August 6, 2004

Self-Service Need Not Be Self-Delusional

By Evan Schuman, eWEEK

Opinion: Retail self-checkout is a great way to use the technology, but retailers are giving false reasons for why they support it.

When you're a retail executive in today's razor-thin-margin environment, you do what you can barely afford and then pray it supports your strategy.

Pricing is no longer something most retailers can determine, as a strict competitor reality often dictates whether your per-item profit is one or two cents. Wal-Mart is the paraphrase of that very old joke: What does a 500-pound gorilla retailer pay its suppliers? Whatever it wants.

That is the background for the industry's huge investment in self-service and self-checkout.

Those wiggle-room-less margins dictate cashier pay rates, which in turn make recruitment difficult and turnover high. That's ultimately what is fueling self-checkout. One retailer seriously argued to me that customers really want self-checkout because, among other reasons, they don't want to deal with surly checkout clerks.

So, a reason for self-checkout is to give customers the chance to avoid the nasty cashier that you hired to serve them? The cashier who wishes she didn't have to accept this job?

As an IBM executive said in an interview, retailers who paint self-service initiatives as existing only because customers want it are being "politically correct." Most retailers avoid saying the truth—which is that they want to need fewer checkout cashiers—because it frightens the cashiers and their union reps into fearing layoffs. The reality is that a layoff is the farthest thing from these retailers' minds.

As one industry official—who has negotiated with the unions on this point—said, if the unions could deliver enough cashiers to keep the lanes filled, the retailer wouldn't be interested in self-checkout.

The true reason for self-checkout and self-service is actually much more strategic, and it brings us back to our friendly, 500-pound gorilla retailer. Retailers want to—and need to—get the cashiers away from their registers so that they can be sent to areas of the business that cannot be automated, such as helping customers bag, carrying products to their car and doing anything that makes their shopping easier and more fun.

Easier and more fun? Suddenly, we have a battle that gets retailers away from a price war and into a "better services for a little bit more money" game.

But first, self-service has got to be made to work. Customers have to be talked into using it, which means that store managers and employees must be talked into wanting to get customers to use it. That means that employees must feel secure that these machines not only do not threaten their jobs, but they will likely give them better job opportunities. It may be true, but that doesn't make it any easier of a sell.

Self-Checkout Self-Delusion No. 1: Customers want self-checkout. The argument that customers want it usually works in that customers like to feel in control, they like their privacy and they want to get out of the store quickly.

Let's take these one at a time. Customers do like feeling in control, but as they struggle with machines that operate with a spouselike intolerance of error, do they indeed enjoy such a feeling?

Customers like their privacy. When is the last time you heard a neighbor complain about shopping at the local grocery store because they didn't want the clerk to see their purchases? The clerks typically don't seem to care. Nosy neighbors behind you in line are more likely to be concerns. And those neighbors will still be behind you in the self-checkout lanes.

Customers want to get out of the store as quickly as possible. True, very true. But retailers and vendors alike say that they often encourage self-checkout usage by deliberately allowing the neighboring cashier lanes to get very long. This isn't one of your warm and fuzzy "make the customer feel valued" strategies, I'm guessing.

But it is true that customers want to get out as quickly as possible. The only problem is that customers are actually slower than professional cashiers, so the getting out more quickly is also a sleight of hand. Some defend this further, saying that it feels quicker because the customer is so busy.

Are these the same people that install those buttons by traffic lights so the pedestrians can amuse themselves while waiting for the light to change?

Reality: Consumers do not want self-checkout, but they do want the long-term benefits that the cashier redeployments will bring. Make that case to customers and employees, and the self-checkout pitch will go a lot easier.

Self-Checkout Self-Delusion No. 2: Send the equipment boxes to the stores and everything will quickly fall into place.

Like any other strategic retail-technology investment, self-service needs a lot more than cables, software and hardware to be successful. The idea needs enthusiastic support from every layer of corporate and multiple layers at the store level.

The rollout must be advertised and accompanied by incentives, the self-checkout lane must be staffed by very well-trained people to answer all questions. Stick it in the corner with no signs, lighting or effective people support, and don't be surprised if it doesn't deliver.

When we were preparing a series of stories on self-checkout, I wrote that claiming that consumers want self-checkout because they don't want to endure the long lines that you purposely created is a cross between "which came first: the chicken or the egg?" and cynical existentialism.

I was told that existentialism isn't typically discussed in eWEEK.com columns about retail technology. But I can't resist. The American Heritage Dictionary defines existentialism this way: "A philosophy that emphasizes the uniqueness and isolation of the individual experience in a hostile or indifferent universe, regards human existence as unexplainable, and stresses freedom of choice and responsibility for the consequences of one's acts."

Sounds a lot like typical self-checkout marketing to me.