Monday, September 10, 2012

Cost of Your Checkout: $12M Every Second

imageCheckout is so much an integral part of retailing. In the world of big box retailing, in fact, checkout may be the only time a customer directly relates to someone representing the retailer. So why are retailers trying so hard to get rid of their only opportunity to connect with their customers?
Because checkout costs them a pretty penny.

As per a Reuters story Wal-Mart says it can save $12 million a year for every second it can cut from the average checkout time at the Wal-Mart chain in the United States. Supermarkets typically have slim margins and profitability and therefore are likely to seek any advantage to reduce on labor that can account for 8-10% or more of sales.

Chances are that you have used a self-checkout counter recently. Chances also are that you did this to save yourself some time and avoid standing in a line waiting for the cashier to serve you. The top three reasons given by consumers to use self-checkout are shorter lines, less time taken to check-out, and convenience. A report by Dechert-Hampe & Company claims that 85% of American shoppers have used self-checkout, two-thirds of the stores have self-checkout lines and almost a third of all supermarket transactions are now self-checkout!
However, the self-checkout process has its concerns for retailers and consumers alike. Immature self-checkout technology has been the bane of consumers. It has been estimated that as much as 40% of Self-Checkout transactions require intervention. Such intervention generally takes out the time advantage that is the primary motivation of the consumer to use these counters.
For retailers, ROI on the self-checkout technology investments remains questionable, though some retailers also believe that increased shrink and smaller baskets are also related to self-checkout counters though data remains questionable. In general, the ROI based on labor savings can be substantial, however, many retailers report the actual savings as soft since they often redeploy people to other tasks.
Wal-Mart’s latest attempts to use iPhone app to provide a “scan and go” self-checkout process may be just the latest shot at solving the problem of providing an efficient solution to a problem that has been a hard case to crack. The process will allow the consumers to scan the items as they shop and then pay at a self-checkout counter. Wal-Mart’s test does not allow users to pay using their phone as yet, but the app transfers the scanned items to the self-checkout kiosk and complete the transaction using the normal self-checkout process. This should definitely allow a more efficient (and hence pleasant) checkout experience compared to the current self-checkout counters, though other technologies had probably looked equally promising at first. From technology point of view, this follows the self-checkout counters, RFID chips, self-service hand-held scanners, and even a tunnel scanner (Kroger’s Advantage Checkout experiment).
Will this be a clincher? Let us wait and watch.
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© Vivek Sehgal, 2012, All Rights Reserved.

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