Rethinking loss prevention: tackling self-checkout hurdles

Mark, self-checkout systems have been around for a while now. What’s your take on them?

“The concept of self-checkout systems brought a lot of excitement. They promised to make shopping faster and reduce wait times, which was great for both customers and stores. Recent studies show a sharp rise in self-checkout popularity, with usage jumping from under 20% in 2021 to over 50% in 2023. 85% of users prefer it for its ease. Gen Z leads with an 89% adoption rate. But as these systems became more common, we noticed an uptick in theft incidents.Think of for example supermarket giant Jumbo in the Netherlands, who reported they suffered €100 million in damages due to shoplifting. A third of all thefts occur at self-scanners. This was a wake-up call for the industry, highlighting the need to look beyond the technology itself and consider the broader shopping environment and the behaviours within it.”

Can you elaborate on some of the unintended consequences these systems have introduced?

“Certainly. The initial enthusiasm for self-checkouts was based on their potential to streamline operations. However, as their use expanded, a significant challenge became apparent: an increase in theft. This wasn't just about isolated incidents; it was a trend that made it clear we needed to rethink our approach to loss prevention. It's not enough to automate transactions; we must also consider the human elements involved.

We are also seeing non grocery stores making the move to self-check outs - such as home furnishing giants IKEA and successful fashion global retailers such as Primark now embracing this technology to cut the queue wait time. A massive driver for this is to improve customer service, which flies in the face of the most published logic. Successful retailers have a fundamental issue and that is that they can’t recruit enough personnel to fully staff a checkout to meet customer demand, which in turn leads to a decrease in customer service. Longer queuing times increase abandonment rate that is directly linked to a reduction in overall turnover. Innovative retailers are now adopting self-checkouts to improve customer service and reduce those queue times.”

Do you think that replacing all cashiers with self-checkout machines is the future?

“Well, that's an interesting question. Let me provide some insights. There was a recent simulation study on self-checkout operations in a grocery store. It found that none of the three alternative scenarios improved throughput, suggesting that simply replacing all cashiers with self-checkout machines may not be the best alternative. It highlighted the need for a dynamic staff schedule to balance labour costs and customer waiting times. At PFM, we see this as part of the larger picture. While we aim to optimise operations, we also emphasise understanding human behaviour. This combination allows us to not only enhance efficiency but also effectively address theft rates. It's about finding a delicate balance between operational excellence and loss prevention strategies that account for human behaviour."

How does understanding human behaviour play into this?

“The shift to self-service created a scenario where the physical oversight by staff was reduced, operating on the assumption that technology could fully manage the process. But theft at self-checkouts often occurs because of the gaps in monitoring. For example, when an employee is overseeing multiple stations, they can't watch each customer closely. It also introduces opportunity to those customers who normally wouldn’t steal, the industry calls this “self sweethearting” sounds innocent but it is theft all the same.Recognising these behavioural aspects is crucial for devising more effective loss prevention strategies.” 

How is PFM addressing these challenges?

“At PFM, we understand that while our AI technology can detect potential theft, it's our focus on human behaviour that really makes a difference. We look at how employees interact with customers and how people behave around self-checkouts. This helps us identify key moments and patterns that could indicate theft, allowing us to create targeted strategies to prevent it.”

Can you give some examples of such strategies? 

“One of the strategies we've adopted is installing the AI technology and displaying the live feed on monitors. These monitors, that can be seen in the checkout areas, act as a deterrent by making it clear that sophisticated surveillance is in place. Additionally, we're working on improving employee-customer interactions. By fostering positive engagements, we not only enhance the shopping experience but also deter theft, adding another layer to our loss prevention efforts.”

It seems like a holistic approach is needed to tackle this issue effectively?

“Absolutely. The challenges posed by self-checkout systems require a comprehensive approach that merges technological innovation with an in-depth understanding of human behaviour. By recognising the complex dynamics between technology, customers, and staff, we can develop sophisticated strategies to reduce theft. The future of retail security lies not just in the technology we use but in our ability to understand and influence the human elements of retail. Retailers must embrace this holistic perspective, using both technology and psychological insights to create a safer, more efficient shopping environment.”