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    TECHNOLOGY: Wake-up Call: Do it yourself

    Retailers loath to embrace self-checkout technology run the risk of losing shoppers to their more tech-savvy competitors.

    By David Diamond

    When I'm on the road for business, it's rare that I speak with anyone else from the time I leave my house until I reach my client's office. I check in at an airport kiosk and print my boarding pass, itinerary, and receipt. When I land, I hit an ATM for some cash; then it's on to the bus directly to my rental car, which is waiting for me with my paperwork already inside. Then I head on out, and if I crave a snack along the way, it's a local supermarket and self-checkout for me.

    Of the technological innovations introduced in stores over the past 10 years, few have been as well received and as widely implemented as self-checkout.

    Self-checkout systems will generate transactions worth $161 billion in 2005, according to the 2005 North American Retail Self-Checkout Study, by Franklin, Tenn.-based retail technology consulting firm IHL Consulting Group. The value of these transactions will increase to more than $450 billion by 2008 as many more systems are deployed in the next few years.

    Why is self-checkout successful? First, in a world of ATMs, deli-ordering kiosks, and pay at the pump, checking out and bagging your own groceries isn't perceived by consumers as an erosion of service, but rather, because the perceived wait times are shorter, as an improvement in service.

    Second, self-checkout uses underused retail space. We can use it to replace lanes six through 10, and before self-checkout, lanes six through 10 were typically open only six hours a week.

    Finally, self-checkout systems work. It may have taken a few iterations of the technology to get there, but most newer self-checkout units are fairly reliable.

    So what's the downside? The only real drawback -- aside from an occasional glitch in a system -- is retailers' fear of the unknown. I've often heard grocers say that they're waiting until consumers demand the technology. This is a mistake. Consumers aren't going to request self-checkout. Rather, they'll evaluate the new technology that they see available. While a retailer hesitates, it's potentially losing customers to those competitors that adopt the technology.

    What should smart retailers do to leverage self-checkout's benefits?

    -Understand your customers' attitudes, opinions, and behaviors concerning self-checkout. Self-checkout is now sufficiently widely distributed that real research can be fielded to understand what your consumers think about self-checkout, and what effects self-checkout has on consumers.

    -Install self-checkout units in every possible store. The technology has proved itself: Consumer concerns have been few and far between. That means it's time to be aggressive with self-checkout by installing a four-aisle module in all except the smallest stores.

    -Help migrate self-checkout from an express-lane technology to a mainstream technology. From the beginning, it was assumed that self-checkout would mainly be a program for the express lanes, and while this is true, more consumers are comfortable using self-checkout for the large weekly shop. These consumers consider the trade-off of their labor for a perceived increase in line speed and control to be a good one, and you need to encourage them. Consider dual formats, with some self-checkout lanes specifically designed as express lanes, and others designed for mainstream shopping.

    -Go to school on merchandising the self-checkout. While the overall results behind self-checkout have been excellent, sales of typical checkout items, including magazines and candy, have dipped as self-checkout has been introduced, and some marketing activities, such as Catalina coupon distribution, can be affected. But proactive retailers are finding ways to address these issues. Kulpsville, Pa.-based Clemens Family Markets, for example, has integrated its loyalty card program to its self-checkout systems.

    Self-checkout now warrants serious development by the affected front end vendors. But this development won't happen unless you demand it. Work with magazine publishers to create marketing devices that thrust magazines back at consumers, without making checkout harder, and work with candy companies to develop new shelves and displays that leverage the self-checkout units, rather than retain ones that suffer from their intrusion. If you keep customer service top of mind during this process, you'll be repaid in kind.

    By David Diamond
    • About David Diamond

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