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Propmodo Technology

By Franco Faraudo · May 1, 2024

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Initially touted as a faster, cheaper checkout solution, self-checkout is plagued by theft and customer frustration, leading retailers to explore innovative alternatives like RFID tags, smart carts, and AI-powered systems. In today's email we explore how self-checkout is being replaced by more efficient and secure technologies.

Be sure to check out our other retail property management tech articles. We'll investigate how innovative tech helps landlords optimize their tenant mix, examine the enduring importance of physical stores in retail's future, and learn how Macerich leverages technology to empower small business owners.

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Self-Checkout Shortcomings Fuel the Search for Smarter Retail Solutions

Self-checkout is booming, driven by several key trends. Today's tech-savvy customers, especially younger generations, crave the convenience and control it offers – just like they've grown used to with self-ordering options in other industries. Plus, with rising labor costs and shortages, self-checkout provides a cost-effective solution for businesses.

Despite all of these trend lines pointing towards a world dominated by self-checkout machines, they have not been as successful as many had predicted. The issue isn’t adoption; nearly 40 percent of grocery stores and over 75 percent of retail stores in the U.S. have self-checkout kiosks. The issue is theft. An estimated 20.1 million Americans have stolen from a self-checkout kiosk (21 percent of them did so accidentally), and 6.6 percent of American consumers plan to steal from the self-checkout again. 

Customers also don’t love the extra work of scanning the items themselves and complain about the finicky nature of the technology. One of those complainers is State Representative Megan Cotter, who, after being very vocal about how she just “worked for free,” created a bill that would prevent any stores in her state of Rhode Island from having more than eight self-checkout stations open at one time. 

Some companies have even decided to remove self-checkout systems in certain locations. Dollar General has stopped doing self-checkout entirely in 300 stores and converted at least some of the self-checkout kiosks into traditional cashiers in another 9,000. Target has decided to limit self-checkout to customers buying ten items or less in 2,000 of its stores. 

The future of checkout could be even more streamlined. Retailer Uniqlo is utilizing radio frequency identification (RFID) chips in its price tags. This allows customers to potentially check out simply by placing items in a sensor-equipped bin, bypassing traditional scanning methods.

Amazon, an early innovator in self-checkout technology, has recently shifted its focus. Instead of its "Just Walk Out" system, which used cameras and sensors to track purchases, the company is now emphasizing Dash Carts. These smart shopping carts feature sensors and integrated screens, allowing customers to pay without a traditional checkout process. Meanwhile, German grocery chain Aldi continues to explore cashierless options. They've developed AI to monitor shopper purchases and are currently beta-testing the technology in one location.

The labor shortage driving investment in self-checkout often highlights regional differences. One New York restaurant experimented with replacing cashiers with video conferencing technology connected to workers in the Philippines. While larger retailers haven't adopted this strategy yet, it demonstrates the range of low-cost options available to innovative businesses.

Change is inevitable for in-store checkout experiences, but the exact shape of next-generation technology remains uncertain. Self-checkout aimed to be faster and more cost-effective, but theft and design issues raise questions about its long-term viability. If self-checkout can overcome its challenges, it may still displace traditional cashiers. But, the longer those problems persist, the higher the chance a superior technology could take its place. 

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Propmodo Technology is edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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