If you give someone the opportunity to steal along with plausible deniability of their true intentions, many people take that risk.
Self-checkout allows businesses to save labor or transfer it to other areas of their stores. However, its use requires customers to scan items and can make mistakes, either intentionally or by accident.
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The problem is that retailers find it very difficult to judge intentions. Did a consumer try to scan an item and fail? Or did they pretend to scan it in order to steal the item?
In many cases, the theft is intentional and the buyer will do it again.
“While 95.9% of consumers have used self-checkout machines, statistics show that theft increases by up to 10%. Sixty-five% at a self-service checkout compared to a traditional checkout,” according to Statistics shared by Capital One.
Self-checkouts make it easy to steal and get away with it, or at least avoid getting arrested if you get caught. This has made self-checkout theft too much of a temptation for many American shoppers to pass up.
“15% of consumers admit to using self-checkouts to steal; 44% “Many of them plan to reoffend,” according to the Capital One report.
It is a situation that has caused some large retailers to take clear measures.
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Five Below makes significant cuts to self-service checkouts
Some major chains, such as Walmart and Target, have taken mixed stances on self-checkouts. Both of these retail giants have reduced or even eliminated self-checkouts in some markets, but they haven't given up on them.
Five below zero (FIVE) a national discount retail chain where most items sold cost less than $5, is the latest major retail chain to make major changes to self-checkouts. CEO Joel Anderson discussed his company's demand-reduced measures during his fourth quarter earnings conference call.
“While we know that shrink is an industry-wide and society-wide issue that has accelerated over the past year, I want to be specific about what we are doing at Five Below with respect to the 2023 shrink results we are seeing. We tested many shrink mitigation initiatives in late Q3 and throughout Q4, including product-related testing, front-end initiatives and safeguarding programs,” he said.
The company made a key change.
“The most significant change we made across most of the chain was limiting the number of self-checkouts open and placing an employee at the front to further assist customers,” he added.
Five Below now has an associate attendant at the remaining self-checkout lanes in all of its stores.
“Additionally, in our highest-shrink stores, the primary payment option is the traditional cash register. We expect 75% of our transactions chain-wide to be assisted by an associate, and the goal is for 100% of transactions in our highest-shrink and highest-risk stores to be completed entirely by an associate,” Anderson said.
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Dollar General made changes to self-checkout
General dollar (Managing Director) a discount chain with more than 20,000 stores nationwide, has made big changes to combat its own shrinkage problems. That's something CEO Todd Vasos talked about during the retailer's press conference. First Quarter Earnings Conference Callwhere he acknowledged that theft at self-checkout counters was not the only factor explaining the increase in robberies.
“Shrinkage remains the biggest obstacle to our business, and we are implementing a comprehensive approach to reduce it across the organization, including efforts in our supply chain, merchandising and within our stores,” he said.
The chain's loss prevention efforts include major changes to self-checkouts.
“To help combat shrink-related issues, our supply chain teams are primarily focused on ensuring deliveries are made on time and in full, and our merchants are focused on reducing the amount of inventory we carry. Within our stores, we are focusing on delivering a more consistent front-of-store presence, expanding the reach of our high-shrink planograms, including the removal of high-shrink SKUs, and eliminating self-checkouts in the vast majority of stores,” he added.
Dollar General has eliminated self-checkouts at approximately 12,000 locations and plans to continue the effort to phase them out.
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The chain's inventory fell about 12% in 2024. While shrinkage may play a role in that, higher costs and customers choosing cheaper products likely played a bigger role. Dollar General's same-store sales rose 2.4% in the first quarter.
Five Below stock has been hit much harder, falling just over 50% so far this year. That drop may be affected by contraction, but the company is forecasting a 3-5% drop in same-store sales for its fiscal 2024 year. Same-store sales fell 2.4% in the first quarter.
