To Self Service or Not to Self Service
When self-service checkouts were introduced into Australian supermarkets around five years ago, they were a novelty, and consumers still had a choice.
They could choose to scan their own items and pay at the self-service checkout, or there were plenty of regular checkouts where they could be served by an actual human who would also put their items into a bag for them. Some human-operated checkouts were even faster, as consumers were limited to 12 items or less.
Increasingly, however, these other options have been scaled back, and—from close personal observation—it is often the case that the traditional checkouts are almost all unattended by staff, giving people little or no choice in using the self-service channel.
The business case for self-service checkouts has always been slightly problematic, and their accelerating use in Australia has pulled the contradictions into focus, mainly as figures show that people are making more frequent trips to the supermarket.
The days of one major weekly shopping spree are fading for many households. People are now visiting more to top up what they have at home. One argument is that self-service is more convenient with fewer items. The flip side is that shoppers now have even more opportunities to be frustrated at the point of sale.
False economy?
It's a cost-reduction exercise for the supermarkets but over the long term. Wages represent close to 10% of the costs for Australian supermarkets. While self-service checkouts will cut that figure, the operators still need to pay around AUD125,000 for each new checkout, which also has costs in integrating with existing point of sale and inventory tracking systems.
Another issue undermining the cost reduction business case is theft. Retail crime is estimated at close to AUD5 billion per year in Australia, and according to U.K. research, theft is more prevalent through the self-service channel.
The study of 1 million transactions found that losses through standard systems were 1.47% but 3.97% through self-service. It also found that some people who would not typically steal from a supermarket were likelier to do so if they self-serviced.
“Customers or all types of companies are sick and tired of the increase in having to do things online and having to use self-service checkouts.”
The solution to this is a human presence in the self-service area, but this undermines the business case to reduce labor costs.
Australia's market-leading Woolworths, which has around 32% of the market, has responded by installing cameras overhead at supermarkets to prevent wrong scanning.
This is an additional cost to the company and has also created anger among digital rights lobbyists, with one group claiming it will make shoppers feel "like they are constantly being watched and recorded."
“This kind of normalization of surveillance makes space for the growing use of invasive technologies in everyday life to access everyday essential services,” said Samantha Floreani, a program lead with Digital Rights Watch.
“These technologies are framed as an improvement for customers, but in reality, it is a punitive use of automation to cut costs on staffing for large corporations while treating every customer as a suspect.”
Consumer rights group Choice says the use of AI in the retail industry shows the need for regulation and legislation because corporations are "making up the rules as they go along." Customers are being left to "navigate the confusion."
Self-service preferred
All this shows that the arguments around customer satisfaction remain unresolved. Australian grocery giant Coles, number two in the Australian market with a 28% market share, says that around two-thirds of its customers prefer self-service checkouts and “we continue to see that number increase.”
Industry research suggests that a growing number of customers prefer self-service. Studies published on the Gitnux blog claimed that 73% of customers prefer them over staffed checkout lanes, with the figure 85% among younger Gen Z shoppers.
Arguing in the other direction, a U.K. study by PwC showed that satisfaction levels had fallen by 8% to 13.9 out of 20, based on mystery shopping research.
Anecdotally, Coles's social media is full of complaints about the self-service.
“I am now faced with a bank of self-service checkouts and not one single staffed checkout! What happened to service,” wrote one customer recently on a Coles Facebook page.
“Customers or all types of companies are sick and tired of the increase in having to do things online and having to use self-service checkouts.”
There is no doubt there is a demographic divide. Younger customers find self-service easier and more convenient, and the supermarkets say they feel a greater sense of control over ringing up their purchases and packing themselves.
Many older people find it alienating, irritating and difficult, particularly when weighing fruit and vegetables.
It might be cynical to say, but the reality is that demographics are only moving in one direction, and time is on the side of the supermarkets as younger consumers age and new, even more digitally savvy generations come up behind them.
In the meantime, many consumers face an often unhappy hybrid of solutions as the retail industry appears to move inexorably towards a self-service future.
Lachlan Colquhoun is the Australia and New Zealand correspondent for CDOTrends and the NextGenConnectivity editor. He remains fascinated with how businesses reinvent themselves through digital technology to solve existing issues and change their business models. You can reach him at [email protected].
Image credit: iStockphoto/Drazen Zigic
