How to reduce checkout shrinkage
Retailers experimenting with self-checkout should be implementing strategies to minimize stock loss so that they can better achieve operational benefits and improve the customer journey.
The ECR Community Shrinkage and On-shelf Availability Group (OSA) and NCR have published a new comprehensive report that assesses the potential impact of self-checkout (SCO) technologies on retail loss and provides best practices and guidance on how to address and balance risks.
“Retailing is becoming ever more dependent upon a host of technologies, many of which are increasingly focused upon improving the customer journey,” said John Fonteijn, chair of the ECR Community Shrinkage and On-shelf Availability Group. “This report will help retail organizations to continue to reap the benefits that self-scan technologies can bring while doing so within a sustainable business model.”
Retailers count their stock loss typically as a percentage of their sales, which, according to a prior ECR report, is about 0.67 percent of sales in grocery retail. The new report from ECR and NCR, “Self-Checkout in Retail: Measuring the Loss,” suggests that a typical retailer can experience an increase in stock loss of one basis point for every 1 percent of sales that go through fixed SCO machines. For instance, a typical store with 25 percent of its sales value going through fixed SCO could see additional stock losses of 0.25 percent of sales value.
Stores using scan-and-go technologies could see an increase of between 0.7 and 10.4 basis points of additional loss for every 1 percent of sales processed. In the study, the average utilization rate for scan-and-go was 2.8 percent of sales value, suggesting additional stock loss of between 0.01 percent and 0.29 percent of sales value.
The report goes on to consider ways in which SCO technologies can be controlled, including the use of effective guardians and a range of emerging technologies. The report also underlines the importance of monitoring data on the risk of loss relating to SCO as well as adopting a more joined up approach to SCO management and control.
“As the industry is moving at an ever-faster pace towards frictionless checkout, the various self-scanning technologies are a key strategic element in retailers’ store development plans,” added Dusty Lutz, vice president and general manager of Store Transformation Solutions at NCR Corp. “The report shows that there is an opportunity to leverage emerging computer vision and artificial intelligence technologies as a more effective and less resource-intensive solution to simultaneously help improve both security and customer experience. For example, our latest security solutions can help detect when a shopper is attempting to substitute an expensive steak for the price of bananas, or tries to leave half of their items in their cart without scanning them.”
The report is based on data collected from 13 major retailers operating in Europe and the United States, including analysis of: 140 million scan-and- go transactions; 17 million transaction audits; video analytics of fixed SCO transactions; and comparative stock loss data from thousands of retail stores.
See the full report here.