Is Self-Checkout Catnip For Criminals?

Great news for innovative retailers. Less so for cashiers.

The self-checkout system market is expected to increase from its current value of $2 billion to more than $4 billion by 2024, according to a new study. Despite mixed reception from shoppers, about 40 percent of transactions and 20 percent of sales volume now takes place on self-checkout stations.

Factors driving growth include the rise in mobile payments, demand for touch-free transactions, a shortage of labor and increasing labor costs.

Labor laws were the impetus for French grocery conglomerates Casino Guichard Perrachon and Carrefour to begin experimenting with automated retail. Stores can stay open 24/7 and don’t require round-the-clock staffing. The move helps both retailers circumvent laws that prevent grocers in France from making employees work late-night hours or on Sunday afternoons.

Stateside, Giant Eagle recently launched a pilot in partnership with startup Grabango. The technology, similar to that of Amazon Go stores, uses computer vision and artificial intelligence (AI) to identify what customers take from the shelves. Customers can use credit cards or cash or go completely cashierless with Grabango’s payment app.

The latest Automated Retail Tracker looks at automation trends and ways that supermarkets and other retailers are implementing technologies to provide more convenient, high-speed services, while also considering challenges and downsides.

Potential Downsides

Perhaps one of the biggest vulnerabilities of self-checkout is the potential for theft. In the abovementioned reports of French supermarkets exploring automation, the need for increased security was emphasized.

These fears aren’t unfounded. According to a study, theft accounts for 4 percent of inventory among retailers with self-checkout, more than double the rate for traditional checkout (1.5 percent).

In a separate study about shoplifting, 72 percent of offenders said self-checkout made theft easy to very easy, while only 8 percent said it made shoplifting more difficult.

The new Automated Retail Tracker explored security concerns with leveraging automation to make the click-and-collect experience faster and cheaper. Fraudsters could use stolen credit cards to place orders, then collect the items to keep or sell.

Retailers can also be hit with painful chargebacks, and card issuers are liable for in-store purchases. However, buy online, pickup in-store (BOPIS) involves card-not-present (CNP) transactions, putting retailers on the hook for any fraud.

Solutions 

Retailers large and small are aware of the issue. Earlier this year, Minnesota-based Farmhouse Market launched a remotely monitored, staff-free grocery store to bring organic food to a small town.

In an interview with PYMNTS, Co-founder Kendra Rasmusson explained what it took to secure the 24/7-accessible, automated store against shoplifting, while avoiding the introduction of payment frictions.

Retailers are increasingly using sophisticated tools to fight shoplifting, according to a recent survey. A majority (55.6 percent) have implemented POS analytics, though emerging tech like fingerprint ID at POS (11.5 percent) and facial recognition (6.4 percent) had far lower levels of adoption. In fact, roughly 90 percent said they had no plans to implement either technology.

Solutions are also being developed to deter criminal activity. Stoplift Checkout Vision Systems, a checkout vision software maker, aims to detect fraudulent transactions through video rather than just using the weight scale provided at the self-checkout machine. AI-enabled video allows the company to flag any price switching or fake scanning.

Even minor league baseball is experimenting with cashierless transactions. Polar Park in Worcester, Massachusetts is using a platform from Standard Cognition to allow customers to buy snacks, drinks and souvenirs without scanning or checking out. The platform uses cameras and algorithms to keep tabs on customers and can even prevent shoplifting, with its AI algorithms recognizing signs of theft from behaviors like trajectory, gait, gaze and speed.

The Future 

While it may appear that robots are coming for human workers’ jobs – it’s been estimated that 10 percent of American workers could lose their jobs to automation in 2019 – according to Forrester, AI is still a century away from making cashiers and other workers obsolete. 

Retailers must embrace automation, Tim Moran, senior vice president of product and marketing at Worldnet, told PYMNTS. The overall trend, he predicted, is that eventually, the self-service model will become standard across most – but not all – retailers.

“It’s early days really. There is an online world and a brick-and-mortar world,” he said – and self-checkout, in-store kiosks and even Amazon Go all represent part of an evolution.