April 23, 2008
CSD: Empowering Customers
By Howard Riell
Through a special arrangement, presented here for discussion
is an excerpt of a current article from Convenience Store Decisions magazine.
Will self-service checkout prove a viable solution for convenience stores?
It just may, for some. At least a couple of the larger operators are already
testing it, and smaller operators are waiting for word on exactly how the cost/benefit
ratio will eventually work itself out.
Obviously, self-service checkout works for supermarkets. Indeed, British retailer Tesco has opened dozens of its Fresh & Easy grocery stores in the U.S., and all of the lanes offer assisted self-checkout. Motorola is even making a handheld scanner that grocery customers carry around to ring up purchases as they go.
But self-service checkout in convenience stores across America is “almost nonexistent,” said Paul Burel, director of marketing strategy for U-Scan, Fujitsu Transaction Solutions Inc.’s self-checkout line. “In the States it’s not hard to get cheap labor, especially in (the c-store) industry. They tend not to be at the higher end when it comes to the cashiering function.”
Because store staffs are small – one or two people can run an entire store plus fuel pumps – the ROI on checkout systems “has been really hard,” Mr. Burel said. “There really hasn’t been an ROI, unless you take customer service out of play completely as a factor to drive the decision. It’s a pure cost to put self-checkout in.”
Perhaps the most obvious reason for the resistance by c-store operators is the space needed that could be used to stock additional products. Self-checkout systems, however, could be configured as pedestals that take up less space.
“The real question is, ‘Would the convenience store feel that it is going to increase its sales because the customers will get in and out that much more quickly?’” said Mark Lilien, a management consultant and partner for Retail Technology Group in Stamford, CT and a RetailWire BrainTrust panelist. “I don’t believe most convenience store owners would be easy to convince of that.”
No matter what management’s judgment, testing such devices remains a simple matter for larger chains. “The fact that so few chains have even tested it in a couple of stores indicates to me that the interest is hardly there at all,” Mr. Lilien said.
Discussion Questions: Why aren’t more c-stores – even major ones – utilizing self-service checkout systems? Should they be?
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Given all the other jobs that need to be done by hand (e.g., lottery tickets, receipts for gas when the printer at the pumps isn’t working, coffee, etc.) the self-serve kiosk would need to be near the counter with the clerk anyway. Maybe a combination of clerk, register, and self-serve could work and/or be cost effective but it won’t eliminate the need for at least one real person to be on duty at the convenience store.
It’s been a long time since I worked in this space, yet I believe the single most difficult to control line item has been and will be shrink. Self service checkout will not reduce labor, as it will be necessary to “police” the activity or shrink will go through the roof. Further, space is at a premium in most CSD locations. Isn’t one premise of faster line throughput the ability to open more lanes? Where will the space come from for that?
Maybe if the space is designed from the ground up with self service check out in mind, the logistic and shrink related issues could be mitigated. I just don’t see reverse engineering poorly designed and inappropriate spaces for questionable gain.
I think the major problem with self checkout at c-stores has to do with the product mix. Beer and Tobacco comprise a huge percentage of in store sales in most c-stores. By law, customers have to be screened for age and in many cases prior use (intoxication). To my knowledge, machines can’t screen for age and screening for intoxication is a hit or miss proposition.
Frankly, many c-stores do much of their business via self checkout at the gas pump. I love this convenience because it keeps me from wandering inside where I might be tempted to buy something I don’t really need, or isn’t good for me.
You are all thinking in terms of existing customers. What about potential customers?
I never go to a convenience store (here in Chicago). I don’t have the patience for the delays caused by the combination of cigarette and lottery ticket sales with the lack of language skills on the part of the typical convenience store worker and patron (regardless of socio-economic group).
Self-checkout would change my mind. I would be able to buy that gallon of milk, laundry detergent, toilet paper, frozen pizza or other self-serve item without having to deal with the ubiquitous drama at the checkout. A convenience store would then be truly convenient, a sort of walk-in vending machine where I can find what I need, pay for it quickly and leave. I suspect there are other potential customers like me.
C-stores are in a unique environment. They have a tremendous amount of “quick traffic,” and deal with a very limited selection. The c-store environment is largely impulse, and less price sensitive on many items.
However, shrink is a large issue in the c-store channel. Self service for product selection is limited, and managing a self-service for payment on goods (about 20% of all goods are behind the counter, or are restricted) will not work because of space issues, the need for an additional employee to handle the scanning and customer questions in a self payment line, and the costs and resource requirements that this entails.
I don’t see this as a viable use in c-stores. As other people have noted, much of the sales are items with no UPC–donuts (plain of filled?) and assorted hot and cold foods that require a human to ring up.
In fact, my favorite c-store chain, Quik Trip, seems to be going in just the opposite direction. Here in Texas, their stores are usually rockin’ and the service is great considering the amount of people in the store due to the clerk helping at least two people at once–by ringing in retail and categories only, and a large portion of the customer base is Hispanic and the language barrier would be a factor to any self checkout fantasy.
Self checkouts were originally sold to retailers as a labor savings device with a substantial ROI. For the most part, this has not turned out to be the case. Rather, the use of self checkouts has become a customer service and sometimes a competitive advantage.
Take the banking model. Would anyone today think of using a bank that offered only teller service? A bank would be at a significant disadvantage today unless they offer all forms of customer transactions including drive-up, ATM, and internet.
Ultimately, retailers must evaluate self checkouts in terms of meeting customer needs and improving customer satisfaction. What gas station today does not offer pay at the pump?
Individual convenience operators will have to make decisions based on the economics, but they may find themselves at a disadvantage if they fail to keep with competition.
In the larger chains, I’ve seen more interest in multi-function kiosks that let consumers do a host of financial transactions, like utility bill paying. The hope has been that this will drive increased traffic in stores, but I think the results were mixed, at best.
On the flip side, I just met with a company yesterday called XProtean that provides technology solutions for the independent c-store market, and this exact question came up. It seems, for independents at least, that a lot of times the labor (already a small number of people to begin with) tends to be drawn mostly from the families of owners. So, even if larger c-store chains proved out the value, I’m not sure that a lot of the independents would be willing to swap out their own family members in order to get those benefits.
However, part of the reason why smaller independents tend to rely on family members is because of employee loss prevention concerns. Perhaps if it could be justified on the basis of reducing opportunities for employee fraud, then you might have a business case worth exploring for more c-stores….
Are you kidding? What better place for self-checkout than Convenience stores? Consumers and retailers alike have been complaining about staff issues for years. This would allow every customer who’s stood there thinking “I could ring this up faster” the opportunity to do just that. Hope it happens immediately.
The only concern would be the destruction of brilliant creative cultural insight, like the movie “Clerks.” (That’s a joke….)
Thinking about my local C-store, I find it hard to see how self checkout will pay off. The sales at the counter are huge with lottery tickets, cigarettes, cash gas purchases and many hot meals that all require some sort of service that, at this point, require personal contact.
The other consideration is theft management–that should be watched closely in the stores that are testing self checkout!
Self service check outs at C-stores will help facilitate the needs of some customers. However, the system must be able to accommodate coffee cups, donuts, and other fresh foods and beverages; a huge part of the C-store business. Lots of C-store customers use cash and might not want to run up the tabs on their credit cards but for some consumers, this will help the “convenience” and therefore drive more business.
I believe self checkout coupled with biometric recognition will be a BIG convenience differentiator and the wave of the future. It just may be longer than 5 years. Most retailers want to be fast followers but big oil may step this one up.
There are two comments in the article that sum up the real problem; why it is going to be a long time until we see self checkout in the C-Store space. To pick up one of the quotes directly from the article, “In the States it’s not hard to get cheap labor, especially in (the c-store) industry. They tend not to be at the higher end when it comes to the cashiering function.”
The second quote or point is the limited number of employees already in the store. Even if you went to self checkout, in most cases it would not reduce the number of employees because they already have a bare-bones staff.
The third problem is the number of complex transactions and the different types of transactions. In most stores, there are over 9 different types of electronic equipment that the clerk interacts with.
How many unchaperoned self-checkouts have you seen? The reason you need supervision is twofold: first, the technology breaks down with alarming frequency and (b) to mitigate concerns about shrink. Not sure how these concerns play out in a c-store, but I wouldn’t want to the the first one on the block to find out.
Self-service checkout should be tested for convenience stores but customer feedback will be essential in determining if this is really seen as a convenience or not by customers. The variety of products presents a challenge. The lack of personnel in these stores to help customers with self-checkout problems could leave other customers waiting in longer lines, and that would not be good for business.
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Given all the other jobs that need to be done by hand (e.g., lottery tickets, receipts for gas when the printer at the pumps isn’t working, coffee, etc.) the self-serve kiosk would need to be near the counter with the clerk anyway. Maybe a combination of clerk, register, and self-serve could work and/or be cost effective but it won’t eliminate the need for at least one real person to be on duty at the convenience store.
It’s been a long time since I worked in this space, yet I believe the single most difficult to control line item has been and will be shrink. Self service checkout will not reduce labor, as it will be necessary to “police” the activity or shrink will go through the roof. Further, space is at a premium in most CSD locations. Isn’t one premise of faster line throughput the ability to open more lanes? Where will the space come from for that?
Maybe if the space is designed from the ground up with self service check out in mind, the logistic and shrink related issues could be mitigated. I just don’t see reverse engineering poorly designed and inappropriate spaces for questionable gain.
I think the major problem with self checkout at c-stores has to do with the product mix. Beer and Tobacco comprise a huge percentage of in store sales in most c-stores. By law, customers have to be screened for age and in many cases prior use (intoxication). To my knowledge, machines can’t screen for age and screening for intoxication is a hit or miss proposition.
Frankly, many c-stores do much of their business via self checkout at the gas pump. I love this convenience because it keeps me from wandering inside where I might be tempted to buy something I don’t really need, or isn’t good for me.
You are all thinking in terms of existing customers. What about potential customers?
I never go to a convenience store (here in Chicago). I don’t have the patience for the delays caused by the combination of cigarette and lottery ticket sales with the lack of language skills on the part of the typical convenience store worker and patron (regardless of socio-economic group).
Self-checkout would change my mind. I would be able to buy that gallon of milk, laundry detergent, toilet paper, frozen pizza or other self-serve item without having to deal with the ubiquitous drama at the checkout. A convenience store would then be truly convenient, a sort of walk-in vending machine where I can find what I need, pay for it quickly and leave. I suspect there are other potential customers like me.
C-stores are in a unique environment. They have a tremendous amount of “quick traffic,” and deal with a very limited selection. The c-store environment is largely impulse, and less price sensitive on many items.
However, shrink is a large issue in the c-store channel. Self service for product selection is limited, and managing a self-service for payment on goods (about 20% of all goods are behind the counter, or are restricted) will not work because of space issues, the need for an additional employee to handle the scanning and customer questions in a self payment line, and the costs and resource requirements that this entails.
I don’t see this as a viable use in c-stores. As other people have noted, much of the sales are items with no UPC–donuts (plain of filled?) and assorted hot and cold foods that require a human to ring up.
In fact, my favorite c-store chain, Quik Trip, seems to be going in just the opposite direction. Here in Texas, their stores are usually rockin’ and the service is great considering the amount of people in the store due to the clerk helping at least two people at once–by ringing in retail and categories only, and a large portion of the customer base is Hispanic and the language barrier would be a factor to any self checkout fantasy.
Self checkouts were originally sold to retailers as a labor savings device with a substantial ROI. For the most part, this has not turned out to be the case. Rather, the use of self checkouts has become a customer service and sometimes a competitive advantage.
Take the banking model. Would anyone today think of using a bank that offered only teller service? A bank would be at a significant disadvantage today unless they offer all forms of customer transactions including drive-up, ATM, and internet.
Ultimately, retailers must evaluate self checkouts in terms of meeting customer needs and improving customer satisfaction. What gas station today does not offer pay at the pump?
Individual convenience operators will have to make decisions based on the economics, but they may find themselves at a disadvantage if they fail to keep with competition.
In the larger chains, I’ve seen more interest in multi-function kiosks that let consumers do a host of financial transactions, like utility bill paying. The hope has been that this will drive increased traffic in stores, but I think the results were mixed, at best.
On the flip side, I just met with a company yesterday called XProtean that provides technology solutions for the independent c-store market, and this exact question came up. It seems, for independents at least, that a lot of times the labor (already a small number of people to begin with) tends to be drawn mostly from the families of owners. So, even if larger c-store chains proved out the value, I’m not sure that a lot of the independents would be willing to swap out their own family members in order to get those benefits.
However, part of the reason why smaller independents tend to rely on family members is because of employee loss prevention concerns. Perhaps if it could be justified on the basis of reducing opportunities for employee fraud, then you might have a business case worth exploring for more c-stores….
Are you kidding? What better place for self-checkout than Convenience stores? Consumers and retailers alike have been complaining about staff issues for years. This would allow every customer who’s stood there thinking “I could ring this up faster” the opportunity to do just that. Hope it happens immediately.
The only concern would be the destruction of brilliant creative cultural insight, like the movie “Clerks.” (That’s a joke….)
Thinking about my local C-store, I find it hard to see how self checkout will pay off. The sales at the counter are huge with lottery tickets, cigarettes, cash gas purchases and many hot meals that all require some sort of service that, at this point, require personal contact.
The other consideration is theft management–that should be watched closely in the stores that are testing self checkout!
Self service check outs at C-stores will help facilitate the needs of some customers. However, the system must be able to accommodate coffee cups, donuts, and other fresh foods and beverages; a huge part of the C-store business. Lots of C-store customers use cash and might not want to run up the tabs on their credit cards but for some consumers, this will help the “convenience” and therefore drive more business.
I believe self checkout coupled with biometric recognition will be a BIG convenience differentiator and the wave of the future. It just may be longer than 5 years. Most retailers want to be fast followers but big oil may step this one up.
There are two comments in the article that sum up the real problem; why it is going to be a long time until we see self checkout in the C-Store space. To pick up one of the quotes directly from the article, “In the States it’s not hard to get cheap labor, especially in (the c-store) industry. They tend not to be at the higher end when it comes to the cashiering function.”
The second quote or point is the limited number of employees already in the store. Even if you went to self checkout, in most cases it would not reduce the number of employees because they already have a bare-bones staff.
The third problem is the number of complex transactions and the different types of transactions. In most stores, there are over 9 different types of electronic equipment that the clerk interacts with.
How many unchaperoned self-checkouts have you seen? The reason you need supervision is twofold: first, the technology breaks down with alarming frequency and (b) to mitigate concerns about shrink. Not sure how these concerns play out in a c-store, but I wouldn’t want to the the first one on the block to find out.
Self-service checkout should be tested for convenience stores but customer feedback will be essential in determining if this is really seen as a convenience or not by customers. The variety of products presents a challenge. The lack of personnel in these stores to help customers with self-checkout problems could leave other customers waiting in longer lines, and that would not be good for business.