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September 14, 2011

Retail and self service – the concepts

This month's just-food management briefing looks at the use of self-service technology in food retail outlets around the world. In part one, Glynn Davis outlines the different concepts in place in stores.

This month’s just-food management briefing looks at the use of self-service technology in food retail outlets around the world. In part one, Glynn Davis outlines the different concepts in place in stores.

Eighteen years on from when the first self checkout was installed at a branch of Price Chopper in New York, much has changed. As technology has improved the capabilities of the equipment has advanced massively, and self-service has grown into a globally accepted way of shopping that encompasses much more than just an unassisted way to pay for goods.

Just like physical stores, self service now comes in many formats and variations – from scan-and-bag checkouts to kiosks that provide information and advice, to product locators, as well as self-scanning devices that enable shoppers to scan their goods while they shop the store. 

And, with the evolution of mobile devices and apps, the self-service world is opening up even more and moving increasingly further away from the experience of those pioneering shoppers at Price Chopper.

The most recognised self-service technology is the basic scan-and-bag checkouts that are now used around the globe by food retailers of all descriptions. Over the years the technology manufacturers have developed these solutions to be as flexible as possible in order that they can play a role in all store formats.

John Curnow, area industry director for retail and hospitality at US technology firm NCR, says: “There are proliferating models of self checkout devices – slimmer versions, those without bagging areas, without shelves for baskets, and those that accept card-only payments. For instance, in a city centre store when there is a rush at lunchtime, people will not use a basket so there is no need for a full self-service checkout device. Why waste the additional footprint that these take up?”

He cites the example of taking out the cash element of a unit, which can reduce the width by 30% so in a smaller store it is possible to put in four of the latest devices in only one square metre. Curnow says footprints are the big issue in some parts of the world. 

“In Europe and the UK there is more pressure on floor space so retailers want more devices in-store. If you’ve twice the number of checkouts then it’s possible to take in twice the money as people will be attracted from other retailers,” he suggests. 

UK retailer Marks and Spencer upped the number of self service units from an initial 12 to 16 at its store in London’s Covent Garden, which helped it avoid losing customers from over-long queues during the lunchtime peak.

Self service tills are integral to UK retailer Anglia Co-operative squeezing the maximum trading space out of many of its smaller convenience stores where square footage is at a premium. 

Richard Feest, head of IT at Anglia Co-operative, has suggested that the most pressure in the group’s stores has been on increasing trading space. The solution, he says, has been to install self-service checkouts with their significantly smaller footprint than conventional checkouts.

“In smaller stores there is pressure on giving over more space to retail, which involves using smaller self service checkouts and smaller hardware,” he explains.

For example, when the group opened a 10,000 sq ft store in Cambridgeshire, the latest versions of self-service checkout technology from retail hardware and software supplier Wincor Nixdorf was installed – comprising three smaller units and four larger variants. This combination takes up the same space as five older versions of the devices.  

As with many retailers, Anglia Co-operative has its self-service devices sitting alongside standard checkouts, with the mix determined by analysis based on its experience of the take-up of self-service tills and sales patterns at stores through the week.

The company enjoys high adoption rates of the technology – between 45 and 60% of its customers prefer to pay this way – which is impressive when only 30-40% of its tills are self service in those stores that have the technology.

This move to smaller footprint devices has led all the manufacturers to design more modular technology. And they all argue that they offer the most modular solutions that provide the most flexibility for retailers.

Ken Duffy, marketing manager for retail store solutions at IBM systems and technology group, says: “We’ve been in self service for some time and it’s the first time we’ve done modular properly, whereby units can be taken apart and different parts used. It’s all about allowing retailers to customise.”

Duffy sees this as an enabler to take self service into new areas such as pharmacy stores, especially with the help of the latest slim-line units such as IBM’s Series 6 with its scanning module that measures only 37cm across its width. 

Gordon Klein, product manager at retail hardware and software supplier Wincor Nixdorf, suggests offering modularity is a great advantage to self-service technology vendors. He claims that Wincor Nixdorf has plenty of options that can be mixed and matched. Permutations include security weighing scales, scanners, varying screen sizes, printer units, coupon readers, as well as cash towers and payments towers. 

“You can change a lot in the modules to the specific requirements of the retailers. We are more modular than our competitors, which is our USP,” he suggests.

Flexibility has also been in evidence with the NCR-designed checkout unit that has a reversible screen that can be used in self-service mode by customers or switched around to face a sales assistant and be used as a conventional checkout. In self-service mode shoppers place their goods onto an ‘input belt’, self scan, and then bag the items. “It’s a UK trial in one store but the customer is happy with it and it will be rolled out next year,” reveals Curnow.

But self service is not just about checkouts. Kiosks are another great way of making the shopping process more efficient – by again automating tasks and putting it in the hands of consumers.

Duffy says kiosks are being used for loyalty programmes and for offering promotions as well as providing information to shoppers. For instance, Kroger uses them as recipe hubs whereby it displays dishes, shows shoppers how to cook them and provides them with recommendations of other complimentary items to buy.

Another use involves allowing customers to pay for their shopping and having the goods delivered to their home. This has been trialled by UK retailer The Co-operative Group. Mark Hale, the retailer’s food retail information systems director, has stated that the devices have increased average basket sizes by GBP9 and there is the intention to roll them out to more stores.

Also in the UK, Sainsbury’s has installed its first non-food ordering kiosks at one of its smaller city-centre convenience stores, which allows shoppers to buy from its full online general merchandise range and have products delivered to their home or to the shop.

Tony Bryant, business development manager at UK retail software firm K3 Retail, says: “Such devices will fit into all store formats and enable retailers to sell more non-food and also additional services. The kiosk extends the retailers’ range in all locations.”

However, Bryant says the jury is out on whether these devices deliver new sales or cannibalise online sales that would have been made at home. “There is also the problem of joining kiosks up to the rest of the business. It is very complex.”

Despite the challenges even those retailers that have not been involved in self service to date are finding the lure of the technology too tempting. Among the new converts is Wal-Mart Stores, which is jumping on board with the recent formation of @WalmartLabs. 

This is run by two Silicon Valley veterans who have the brief to bring Wal-Mart up to speed with new innovations such as smartphone payment technologies and mobile shopping applications.

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