Wal-Mart Boosts Self-Checkout, But Its Claimed Cost Savings Don’t Add Up

Written by Evan Schuman
March 7th, 2012

At a New York conference Wednesday (March 7), Wal-Mart CFO Charles Holley mentioned that Wal-Mart—and its Sam’s Club division—will be sharply increasing how many self-checkout lanes it offers. On the same slide and in practically the same breath, he said that Wal-Mart saves $12 million in cashier wages for every second it reduces in checkout. That’s really interesting, but mostly because of what Holley did not say.

The implication of the comment was to associate such savings with self-checkout, but the Wal-Mart CFO was careful to not go there. One of the many reasons is that the savings being hinted at are almost impossible to prove, assuming they exist at all.

The expansion referenced for Sam’s Club would see a self-checkout increase from the 80 stores that currently have it to 300 by December. The savings, though, are much more amorphous. Let’s drill into Holley’s comments.

First, the keynote remarks he made at the Bank of America Merrill Lynch Consumer & Retail Conference differed slightly—but materially—from the slide he was working from.

The slide (which presumably went through legal eight or nine times) said: “For every 1 second in average transaction time, we spend ~$12M in cashier wages.” What the CFO said, though, was: “For every second we can save, that’s $12 million in savings we can pass along.”

That’s a key difference, and it speaks to the ongoing self-checkout debate. Let’s assume that the math is correct and that a second spent by all of Wal-Mart’s cashiers costs the chain about $12 million a year.

How would self-checkout lanes change that? Its value is that self-checkout enables the store to process more transactions with fewer people. But it’s not a clean reduction, because an associate has to manage a handful of self-checkout lanes to deal with exception items, glitches, training customers and watching for thefts.

Self-checkout systems are supposed to only handle 10 or fewer items, so self-checkout lanes will either remove only smaller baskets or will radically slow down from the weight of many large shopping efforts.

Self-checkout is certainly a boost for store efficiency—which ultimately saves money—but associating with a time reduction seems a reach.


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