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Tackling Shoplifting Challenges at Self-Checkout

Solutions to self-checkout shrinkage in retail
April 29, 2024

In the dynamic landscape of retail, combating shoplifting remains a persistent challenge for businesses seeking to safeguard their bottom line and uphold customer trust. Among the various factors contributing to shrinkage, theft at self-checkouts has emerged as a particularly concerning issue. Now let's take a closer look at the reality of self-checkout shrinkage and explore possible solution to mitigate the impact.

Shrinkage, the $100 Billion Crisis in Retail Industry

Shrink, the industry term for inventory loss typically caused by theft, damage, or mistakes, was once viewed as an unavoidable aspect of retail operations. However, retail shrink cost U.S. retailers over $100 billion in 2022, NRF1 reported.

Findings from the EHI Institute2 reveal a concerning trend in the German retail sector as well, with inventory losses escalating from €4.1 billion (2021) to €4.6 billion (2022). Of these losses, €3.73 billion can be attributed to theft perpetrated by customers, employees, suppliers, and service personnel.

In 2022 police crime statistics underscored the severity of the issue, with reported cases of shoplifting increased by 34,3%2 compared to the previous year, with self-checkout terminals identified as one of the significant contributing factors.

Self-Checkout: A Double-Edged Sword

Self-checkout has become a staple in shopping, designed to offer customers a simpler, faster, more sanitary checkout experience. However, alongside its widespread adoption and convenience, there's a troubling issue: self-checkout theft.

Across the globe, the impact of self-checkout theft is on the rapid rise. In Australia, annual losses from such thefts reached a staggering $3.2 billion, while France has reported increases of up to 30%, as reported by Gitnux. 3 Similarly, the UK grapples with substantial losses, with £3 billion worth of goods stolen at these machines annually. Alarmingly, self-checkout theft is reported to be 5 times more likely to happen than theft via traditional cashier checkout, fueling a 30% increase in shoplifting incidents since the adoption of self-checkout technology.

Self-checkout machines, according to a research conducted by checkout-technology company Grabango 4 , considerably contribute to shrinkage, accounting for losses totaling 3.5% of sales. This figure represents more than 16 times the losses typically incurred through traditional cashier operations.

Self-checkout thieves typically estimate the value of their stolen items at around $60, according to a report. 5 Of those who intend to continue stealing from self-service checkouts, 46% aim to steal the most expensive items in their carts, while 37% plan to steal essential items such as food, water or health products. Furthermore, the report states that almost 70% of self-checkout users express concerns that these machines contribute to higher rates of theft, highlighting a pervasive perception among consumers. 21% of self-checkout users confess to unintentionally leaving without paying for an item. Despite recognizing their error, the majority (61%) choose to retain the item, which shows a notable gap between ethical awareness and consumer actions at self-checkout stations.

Nevertheless: The Continued Rise of Self-Checkout (SCO) in Retail

Despite concerns surrounding the loss at self-checkout, retailers continue to embrace this technology, with plans for further expansion evident in the retail landscape. Zebra's 2023 Annual Global Shopper Survey 6 reveals a significant trend, indicating that 45% of retailers intend to convert more of their checkout lanes into self-checkout kiosks, which is 5% higher than the previous year. Moreover, nearly all retailers are projected to adopt self-checkout systems by 2027, underlining the widespread acceptance and integration of this technology within the industry.

Decision-Makers and Associates Agree Self-Checkout is a Net Positive
(Source: Zebra)

Additionally, over 80% of retail decision-makers and associates view self-checkout as a valuable addition to their stores, citing enhanced customer experience, ROI (return on investment), and the ability to free up store associates for higher-priority tasks as key benefits.

Both retail leaders and employees demonstrate a shared enthusiasm for self-checkout implementation. The survey indicates that 83% of retail workers believe that self-checkout operations enable them to perform their duties more efficiently and effectively.

Leveraging Technological Solutions: Signatrix SCO System

To seamlessly integrate self-checkout into their retail operations while simultaneously combating shrinkage, retailers are embracing innovative solutions like Signatrix SCO System. It harnesses the power of AI (artificial intelligence) to detect suspicious activities such as non-scans and product switches at self-checkout terminals, prompting immediate action from store staff or requesting customers to (re)scan the items.

Signatrix SCO System, equipped with video cameras and AI software, serves as a formidable deterrent against potential theft, bolstering security measures at self-checkout stations and safeguarding retailers against financial losses. In the face of evolving challenges, the retail industry must remain vigilant in its pursuit of effective strategies to combat shoplifting at self-checkout terminals. Through a combination of technological advancements, comprehensive employee training and proactive measures, retailers can fortify their defenses and uphold the integrity of their operations, ensuring an improved shopping experience for all customers.

1 https://nrf.com/media-center/press-releases/nrf-reports-retail-shrink-nearly-100b-problem

2 https://www.ehi.org/wp-content/uploads/Downloads/Leseproben/EHI-Studie_Inventurdifferenzen_2023_Leseprobe-3.pdf

3 https://gitnux.org/self-checkout-theft-statistics/

4 https://www.grabango.com/grabangos-computer-vision-analytics-uncover-self-checkout-systems-have-16-times-more-shrink-than-traditional-cashier-lanes/

5 https://www.lendingtree.com/debt-consolidation/self-checkout-survey/

6 https://www.zebra.com/content/dam/zebra_dam/en/reports/vision-study/retail-shopper-report-vision-study-2023-en-us.pdf

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