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Addressing the ugly side of self-checkout: shoplifting.

Merchants who’ve adopted self-checkout can experience substantial loss from shoplifting. Here’s why and how to stop it.

August 12, 2019

Addressing the ugly side of self-checkout: shoplifting.
If seeing self-checkout lanes at your local grocery store isn’t enough evidence that the model is catching on, the latest data from Market Research Engine should be. The research company recently reported that the self-checkout market will exceed more than $5 billion by 2024 at a CAGR of 10.3% during that time. Clearly, retailers are very interested in these types of solutions thanks to their potential efficiency gains. However, as their trusted advisor, it’s essential that you provide information on potential downsides of the technology as well. Specifically, it’s been noted that self- and autonomous checkout can lead to increased shoplifting and shrink.

A 2014 survey done in the U.K. revealed that 20% of shoppers regularly steal when using self-checkout. The average loss for each incident is $18, amounting to nearly $2 billion in losses per year. This data was reinforced by a more recent study done by the European-based ECR Community Shrink and OSA Group. The group’s research showed that grocery stores with a self-checkout solution record losses 33% to 147% higher than stores without self-checkout.

These losses can occur in many ways and are well-known to retailers familiar with “sweethearting.” Sometimes the barcode or price tag of a lesser valued item is scanned in place of a more expensive item. In other instances, multiple items are passed into the bagging area after only one was actually scanned. In the past, for a customer to benefit from sweethearting, a store employee had to be in on the theft. With self-checkout, sweethearting tactics can be performed by the shopper alone.

There’s evidence that there are additional reasons why theft occurs more frequently at self-checkout. Customers having trouble with the scanning technology might become frustrated enough to give up and place the item in their bag. Customers might accidentally shoplift during one trip to the store, realize how easy it was, and continue to do it. Regardless of the reason, theft happens more frequently with self-checkout.

Self-checkout loss prevention tactics
There are a few ways to combat loss inherit with self-checkout solutions:

Using people—Many stores will have at least one employee overseeing the self-checkout area. Not only can their presence act as a deterrent, but they can also monitor all items being scanned at each lane. While certainly not perfect, this low-cost option can help minimize loss. Even better, retailers like Sam’s Club will have employees confirm cart contents with the receipts of exiting shoppers.

Using technology—Having identified the problem of loss with self-checkout and realizing it could become an even bigger problem with upcoming shop-and-go concepts, AI-based solutions have recently come to market. In some instances, these solutions use video surveillance cameras to track products as they move from shelves into carts and eventually into a bagging area. If a product wasn’t shown to have been scanned through the POS, an employee can be alerted. Other forms of AI can detect anomalies in a customer’s behavior. Each customer receives a score by the software. If thresholds are met, employees are notified, and bag checks can occur.

While self-checkout can save your customers money, it can also cost them if shoplifting isn’t dealt with properly. To continue this discussion or learn more about self-checkout solutions for your customers, contact Ingram Micro’s DCPOS expert, Daryl Schuster.