Short read: ‘It hasn’t delivered’: The spectacular failure of self-checkout technology

At a time when the usual worries about technology replacing humans are heightened because of the advent of AI, this article highlights a ‘labour-saving technology’ which hasn’t worked in the West (and thankfully has never made it to India). The tech in question is ‘self-checkout kiosks in supermarkets’. When we visit Europe or America for business, we are usually greeted by the following sight in supermarket checkouts: “It’s a common sight at many retail stores: a queue of people, waiting to use a self-checkout kiosk, doing their best to remain patient as a lone store worker attends to multiple malfunctioning machines. The frustration mounts while a dozen darkened, roped-off and cashier-less tills sit in the background.

For shoppers, self-checkout was supposed to provide convenience and speed. Retailers hoped it would usher in a new age of cost savings. Their thinking: why pay six employees when you could pay one to oversee customers at self-service registers, as they do their own labour of scanning and bagging for free?

While self-checkout technology has its theoretical selling points for both consumers and businesses, it mostly isn’t living up to expectations. Customers are still queueing. They need store employees to help clear kiosk errors or check their identifications for age-restricted items. Stores still need to have workers on-hand to help them, and to service the machines.”

Supermarket chains have spent billions of dollars over the past 20 years trying to get self-checkout kiosks right. It is a simple use case for tech. So why has it misfired? “”It hasn’t delivered anything that it promises,” says Christopher Andrews, associate professor and chair of sociology at Drew University, US, and author of The Overworked Consumer: Self-Checkouts, Supermarkets, and the Do-It-Yourself Economy. “Stores saw this as the next frontier… If they could get the consumer to think that [self-checkout] was a preferable way to shop, then they could cut labour costs. But they’re finding that people need help doing it, or that they’ll steal stuff. They ended up realising that they’re not saving money, they’re losing money.””

The theft (called ‘shrinkage’ in trade jargon) issue is particularly painful for retailers: “Some retailers cite theft as a motivator for ditching the unstaffed tills. Customers may be more willing to simply swipe merchandise when using a self-service kiosk than they are when face-to-face with a human cashier. Some data shows retailers utilising self-checkout technology have loss rates more than twice the industry average.”

If you want to read our other published material, please visit https://marcellus.in/blog/

Note: The above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. The information provided is intended for educational purposes only. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India (SEBI) and is also an FME (Non-Retail) with the International Financial Services Centres Authority (IFSCA) as a provider of Portfolio Management Services. Additionally, Marcellus is also registered with US Securities and Exchange Commission (“US SEC”) as an Investment Advisor.