Evan Schuman's StorefrontBacktalk

A UK-based research group predicts there will be 430,000 retail self-checkout terminals (self-checkouts) in use globally by 2014, four times the current number, and North America will account for more than half of the units.

The forecast is based on a study by Retail Banking Research, which said there were 92,600 self-service checkouts in use globally by the end of 2008, about 25 percent more than were in service at the end of 2007. The study focused only on self-checkouts used in supermarkets and other retail establishments.

“Despite the recent progress, (self-checkout) remains a niche product in all but a handful of countries, and it still has a long way to go to reach the level of penetration achieved by traditional assisted point-of-sale terminals,” said the report.

It said stores in North America have about 80 percent of the world’s self-checkout kiosks, about 74,000 units as of the end of 2008. “Western Europe was home to 15,000 machines and Asia Pacific 3,000 while the other regions contained no more than 700 machines between them,” said Retail Banking. “Retail Banking’s research also revealed that in 2008, a total of 22,800 global self-checkout shipments were made, up 19 percent on the year before.”

Greg Buzek, president of IHL Group, which also studies the self-checkout market, acknowledged Retail Banking as a respected company. But he said its predictions might be somewhat optimistic.

“The forecast seems quite aggressive and seems to assume that vendors have found a new solution that broadens the market reach for the self-checkout technology to many other retail segments beyond grocery, DIY, and mass merchants,” Buzek said. “Our report and forecast, which should be out in the next few weeks, remains bullish on the technology overall. However, I believe our forecast will be more in line with market realities and acceptance from other segments.“

Retail Banking Research said North America will account for more than 50 percent of the 430,000 units it expects to be deployed by 2014. Western Europe should represent 32 percent and Asia Pacific 13 percent of self-checkout installations, predicted the report. “The adoption of (self-checkout) technology in the other regions is expected to remain significantly lower, with these regions together forecast to account for fewer than four percent of terminals.”

Retail Banking said the “compelling reasons” for retailer adoption of self-checkouts include staffing efficiency since “one attendant can supervise four or more such terminals so employees can be redeployed to improve service elsewhere” and the ability of the devices to “more than double the number of points of sale that can be made available to customers in the same space” as regular POS terminals.

The researchers contend the self-checkout kiosks give customers the “illusion of faster service,” a sense of privacy and confidence that all self-checkouts are being registered correctly.

Retail Banking estimates the North American base of self-checkout installs will increase at a rate of 20 percent per year over the next six years. “Some of the larger North American retailers are installing self-checkouts in greater numbers than previously, and this has increased forecasts for self-checkouts in the region,” Retail Banking said. “In markets with lower labor costs, the business case is weaker. Brazil, for example, contains only a handful of self-checkout installations and those that are deployed are hardly used at all. The unions are strong and highly regarded in Brazil and they have greatly publicized their opinion that retailers use self-checkouts to replace the human workforce. Self-checkouts are therefore unpopular because they are said to constitute a threat to the workforce.”

Although Retail Banking called Japan “another potentially huge market,” it said self-checkouts are slow to catch-on there because “there is a widely held view that self-checkout terminals reduce the level of service, which makes them difficult to sell in a country where a high level of service is seen as paramount.”

Retail Banking listed NCR, Fujitsu, IBM and Wincor Nixdorf as the leading self-checkout manufacturers, noting they account for 99 percent of the world’s self-checkout market.