D-I-Y for Y-O-U?
Self-checkout poses challenges, promise for c-stores.
The self-serve movement owes a great deal to gas stations and c-stores. But while self-serve at the pump energized both the channel and the concept itself decades ago, the same has not played out inside the store.
For years, c-store operators have watched self-checkout proliferate at supermarkets, home-improvement centers, hypermarkets, and even airlines and libraries, trying to decide if the idea is appropriate for them. The verdict thus far has been tepid at best. But John Schaninger thinks otherwise, having spent a year and a half resolving the question for Quick Chek Corp., Whitehouse Station, N.J. Schaninger, vice president of sales and marketing for the 125-store chain, expanded the company’s original four-store test into three additional locations. The reason: After the test, the chain received higher customersatisfaction scores and an improved perception of staff friendliness.
“That’s really the biggest benefit,” he says. “We’re a high-volume chain. At breakfast, lunch and dinner, our employees are busy. [Self-checkout] allows them time to engage with customers more than before.”
Schaninger’s conclusion comes despite myriad barriers, including cost, questionable labor savings and how a large percentage of products in the store are age-restricted or difficult to scan, such as prepared foods. But the bottom line for Schaninger: “Customers love it.”
Set against the industry’s sluggishness with self-checkout, his findings imply that the answer varies depending on company goals, store size and volumes. That said, a number of elements in this complex equation seem fixed:
- Not in Every Store: Even Schaninger feels that not every site justifies the cost of self-checkout, saying larger stores with higher traffic counts and more staff typically qualify.
- Costs Have Come Down: The self-checkout devices have become more streamlined for the channel, sometimes cutting equipment costs in half.
- It’s a Self-Service Age: Customers are accepting the self-checkout option as part of their shopping lives, pushing the definition of what convenience is and forcing c-store retailers to confront the issue. Some believe that self-checkout at c-stores is inevitable. “No retail segment is more dependent on selfservice than c-stores, with pay-at-thepump, ATMs, fountain drinks, coffee. ... It’s the best example of self-service retailing we have,” says John Saccomanno, director of industry marketing for NCR Corp., Duluth, Ga., which expects a 10% rise in self-checkoutdevice sales across all channels in the coming year. “It’s an industry that next to restaurants is one that’s most susceptible to high-peak periods … like the lunch rush or before a baseball game or parade,” he says. “It results in an inconsistent convenience offering.”
Face -Time Face -Off
One of the more fundamental concerns surrounding self-checkout is customer-employee interaction. While some may argue that a typical c-store customer would prefer avoiding human interaction, others assert human personalization is a differentiator, one that helps transform a store from a destination commodity into an anticipated consumer experience.
Many call “enhancing an alreadyimpersonal experience” unwise. James Richardson, vice president of consulting for The Hartman Group, Bellevue, Wash., says what’s changing is the industry’s growing emphasis on foodservice.
“Food requires a high degree of trust,” he says. “People have to believe in the quality of the perishables. They have to believe in the brand and the store staff.”
And consumers have less trust in c-store staff than their local independent grocer. “If c-stores are trying to ramp up fresh food, that might mean they want a tighter relationship,” Richardson says. “Self-checkout doesn’t help that.”
Those arguing the contrary expand the scenario, saying that the employee never leaves the sales floor. With self-checkout, Saccomanno says, employees are no longer tethered to a single point-of-sale (POS) and can handle multiple tasks, including connecting with customers.
“People get better service in a [selfservice environment],” Saccomanno says. “The way things are now, the associate is 2 feet higher or there’s a counter with a POS in between. You will find most retailers deploying selfcheckout in other formats because it enhances customer-service levels.”
Why or why not?
The proliferation of self-checkout at grocery stores at least at first glance is compelling, according to Richardson of Hartman Group. People shop for a week’s worth of supplies vs. a fill-in or grab-and-go purchase at a c-store. In a supermarket, self-checkout may actually alleviate congestion.
Another concern is how much selfcheckouts will accelerate transactions. Greg Buzek, president of IHL Group, Franklin, Tenn., says c-stores have unique issues in that some charge for enhancements to purchases, such as extra cheese or bratwurst vs. regular hot dogs. That poses a practical prob lem of scanning or weighing the item at the self-checkout. Then the problem of age-restricted products comes in. “Think about all the things that will stop a selfcheckout: buying lottery, fountain drinks done through a dispenser, phone cards, or checking I.D. for cigarettes or alcohol,” Buzek says. “So now you’ve reduced the selfcheckout to packaged items in store. But you still have to have that cashier there. So now you’ve got one person overseeing all packaged-items sales.”
Labor savings are a question, he says. The benefit of redeploying labor may be moot because many stores aren’t big enough to reap the rewards. “You have to be a pretty large c-store, almost like a truckstop, to have enough employees to redeploy or [cut] for it to make sense,” he says.
Then there’s the cost. Typically, a self-serve register can run $15,000 to $20,000 each, with trimmed-down versions for c-stores in the $10,000 range, Buzek says. That’s compared to a regular POS register, which will run $2,500– $3,000.
Beyond customer service, the arguments for self-checkout bleed over into operations, says Saccomanno of NCR. If a c-store employee calls in sick, that’s the equivalent of three grocery-store employees—so self-checkouts can be a partial HR solution. Another area of benefit is with cash management: In a self-checkout environment, employees will handle less cash, and scanners can better and more consistently identify counterfeit currency.
Then retailers have to consider processing time, he says. If self-checkout actually allows a retailer to push through more customers in the same amount of time, it may translate to more parking for guests, more pump spaces to pull up to and more merchandise turns inside the store.
Technology also has a way of personalizing the customer experience, Saccomanno says. The examples involve loyalty rewards, communicating in a native language and consistently offering a “hello” or “thank you” with the person’s name on the screen.
In the end, Saccomanno concedes that volumes are an important consideration for the whole equation. “You’d realize better use of labor if you had a large number of transactions at the store,” he says. However, he says, self-checkout registers for c-stores today are smaller, more streamlined devices that are cheaper and have less “down” time. “If you have 20 lanes and 10 are self-serve, losing one is no problem,” he says.
“If you have three and one goes out, that’s like losing a cashier.”
Playing It Safe
Whether self-checkout eventually picks up at c-stores, its onset will potentially change the way operators lay out their stores. According to Ed McGunn, CEO and president of Corporate Safe Specialists, Posen, Ill., the concept takes the cash and moves it to the front of the store.
In the average c-store, registers are near the back office, where employees count the money. With self-checkout, the cash is at the front of the store, so staff must physically move money containers to the back.
“Hardened business practices will need to be exported to whatever this business environment will be,” he says. “Customers are using [self-checkout]. The next phase is to manage the cash the customer deposited.”
Self-service will have a transformative effect on the industry, Saccomanno of NCR says. Self-checkout will eventually include in-store fuel sales and lottery, he believes, and will shake up many facets of the stores.
“It will require a change in checkout areas and how you handle adult products, like magazines and tobacco,” he says. “How do you transform your business to do all that correctly?”
Self-Checkout Pros, Cons
For retailers weighing the pros and cons of self-checkout, here’s a quick hit list of the biggest issues.
- Frees up employees to provide more one-on-one interaction with customers
- Speed, possibly increasing transaction numbers over any given time period
- People like the option and want it because they see it in other retail channels
- Labor savings, which is more beneficial to larger-format c-stores
- Less cash handling, better at spotting counterfeit currency
- Makes the experience less personable
- Age-restricted and perishable products slow down transactions
- Costs are coming down but are still significant vs. a regular POS register
- Questionable labor savings for smaller stores
- Changes store format and brings cash toward the front of the store
For some retailers, due diligence has kept many c-store retailers from getting into self-checkout, with one of those reasons being cost. Here are a few numbers provided by the Franklin, Tenn.-based consulting firm IHL Group. $25,000 Cost of a typical self-checkout unit
$10,000 Cost of a streamlined self-checkout unit designed for small-format stores
$2,500 Cost of a typical POS register Source: IHL Group