The law of unintended consequences is taking a chomp out of grocery chain profits as more stores transition from human clerks to self-service checkout technology, thus reducing the time shoppers spend in line and under the temptation of impulse items.
That's the upshot of research being released tomorrow by IHL Consulting Group in Franklin, Tenn., which provides market analysis to the retail industry and its IT vendors. According to IHL, consumers report buying junk food, supermarket tabloids and the like 45% less frequently while scanning their own purchases than when checking out the old-fashioned way.
"Retailers are being forced to rethink their merchandising at the front end as they deploy self-checkout systems," says IHL President Greg Buzek in a press release. "The impulse displays have not caught up to this new technology. By definition these are impulse items – thus they must engage the senses. Retailers such as Meijer and Kroger have adjusted by offering items such as rotisserie chickens and fresh baked breads to rely more on the sense of smell to drive sales rather than simply visuals when trapped in a staffed lane."
The scandal rags may have to use bigger headline type or adjust their ratios of celebrity to alien-abduction news (that's not in the report; just my free advice).
Shoppers logged $111 billion worth of self-checkout purchases last year, an increase of 35 percent over 2004, according to IHL. Fewer than a fifth of consumers report using self-checkout every time it's available, while 29 percent say they do so only when the staffed lines look daunting.
The biggest gripe? That's predictable: 55% say it's when something goes screwy and they have to wait for a human being to come over and fix it.
One thing everyone should be able to agree on is that self-checkout is only going to become more commonplace. Buzek saw the adoption of this technology expanding two years ago when we spoke just after IBM bought self-checkout vendor Productivity Solutions.
"That's going to be a big jump to this market because IBM is the [point-of-sale] vendor for about 75% of the top 20 front-lane checkout retailers," Buzek told me at that time. "Now that they own the self-checkout platform, they're going to be able to integrate stuff in a much more cost-effective way, thus bringing down the cost and increasing the payback" for retailers.
Selling fewer candy bars isn't likely to upset the whole apple cart.
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My favorite is . . .
The grocery store I visited recently where they had a dedicated staffer at a podium-like desk who oversees the self-serve lanes to rush over for misbehaving sensors and alcohol and tobacco purchases. Well, I guess that reduces the staff ratio to one person to four checkout lanes, but it still seems ironic. The self-serve lanes at my regular grocery store have an electronic hissy fit if I try to use my cloth grocery bags, so I never use those lanes. Actually, the self-serve checkout machines in all the stores are always having a hissy fit about *something*, so it ends up taking longer to check out than if you'd just waited in line.
National Enquirer?
No one reads the National Enquirer at the grocery store anymore...it's Us Weekly! Get your popular mags in order!!
Software fix
Magazines break even or lose money on newsstand sales, but they're vital to getting the magazine in front of new subscribers. So this is an opportunity for the retailers to sell magazine merchandising spots in the checkout software. Put up article teasers on screen between items, then at the end...
Purchase your items plus Us Weekly (big button)
Purchase only scanned items (small button)
Publishers would have to pay to get a featured spot in the PoS system, just as they pay now for distributor slots.