout makes things easy, other times it does not.

  2. Christina Says:

    Completely disagree. I seek out and will always use the self-checkout if it is available, especially on a trip without many items. I especially like the ones that also provide the ability to get cash back when paying with a debit card.

  3. Steven Says:

    Grocers want me to help them eliminate jobs for checkers and baggers who also have to put food on their tables, and don’t even try to bribe me with a self-service discount? I don’t think so.

    I currently drive PAST a self-serve Albertson’s and drive an extra 2 miles to shop at a full-service Albertson’s.

  4. Beth Says:

    Home Depot’s 4-kiosk self-service area is patrolled by a responsive employee and the machine accepts both cash & plastic. Winn Dixie’s self-service area is unmanned and requires me to bag, then juggle my purchases at another line where payment is made.

    So I’m happy to use the self-checkout at Home Depot, but do my grocery shopping at Publix – with friendly cashiers & baggers who offer to take my purchases to the car.

  5. Evan Schuman Says:

    These comments–thus far–are quite interesting. Even Christina’s comment, which starts with “completely disagree,” doesn’t actually disagree because it doesn’t make the distinction between various kinds of retailers using self-checkout. As Beth points out, that can–and does–make a huge difference.

  6. D. Garcia Says:

    I use self service checkouts at every opportunity, including Grocery and Hardware stores. More specifically, I use whichever method will get me out the door the quickest and/or is the most convenient. This is a primary factor in the success of online shopping.

  7. Franz Says:

    I remember when all gas was full-serve, and there were lots of arguments that it would never go self-serve …. too dangerous, too impersonal. We know where that went. Its inevitable, the economics will eventually make it happen very broadly.

  8. Thomas 2.0 Says:

    Exactly right. Works in some venues and not in others . . . I think there’s a growing number of consumers who want less interaction with store employees. I’m one of those customers: Be available and easy to find if I need help, but no, for the fourth time, I DO NOT need any help finding anything, except for a way to convince you that I’m a full grown adult who has a lifetime of experience negotiating department/electronics/video store aisles.
    But I’ve found grocery self-checkout to be a dud. Buying alcohol means signaling for a check-out attendent, which–because they don’t staff properly–means the cash register manager who’s trying to juggle the needs of 6 – 10 cashiers, self-checkout, and a cutomer service kiosk. And, in support of your caveat against one-size-fits-all solutions, both the Domick’s and Jewel self-checkouts freeze up if I try to double bag something.
    Of course, that’s not a condemnation of self-checkout in-and-of-itself, even at grocery stores; it’s their staffing/implementation that’s made it so aggrevating . . . though given State and local laws, there’s probably not much they can do about the alcohol thing (other than, of course, having sufficient staff to make it as painless as possible).

  9. Shinobi Says:

    I also tend to be on the side with people who prefer self checkout. (Although I will always pick the fastest option, so that is important to consider as well.)

    I think a survey on grocery self checkout would be interesting. Some people may be slower to adopt the technology just because they find it intimidating, others may have other reasons. In order to draw any real conclusions about consumers and there preferences with regards to self check out there needs to be a study done. Anecdotal data doesn’t really tell us anything.

  10. Craig Says:

    I am a manager at a Supermarket that offers self-checkout, so maybe I can offer some insight into this topic. D. Garcia seems to have the attitude many customers have, that is, using whichever method appears to be fastest at the time. However, an important factor to consider is the demographics of your shoppers. For example, in my particular store, only 15% of all orders checked out are through the self-service line. Approximately 80% of our clientele is 50+ years old and most of them either want someone to wait on them (I have heard comments of “we pay you to wait on us”) or don’t use the self-checkouts because they don’t feel as if they should have to learn how to use them. Another portion of that group is simply intimidated by thinking they have to use “new-fangled” technology. These same people still use checks and/or cash for their purchases. Anyway, I guess what I’m trying to say is that another variable that should’ve been used is that of who it is doing the shopping.

  11. Adam Says:

    A couple of comments:

    1. If the grocery stores are saving a good amount of money with self checkout why don’t they offer some type of incentive (such as bonus coupons or double points) when you use the self checkout. Heck you could even get one of the brands to sponsor it as part of the marketing program so there would be no cost. This would really boost usage and make people ‘happy’ to use self checkout as they are getting something for their effort.

    2. The self checkout is still too slow. You have to frequently wait for the system to catch up. You can’t enter multiple items (i.e. if you are getting 4 bottles of coke you have to scan each one).

    3. Don’t close the self check out late at night. In my area they all close around 10pm. If you go shopping late, there is one cashier and a very long line and all the self checkouts are “closed”. I understand you need one employee to monitor but eliminating the lines will boost sales.

  12. Richard Says:

    Location, location, location…

    I have installed and currently maintain several Self Checkout Systems… PSI(now IBM), IBM Baltimores, U-Scan, and NCR.

    Some of the Wal-Marts are choosing to remove their Self Checkout because of loss… While other Wal-Marts seem enamored… I believe it boils down to how they are managed, and I try to convey this to the stores. The stores that are succesful with them, have a dedicated person who is trained and comfortable with customers and the equipment, to monitor them and assist customers as needed. Stores who are not succesful are the ones who seem to forget their customer service skills, and thus have unhappy customers.

    Grocery stores in my area who are known for their customer service, have a large number of customers who will use Self Checkout if it will get them out quicker, but some grocers have never been known for their customer service, and their customers will use Self Checkout regardless of lines, to avoid cashiers.

    I try to dispel the idea that Self Checkout is automatically putting people out of work. Sure, it can happen if the store makes that choice, but the success stories that I have seen, utilize those people elsewhere, either walking the floor helping customers, or some stores often times will still sack orders on the Self Checkout. It also allows having additional lanes open with the same number of cashiers, cutting down on lines. Grocery has such a small margin of profit, customer service is still a vital part of winning and keeping customers.

    I think it will continue to improve and become more user-friendly, and not just accepted, but appreciated.


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