Walmart, jobs and the rise of self-service checkout tech

If self-checkout is a mature technology, why are some stores ditching it?

Automated self-checkout is appearing in more and more retail stores, with Walmart this year installing 10,000 self-service kiosks in hundreds of stores. But self-checkout is a technology direction with risks -- and even as Walmart moves ahead with its plan, other companies are already abandoning it.

Retailer Albertsons LLC, for instance, has already pulled its self-checkout systems, as did Big Y, a New England grocer. Ikea is moving to do the same thing.

At the heart of these reversals: Customer rejection.

Even so, stores like Walmart say automated self-checkout kiosks can increase customer convenience and choice. But what does a checkout kiosk system actually fix?

Vendors argue that having more checkout options means shorter lanes and speedier customer transactions. But there are concerns about the impact on jobs, since stores that roll out the technology can steer customers to self-checkout systems -- and cut back on human cashiers.

That later issue is a flash point.

Tech vs. jobs

"People are not getting enough hours now, and when we have the self-checkout, people are going to be getting even less hours," said Janet Sparks, a Walmart customer service manager at a store in Louisiana who is also involved with Organization United for Respect at Walmart, a group supported by the United Food and Commercial Workers union. She believes understaffing creates demand for self-checkout systems.

Automated self-checkout "does eliminate jobs, there's not much question about that. The question is how many?" said Frank Levy, an MIT professor emeritus of urban economics.

Levy sees self-checkout automation as the next wave of technological change in this area, the first being barcoding. Barcoding improved the volume of work a cashier could handle. The question is whether there is offsetting job creation to make up for job losses due to automation.

In general, if computerization enables you to lower prices to stimulate more demand, employment will rise, he said.

But checkout cashier salaries are just a small part of the cost of groceries, said Levy, who doesn't believe the labor cost savings will have much impact on prices.

"What kinds of job creation is the economy going to see in other areas that might soak up labor, as opposed to just driving down the wages so cheap so that you get more jobs created that way?" said Levy.

Producing the automated systems will create jobs, but Levy said that the net overall effect may be job loss. "We should be thinking about it as a big problem," he said.

Walmart's rationale

A Walmart spokeswoman says the company's decision to expand automated checkouts will have no impact on jobs, or on the hours worked by its employees.

"It's about offering our customers a choice in how they checkout," said Ashley Hardie, the Walmart spokeswoman. Customers are telling us "they are looking for an easier, more convenient way to shop in our stores," she said.

Walmart has self-service checkout systems installed in about 1,800 stores. Some of the 10,000 new systems, a purchase announced in November by the vendor NCR Corp., will be used to upgrade older systems. The deployment is scheduled to be completed by the end of this year, expanding self-checkout systems to about 2,500 of Walmart's approximately 4,000 stores. There are about eight checkout kiosks per store, the company said.

Despite Walmart's decision, automated checkout faces problems from customers.

When Albertsons, a large regional food and drug retailer with stores in the South and West, pulled its systems, the company explained its decision in a lengthy Facebook post.

Lots of customers talked about the self-service checkout lanes, wrote Albertsons in 2011, "but mostly" it was about how the checkout lanes "'take jobs away from people.'" Some also complained that it lessened the customer experience. "Customer service is always our highest priority," the company said.

Today, Albertsons' self-checkout systems "are completely removed, and we haven't revisited it," said Albertsons spokeswoman Christine Wilcox.

Ikea moves the other way

Ikea is removing systems from its U.S. stores, too.

"We have found that checkout times were longer for customers who used self-checkouts than for those using staffed checkouts," said Ikea spokesman Joseph Roth. "At Ikea, we believe staffed checkouts are more convenient to the customer - especially given the unique shopping experience our stores offer."

Francie Mendelsohn, the president of Summit Research Associates, which studies kiosks and other self-service systems, used Ikea's system. She said the bar code scanner had to be six inches away to get a scan, something she didn't know. So the system didn't work for her. "Nobody around me was able to scan anything in, either," she said.

In general, Mendelsohn said "a seasoned human checker is much faster than a person doing it by himself at the kiosk."

Vendors and analysts say there are many consumers who like these automated systems because they see them as fun, they allow shoppers to check each price, and some consumers prefer to pack their bags a certain way. Stores are staffing one human for every four or six self-service systems to help customers use them.

NCR offers upgrades

At the National Retail Federation show in New York this week, vendors such as NCR were unveiling technology upgrades. NCR has developed an image-based capability that can recognize certain products. Instead of keying in a product code for a banana, for instance, the system recognizes the banana, said Dusty Lutz, general manager for retail self-service solutions at NCR.

Lutz said NCR is trying to make the job of running these systems easier for IT by including such features as predictive capabilities. For instance, the self-service checkout system can monitor CPU temperatures and if something starts running outside of normal ranges, it will trigger an alert before a more serious issue occurs. "It's not designed to create a new burden for the IT staff," he said.

Bill Gribbons, a professor of information design and corporate communication at Bentley University, who also works on usability issues at the college's Design and Usability Center, questions the future of self-service kiosks. He said kiosk systems are more focused on getting rid of clerks, not on helping consumers. And that's why some stores have removed them.

"The value to the business is very clear," said Gribbons. "The value to the shopper is less clear."

Other options

Gribbons believes more promising technologies will include tablets with card swipes integrated into shopping carts or smartphone apps. These technologies will be automatically synched with the customer's shopping list, and might include home ordering capabilities.

Instead of having customers stand in line at checkout, "the solution is to eliminate the lines completely, and then there is value to both the business and the consumer," said Gribbons.

Jerry Sheldon, an analyst at IHL Consulting Group, which looked at this technology trend, says Walmart's purchase solidifies front-end self-checkout kiosks systems as a mature tech choice. Walmart only invests in a technology "that they are going to be certain of a return on it."

The cost of the Walmart system was not disclosed, but a ballpark price of four units -- a pod -- is some where in the $70,000 to $80,000 range, said Sheldon.

Sheldon doesn't see kiosks systems going away, but believes stores may move to hybrid models that give shoppers an array of approaches to meet the unique characteristics of their customers. The impact on cashiers remains to be seen.

Daniel Castro, a senior analyst at the Information Technology & Innovation Foundation, says there are about 2.7 million cashiers working in retail. It's a number that should grow as new stores open, but would decline if fewer cashiers are needed.

Whether the technology affects employment depends on how checkout kiosks are used, said Castro. Some retail firms use self-service to reduce overhead costs; others use it to put more employees on the floor. People might also be able to move on to higher-value jobs, which includes managing self-checkout systems.

"The workforce changes raise an important question about how individual workers actually make the transition from one type of job to another," he said. "This is one reason why I think it is critical for the government to provide strong safety nets to families and education and training programs for workers so that people can adjust and prosper to changing circumstances in a dynamic economy," he said.

Patrick Thibodeau covers cloud computing and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed. His e-mail address is pthibodeau@computerworld.com.

See more by Patrick Thibodeau on Computerworld.com.

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