Self-checkout counters bring new convenience and speed to shoppers, as well as enhancing operational efficiency for retailers. But they can also dramatically exacerbate retail shrinkage. Technology can provide the solution.
Encompassing unsold inventory losses resulting from shoplifting, employee theft and administrative errors, retail shrinkage (explored in our previous blog) costs UK retailers an estimated £8 billion across their operations each year. In this blog, we zero in on specific initiatives that can empower in-store retail employees and enhance the customer experience by minimising retail shrinkage at self-checkout counters.
“Shoplifting is becoming more common among middle-class customers because of faulty checkouts.”
Archie Norman, Chairperson of Marks & Spencer
Self-checkout (SCO) systems are revolutionising the shopping experience. In today’s fast-paced retail environment, they offer customers the freedom to shop and pay independently, enhancing convenience, reducing wait times, and optimising operational efficiency.
These systems can also, however, lead to retail shrinkage at more than double the rate encountered through traditional checkout methods – whether that’s through non-scanning, unpaid walkaways at SCO counters, or mis-scanning.
“The thing is when it comes to self-scanning tills, it's hard to know how much deliberate stealing is and how much is by mistake.”
Paul Foley, Former Chairperson of Aldi UK
Now, with uptake increasing fast – the number of SCO counters in UK supermarkets rose 45% over the past five years – the challenge of retail shrinkage is set to become even more acute. The retail sector urgently needs effective solutions.
Swipe, scan, steal: Dissecting customer behaviour at SCO counters
Shoplifting is a common issue in traditional checkout lanes. But SCO counters can make it far easier for dishonest individuals to take advantage of the lack of oversight. Additionally, errors in scanning or discrepancies in pricing can lead to unintentional losses for retailers. According to the British Retail Consortium, customer theft contributed to approximately £1.8 bn of retail revenue losses in 2023, with SCO counters being the major contributor.
Customers engaging in these behaviours can be divided into two groups, with one large set of customers admitting that they unintentionally failed to pay for an item and the other intentionally attempting to steal.
Self-checkout, self-loss for retailers: Understanding the shrinkage dilemma
While still operational, Grabango revealed that shrinkage via SCO machines was responsible for losses equivalent to 3.5% of sales. Broadly speaking, these losses divide into three main categories of losses at SCO counters:
Walk-aways: Shoppers scan all items correctly, but do not finalise the payment process, or they don’t scan the items at all and leave the store with the unpaid products.
Non-scanning or scan avoidance: Shoppers bypass the scan area without scanning items or leaving items in a basket or trolley; approximately 20% of losses at self-checkout are due to scan-avoidance incidents.
Mis-scanning: Shoppers weigh products at the produce scale, intentionally select lower-priced products on the SCO till’s display and attach a ‘manipulated price tag’ to the product; employees may also, at times, collude with customers to authorise a lower price.
Tech to the rescue: Innovations tackling shrinkage at SCO counters
By implementing technology at SCO stations, UK retailers have been able to reduce shoplifting losses by 15-30%. No surprise that there’s such high demand for user-friendly solutions that not only safeguard the privacy of customers and staff but are also easy to implement and support.
Technology initiatives that can enhance security and streamline operations by cutting losses at SCO counters include:
1. Low-tech solutions complementing security
Retailers can enhance security by combining low-tech solutions with advanced technologies. An enhanced barcode scanner and mirror function is a simple yet effective deterrent, while clear signage reinforces security awareness. Embedded RFID technology automates scanning and improves accuracy at self-checkout counters; weight checks and locked cases prevent item swapping; restricting the number of items per transaction reduces theft risk; and random bag checks (and attentive staff) also deter dishonest behaviour.
2. Generative AI models augmenting security
Generative AI, trained on transaction data, detects abnormal purchasing patterns and flags potential fraud in real time. It also enhances weight-based security systems by predicting expected transaction weights. Customers receive prompts on-screen, and staff are alerted to mis-scans.
3. The impact of enhanced customer identification
Scanning loyalty cards at SCO counters reduces anonymity and discourages shoplifting. Biometric verification (facial/fingerprint recognition) enhances security by verifying user identity. Combining loyalty or biometric verification with purchase history and pattern analysis enables customer profiling, identification of repeat offenders and alerting store staff to potential thefts at SCO counters.
4. Video analytics for effective loss prevention
Video analytics uses object detection and tracking to detect suspicious activity, like concealing merchandise or leaving without paying. By studying body language and movement patterns in real time, behaviour analysis can detect scan avoidance, mis-scanning and walk-aways (research shows that video analytics could reduce shoplifting losses by up to 30%).
The time for action? Now
By implementing a combination of customer awareness, enhanced surveillance, staff training, and user-friendly technological solutions, retailers can prevent and manage loss at SCO counters. Doing so is key to safeguarding profitability and maintaining customer trust.
