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Is the sun setting on self-checkout?

Checkout-free technology and smart carts gain traction
aldi grab and go
In April, Aldi became the first major U.S. grocery retailer to deploy Grabango’s checkout-free shopping technology.

It could be the beginning of the end for self-checkout machines. 

In the U.S., Walmart has removed self-checkout lanes at six locations so far, owing in part to losses from theft, including items like fruit and vegetables being scanned with codes for cheaper produce. Safeway has also shut down self-checkout at a number of locations in the San Francisco Bay area because of theft.

A Giant Tiger in Stratford, Ont., meanwhile, recently scrapped self-checkout kiosks for a different reason. “The biggest complaint you have from everybody is, 'You don't pay me to work here,’” Scott Savage, the franchisee of the location which has a mostly older clientele, told the CBC of customers having to scan and bag their own groceries. “They would line up at my regular registers.” 

Meanwhile, independent grocers like The Sweet Potato never introduced them in the first place.  

“When I did a cost-benefit analysis, the benefit just didn't outweigh the high capital cost output,” CJ Chiddy, COO of the two-location organic and natural foods Toronto grocer, tells Canadian Grocer.  “We pride ourselves on being an employer with a strong reputation for doing right by our team, and self-checkouts didn't feel in line with those values.” 

He also notes The Sweet Potato owes its success in part to developing first-name relationships with customers. 

“We care too much about growing and nurturing our community connection to replace those people with automation,” explains Chiddy. 

From self-checkout to checkout-free 

A number of companies, including Amazon and Grabango, a Berkley, Calif.-based provider of checkout-free shopping technology, are banking on a different alternative to stick. 

Using edge computing and an AI network, Grabango bills itself as the only enterprise-class checkout-free solution for operation in existing stores. In April, Aldi became the first major U.S. grocery retailer to deploy Grabango’s checkout-free shopping technology in an existing full-size store at one of its Chicago locations. Shoppers who download the Grabango app and scan a QR code at the end of their trip can experience checkout-free shopping, though still have the option to go to the cashier. 

Will Glaser, CEO and founder of Grabango, touts its solution over self-checkout, noting while the “machines increase transaction capacity and save on labour costs, they cause other issues and costs. They are hard to use, which means needing staff to help customers.” 

Who hasn’t gone to the self-checkout lane thinking it will be faster than the cashier only for the machine to be blinking for assistance as you wait for an employee to approve a discounted item or fix some other issue? 

“And while some customers like them, many people don’t. And so if you install too many self-checkout kiosks, you end up alienating those shoppers who resent doing the checkout work themselves,” adds Glaser. “The other hidden cost is shrink.”

Grabango’s research found self-checkout machines “are a significant driver of shrink, with losses amounting to 3.5% of sales — or more than 16 times more loss than traditional cashiers.”  Its research calculated that 6.7% of self-checkout transactions had at least some amount of partial shrink, as opposed to 0.32% with cashiers.

“Partial shrink is the most common and costly form of shoplifting, where a shopper pays for some of their purchase, but not the full amount,” notes the study.  “For example, a shopper might have three cans of soda but only scan two of them, or might type in a code for a lower-priced item.” 

While checkout-free technology has had mixed results to date — Amazon has been swapping its Just Walk Out technology for Amazon Dash smart carts that show prices on a screen to the customer in some of its Fresh grocery stores — the Grabango solution is different, contends Glaser. 

“Ours is much more cost-effective and doesn’t use weight sensors under every shelf which limits how you can run a store in subtle ways, particularly around merchandising,” he says. “With ours, you can move around product, execute end-cap promotions and add seasonal items because we don’t rely on shelf technology.” 

Among Canadian-based companies, Grabango has partnered with Circle K on checkout-free technology in the U.S. but has yet to employ the tech in Canada. “It’s a market we are eager to get into, because Canadians don’t like waiting in line, either,” notes Glaser. 

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sobeys smart cart
Sobeys was one of Caper Cart’s early adopters.

Smart shopping carts get a push

Could smart shopping carts be the holy grail?  In addition to Amazon, smart carts have been developed by Caper AI, which  Instacart acquired for $350 million in October 2021. Caper has been piloting its solution with Empire Co.-owned Sobeys, including at its Laird and Wicksteed location in Toronto. 

A Caper Cart has sensors that detect the items placed into their cart without having to be scanned or weighed, and customers “check out” by paying directly on the cart’s terminal rather than lining up. 

“Sobeys was one of Caper Cart’s early adopters, and we’ve been proud to partner with them for the past few years,” says Ahmed Beshry, co-founder of Caper and senior director of business development at Instacart.  “More broadly, we’re excited by the retailer adoption we’ve seen to date across North America, including Bristol Farms, Fairway Market, Geissler’s, Kroger, Schnucks and ShopRite.” 

In addition to streamlining checkout and the ability to watch your running total, a Caper Cart gamifies the shopping experience with a coupon wheel. “This allows customers to spin the wheel for a chance to win discounts and dollars off right before checkout,” says Beshry. “We see many opportunities to continue gamifying the experience in the future as we partner with CPGs.” 

In addition to making them a revenue generator for stores by sharing in ad revenue, he says “store managers tell us the gamified elements are attracting new customers to their stores.”

As well, he says the majority of customers choose to login to their grocer’s loyalty program at the start of their shop with a Caper Cart — and, in doing so, can be served with new, personalized offers. “For example, for a customer who typically shops a $70 basket, a grocer could offer a personalized deal of $5 off if they spend $100.”  

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