Shoppers Say It’s Easy to Swipe Items at Self-Checkout. Here’s How Retailers Should Respond.

Convenience may be the top benefit of self-checkout. But retailers must make it harder for customers to leave without paying. Running this software behind the scenes can help keep things in check at the door.

A woman uses a Personal Shopping mobile device to checkout in the aisle of a supermarket,
by Suresh Menon
October 12, 2021

Let’s talk about self-checkout (SCO) registers.

There’s no denying they are an essential part of the customer experience and have saved many of us from waiting in absurdly long lines to buy just a couple products.

Participants in Zebra’s most recent Global Shopper Study also confirmed that SCO has its benefits. For example:

more than six-in-10 (63%) shoppers agree SCO solutions provide an improved customer experience.

86% of retail decision-makers and 71% of store associates agree SCO improves the customer experience.

That’s all well and good for the customer experience.  But retailers should calculate the total cost of their SCO. Is it improving the experience for loss prevention (LP) teams?

Probably not. To be honest, I often find retailers underestimating its vulnerabilities.

SCO, as we all know, has a hefty impact on shrink rates. In fact, according to a study by Professor Adrian Beck of the University of Leicester, “a store with 50% of transactions being processed through Fixed SCO…can expect its shrinkage losses to be 75% higher than the average rate found in Grocery retailing.”

Unfortunately, many attempts to mitigate SCO risk fall flat. The anonymity of this service, coupled with an erroneous, internet-spawned belief that retailers owe consumers something for ringing up their own products, makes for an uphill climb to minimize SCO shrink.

Luckily, there is technology that can help defend against one of the most common sources of SCO shrink: SKU switchouts.

What does a SKU switchout look like?

This classic scheme involves the customer entering the PLU code for something inexpensive (often bananas at 50¢/lb) and weighing up something pricier. It’s a favorite methodology of retail criminals. To deter this, most SCO registers are programmed to loudly announce “bananas!” whenever the customer enters the code, to alert the SCO attendant. But attendants can get busy, and when they do, this stopgap amounts to nothing.

It should be noted, however, that not all shrink at SCO is fraudulent. Yes, you have your fair share of people purposely ringing up a $22/lb beef roast at the price of bananas or passing a jug of olive oil over the scanner while discreetly covering the barcode. But there’s also non-malicious intent.

For example, imagine a customer trying to buy cherries at $5/lb. She cannot find the fruit in the SCO register’s produce lookup menu. Not wanting to make the people behind her wait any longer, she hastily hits the button for Russet potatoes. Just like that, she’s gotten her cherries for a mere $0.99/lb.

Not intentional, but still impacts the retailer – and must be dealt with as such.

So, now the question is, what technology can help mitigate the risk of this scheme happening?

Prescriptive analytics

Many retailers are using prescriptive analytics to combat shrink at SCO. This software solution analyzes data and tells you:

  • what is happening.
  • why it happened.
  • how much it is costing you.
  • what to do about it.
  • who should do it.

Numerous retailers have their prescriptive analytics solutions monitoring sales of their cheapest items sold by weight, especially bananas. The right solution will instantly flag when a store seems to have sold more bananas than it should have in stock and alert the right asset protection (AP) investigator to follow up with specific video footage, receipts and loyal/non-loyal information. If the excess quantities appear to have been purchased via the SCO line, this is further assurance that something is amiss. The exact selection of items to monitor can be configured by the retailer based on its own unique trends.

Prescriptive analytics also provides another means of identifying and eliminating this common source of shrink by analyzing weights.

The key to this type of analysis is identifying items with a weight inconsistent with the product the customer selected at the register. For example, consider a customer who scans a rib roast price sticker at SCO. The price added to the customer’s order is just $2.

Prescriptive analytics will identify that the store does not sell rib roasts in such small quantities and place the customer’s name on a list of potential fraudsters for later investigation. Chances are that when making this label, an employee or customer actually weighed a lightweight object, like a box of gloves, instead of the actual roast.

In a similar sense, imagine a customer enters the PLU code for bananas at SCO, but the item placed on the scale clocks in at eight pounds! Unless the customer owns a family of chimpanzees, it is highly unlikely the customer grabbed eight pounds of bananas in one go. More likely the customer is stealing something heavier, like a turkey or beef roast.

With prescriptive analytics monitoring SCO from the back end (i.e., through the data), you gain an extra, 24/7 pair of eyes to alert you to fraud.

Intelligent barcode scanner

For added assurance, there is also the option of implementing an intelligent barcode scanner at the SCO lanes. The best models provide another layer of risk mitigation by leveraging high-resolution cameras to visually identify produce and other items by shape, color, weight and appearance, making it more difficult for customers to successfully switch out SKUs or barcodes.

This goes a long way in situations like the above, where the customer enters the wrong code or scans an alternate barcode. An intelligent barcode scanner compares the actual item to the expected characteristics of the item scanned or entered against thousands of similar pictures. When it detects an inconsistency, such as the customer scanning a lipstick while placing a leather jacket on the belt, it instantly alerts the customer or SCO attendant to make sure the scan was accurate. This alert gives the customer or SCO attendant a chance to correct the mistake before a loss is incurred.

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Editor’s Note:

If you’re struggling with losses at SCO and would like to learn more about the various technology tools available to help solve this growing issue, you can reach Zebra’s retail solution experts here.

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Suresh Menon
Suresh Menon is Senior Vice President and General Manager for Software Solutions at Zebra Technologies. He is responsible for the strategy, development, and management of Zebra’s Software Solutions product line, which features an industry leading portfolio of AI-powered workforce management, task execution and communication solutions, prescriptive analytics and self-directed physical inventory management solutions.