Cutting Self-Checkout Shrink with Advanced Technology

Self-checkout may seem like the latest and greatest technology to hit retail floors in the 21st century, however, the mushrooming challenges of self-checkout shrink have retailers like Target and Walmart reconsidering its use, either removing it entirely from certain locations or limiting it to customers with 10 items or fewer. Self-checkout areas can be a hotspot for theft, not only from customers but employees, too.

What is self-checkout shrink? 

Self-checkout shrink refers to the loss of inventory or revenue that occurs specifically within self-checkout systems in retail stores. This can include instances where items are not properly scanned, leading to underpayment or non-payment, and situations where items are intentionally or unintentionally removed from the store without being scanned or paid for, for example.

When retailers neglect to follow self-checkout best practices and proper management, they quickly become vulnerable to shrink. Practices like employee training, surveillance, using the latest loss prevention technology, and inventory checks are just a few ways to stay on top of reducing shrink in-store.

Common forms of self-checkout shrink 

Self-checkout shrink can be both unintentional and intentional and can appear in many forms, but can be broken down into two categories: internal and external.

Internal self-checkout shrink examples 

Internal theft occurs when employees exploit the self-checkout process to steal merchandise or abuse store policies. For example, a grocery store employee grabs food from the salad bar but rings the salad up as bananas. Other examples of internal self-checkout shrink include employees intentionally processing fake returns, misusing coupons, under-ringing merchandise, and overriding weight discrepancies alerts.

External self-checkout shrink examples 

External theft involves customers taking advantage of system vulnerabilities to leave with unscanned items. Item Switching, for example, is when a customer places the barcode of a cheap item like gum on a high-value product like electronics and scans the cheaper barcode at self-checkout. Other examples of external self-checkout shrink include skip-scanning, weight manipulation, coupon fraud, and self-checkout cart abandonment.

How retailers can prevent self-checkout shrink 

Whether intentional or accidental, internal or external, studies have shown that self-checkout machines are a significant driver of shrink, and up to four times higher than traditional checkout lanes. Luckily, thanks to advanced retail technology, minimizing self-checkout shrink can be as simple as modifying your loss prevention strategy to incorporate the following:  

1. Comprehensive Staff Training: To effectively detect and address suspicious behaviors in self-checkout areas, employees need comprehensive training on identifying when customers are tampering with barcodes or security systems. This is crucial for mitigating self-checkout shrink. Solutions such as Secure™ Coach can help optimize your front-end by managing associate knowledge and behaviors with training and coaching.
2. Visible Surveillance: Surveillance cameras positioned strategically around self-checkout areas can be an effective way to deter potential thieves. Visible signs indicating surveillance, such as signs or stickers on self-checkout machines, can further dissuade fraudulent activities.
3. Monitoring Bagging Areas: Technology, such as weight detection, helps to identify unexpected items in the bagging area and alerts staff if a customer fails to scan an item, preventing accidental or intentional theft. 
4. Regular Audits and Inventory Checks: Conducting routine audits to spot inventory discrepancies and missing items can help identify patterns or potential weaknesses in the self-checkout process. Our Secure™ Inventory solution helps retailers gain inventory visibility and reduce retail shrink by collecting inventory movement data from the organization’s systems of record and then notifying them of anything anomalous. 
5. Leveraging Data Analytics: Using the latest retail technology solutions that analyze transaction data and provide insights into suspicious behavior or patterns can help retailers preemptively address potential theft or fraud. 

Balancing self-checkout & customer service  

Is removing self-checkout the solution? While it might reduce self-checkout shrink, it could also have long-term consequences to the customer experience due to the growing demand from consumers—53% of young Americans prefer self-checkout to traditional checkout. For many people, self-checkout offers a more comfortable and stress-free shopping experience, particularly when buying items that might be considered embarrassing, such as adult diapers, pregnancy tests, and medications. Although reducing shrink is important, focusing on ensuring a positive customer experience will ultimately lead to loyal shoppers. 

In an interview with Modern Retail, Appriss Retail CEO Michael Osborne states,

“Without understanding how their customers shop, retailers who simply restrict or shut down self-checkout are taking away a benefit to the consumer. It’s going to come back to balancing the right systems with the behaviors of your clients and your product use. I feel like retailers are going to have to adapt by providing the best balance, and somewhere between zero self-checkout and wide-open self-checkout is the answer.”

Our advanced loss prevention solutions help you effectively tackle self-checkout shrink to protect profits and avoid damaging valuable customer relationships. Contact us to schedule a discovery call and learn more about how our solutions can help you protect profits.