Self-service checkout systems and consumer adoption

¶ … Self-Service Checkout

In response to the question of why retailers continue to invest in self-service checkout lanes despite their relative low use, the answer lies in the significant cost reductions possible even with low usage rates. According to Paula Rosenblum, Research Director at AMR Research, self-service checkout lanes cost on average $100K to $125K each to set up, including the software to capture the sales data (AMR Research 2003). Given this expense per lane, retailers look first for returns on this investment in the most expensive category they have, which are salaries. Retailers often move staff from standing at registers to training so they can be subject experts in aisles and provide service throughout aisles to increase shoppers' satisfaction. According to AMR Research (2003) Home Depot had targeted 30% of all transactions in 2003 through 760 store locations. AMR estimates that this amounted to 40 million transactions in the U.S. alone. The freeing up of p0rsonnel to better advice and serve customers through the aisles is considered a major competitive advantage by Home Depot. So highly thought of is self-service checkout that the CEO of Home Depot during the 2003 earnings call mentioned that this technique is responsible for significant strategy in managing to cut down on theft, as more personnel are in the store aisles assisting customers and discouraging shoplifting. On the upside, having more associates in the aisles also increases same store sales by encouraging up-sell and cross-sell of additional products. Altogether, the role of self-service checkout is to provide retailers with the opportunity to get higher levels of productivity from the sales associates by both providing personalized service, alleviating the potential of theft in the aisles, and most importantly, increasing the potential of up-sell and cross-sell opportunities as well. On a final note behavioral studies like the one completed by Cap Gemini (2003) showing that shoppers' main frustration is with waiting to check out of stores, and that self-service checkout lanes are specifically created to address that pain point of shoppers so they will return to the same store and chain.