Self-Service Technology in Supermarkets

In recent years, there has been an increasing trend of self-service technology (SST) adoption in the retail sector. SST can take the form of self-checkouts and interactive self-service installations such as price-checking kiosks.

In Singapore’s retail sector, SST is mostly commonly found in supermarkets. With a high traffic flow, high transaction volume, and a large number of SKUs in supermarkets, self-checkouts are deemed to be a key solution to increase productivity and reduce reliance on manual labour in the checkout process.

In 2014, Singapore Productivity Centre (SPC) conducted a study to assess the effectiveness and challenges faced by local supermarkets in implementing self-checkouts. The study aimed to identify the pitfalls, challenges, and best practices that retailers should take note of when they implement SST

The study included:

a. literature review on relevant best practices and trends overseas;
b. a survey on consumers to understand their receptiveness to SST in supermarkets; and
c. interviews with supermarket chains to learn more about their experiences in adopting SST

1. What Consumers Think About Using Self-Checkouts

Awareness of Self-Checkouts

  • Most of the consumers surveyed (86%) were aware of the self-checkouts available in the supermarkets, but only 54% of them preferred to use them compared to regular manned check-outs if they were given an option
  • Speed is cited as the main reason for using self-checkouts (59%), followed by convenience (19%)
  • 21% of the respondents had not used self-checkouts before

Reasons for Not Wanting to Use Self-Checkouts

Of those who preferred not to use self-checkouts, close to half (45%) cited “not knowing how to use” as the main deterrent.

Previous research studies have shown that some shoppers experience “technology anxiety?when they encounter new technology. In general, older customers tend to shun self-checkouts and prefer the manned counters. Technology anxiety influences overall feelings of satisfaction and intention to repurchase. Hence, the presence of self-service checkouts might generate negative emotions in certain groups of shoppers, if their concerns are not addressed properly.

The technology anxiety is compounded by the bad experience that some shoppers have with self-checkouts. From our survey, 63% of shoppers have had an unpleasant experience with self-checkout

“Technology breakdown?was the most common (31%) reason cited for the bad experience, followed by “not user friendly” (27%).

If the matter is not addressed promptly, service failures have been found to arouse anger and discontentment, leading to disastrous consequences for the supermarket. According to a study in the UK, one in three shoppers left a store without purchasing the goods they intended to because of a negative experience with a self-service machine.

2. Challenges Faced by Supermarkets

Shrinkage
One common concern is the problem of “shrink?or lost inventory caused by factors ranging from accidental failure to scan a product to intentional theft. Most supermarkets believe that “shopper-caused shrink?happens more easily in self-checkouts.

A variety of mechanisms is put in place to address this. The mechanisms range from placing staff near the checkout area to make sure the shoppers are doing the scanning correctly, to hidden cameras and advanced loss prevention technology.

Integration of Equipment

The systems for cashless payments currently reside on two terminals, one for credit card and one for NETs payments. If the self-checkout accepts cash, there is a separate cash management unit, which might come with different outlets for coins and dollar notes. It will greatly facilitate customer adoption if the various systems are integrated to make the whole process simpler.

Return on Investment

The costs of self-checkouts and loss prevention technology remain high. Supermarkets that have adopted self-checkouts have seen the following benefits:

  • Enhancement to customers’ shopping experience by allowing them to carry out self-directed transactions
  • Improvement in use of limited manpower resources by deploying them away from cashiering duties to other higher value-added activities

However, it is difficult to attribute all sales improvement and cost savings to the installation of self-checkouts.

There are also reported cases of self-checkouts being pulled out from major supermarket chains in the US (e.g. Costco, Albertsons), and being replaced with other options such as express checkouts and manned checkouts to enhance human interaction.

3. Factors to Note in Adoption of SST

Retailers in Singapore have been relying heavily on manpower and manual processes. However, they are increasingly facing the challenges of an ageing workforce, shortage of workers, and difficulties in hiring and retaining employees. To address these challenges and to sustain their competitiveness, retailers will have to invest in labour-saving equipment and lean processes. SST can be a viable solution.

In the adoption of SST, and in particular self-checkouts for supermarkets, retailers should consider the factors in the table below.

Factors to Consider
1. Customers

  • What are the customers?preferences and behaviour?
  • Are they equipped to help themselves?
  • How do you educate and incentivise your customers to use the SST?

2. Employees

  • Are the employees trained to handle the technology?
  • Are the employees trained to deliver the same or better customer service with the SST in place?
  • Where do you deploy any “excess?manpower?
  • How does the technology affect their roles and duties?

3. Processes and layout

  • Do you need to change the layout to accommodate the new processes and technology?
  • Do you need to change the layout to encourage shoppers to use the SST?
  • How does the technology affect the other processes?

4. Technology

  • Is the interface user-friendly?
  • What are the actions to take if there is a breakdown?
  • What are the turnaround time, maintenance and servicing terms offered by the vendor?

5. Financial considerations

  • What are the costs and benefits of investing in SST?
  • What is the pay-back period?
  • Are there subsidies, grants and loans available to support the costs?

Self-service is about delivering your service with less manpower, by empowering your customer. Find out more about how SPC can help you with implementing self-service through our SPC S2tm programme.

Enquiries

Please contact us at 6745 5833 or customerservice@sgpc.sg if you would like to discuss with SPC on how we can assist you to implement SST in your company.

If you would like to use or cite any information from this article, please seek prior approval from SPC which owns the copyrights to the information.

This article is based on a research carried out by SPC with research assistance provided by Ruth Tan, Toh Hao Hong and Pearl Tan Hui Lin. SPC would like to extend our appreciation to the management team and customers of the selected supermarket for their participation in the research.