Self-Checkout Theft – Technology Increases Retailer’s Risk Of Theft

On the latest episode of the E-Commerce Retail Briefing podcast:

With self-checkout technology becoming more widespread, theft is also on the rise for retailers. According to a report, theft accounts for 4% of most retailer’s inventory. But the cost-effectiveness of self-checkout seems to trump the rise in stolen inventory.

What is self checkout theft? 

Self checkout theft is a form of shoplifting where a shopper missuses an automated point of sale or cashier machine to illegally acquire goods at a lower cost. Larger retail stores and supermarkets in America with limited checkout clerks or other employees are the most affected by this method of theft.

A common method these petty thiefs use is to ring up an item with the pricing sticker of a cheaper item, also known as the weight or “banana trick.” Think $15 per pound steaks scanned with the sticker lifted of of a $1 per pound bag of bananas.

Or an even easier scam, the “pass around” trick in which criminals use sleight of hand to simply place an item in their bag without scanning it or putting it on the checkout counter. Busy employees and distant surveillance cameras can be relatively easy to fool by these criminals.

Finally the most common trick that’s used is the one that arguable every person has been tempted to do: simple leave an item in their cart and “forget” that it’s there. Honest mistake if anyone asks, and it doesn’t involve deliberately deceiving the scanner software and won’t likely result in a visit by the police or a night in a jail cell

Ease Of Self-Checkout Trumps Risk Of Theft For Retailers

Self-checkout technology is wide-spread with large and small retailers alike. Without the supervision of cashiers, theft seems like it would occur more often. While theft is more likely to happen with self-checkout, retailers have still embraced the method. Shoplifting accounts for nearly 4% of inventory for retailers with self-checkout, compared to just 1.5% for traditional checkout, according to a report. What’s more, in a recent review of shoplifting offenders, 72% said that self-checkout made theft easy to very easy. Only 8% answered it made shoplifting more difficult. 

For some retailers, they’re finding higher sales in addition to higher losses with self-checkout. Still, most are willing to take the chance of more losses. Switching to self-checkout provides convenience and the cost to sell is much lower. A self-checkout setup with four machines costs $125,000 versus just $1,500 for four traditional registers according to estimates from MIT. But with only one person needed to man self-checkout compared to four at the registers, cost savings can add up quickly.

Latest news from major retailers and supermarkets

  • REI announced they are now offering an expanded selection of gear and apparel online with dropshipping. The company’s expansion allows it to increase its assortment without having to fit additional inventory in its warehouses, plus REI can also gain new insights about its customers based on the orders placed through its partners. The chief digital officer at REI said, “this functionality opens up so many doors for our customers and gives them access to new sizes and styles of products that we could not stock previously.” The retailer’s new online expansion is their latest move as they strategize to provide more options for shoppers online and in-store.
  • In the midst of continued turmoil, Bed Bath & Beyond has poached former Target executive as their new CEO. The announcement to name a permanent CEO has been a long time coming since the company’s former CEO’s departure in May. The announcement comes just days after the home goods retailer announced 60 store closures by the end of the fiscal year, a 50% increase from the 40 stores it initially announced closing. The company indicated that newly appointed CEO, Mart Tritton, will be immediately focused on the company’s ongoing business transformation. While at Target, he re-envisioned its private-label strategy, an area Bed Bath & Beyond has room for growth. One of the retailer’s Chairman said in a statement that he believes Mark’s ability to re-define the retail experience and drive growth makes him uniquely equipped to lead Bed Bath & Beyond at a critical time in their organization.
  • According to a report from Coresight Research, private label sales of consumer packaged goods have effectively disrupted the industry. Private-label sales grew from 2.2% in 2015 to 5.8% in 2018 and annual sales have grown four times faster than national brand sales. Many major retailers are incorporating private label brands into their strategy, including Target and Kroger. But Costco’s Kirkland remains the titan in the space with sales exceeding $39 billion last year, reflecting a higher than 10% growth rate. CPG makers are fighting back, with Coresight noting Unilver’s efforts through the acquisition of Dollar Shave Club in 2016. For retailers, the key advantages of private label growth is the direct relationship they have with their customers. They have access to valuable customer data from transactions and loyalty programs that helps them better understand their customers.