It’s an incredibly uncertain time for retailers.
The industry landscape is in a state of flux as technological innovation disrupts long-established point of sale strategies – such as the self-service checkout machine.
From till-free shopping experiments in the UK to completely cashier-less stores, such as the recently opened Amazon Go Grocery store in Seattle, these developments mean retailers need to be in a constant state of preparedness for what the future may hold.
But at the same time, they also need to be incredibly discerning about what technologies they invest their capital in today.
And the last place retailers want to find themselves is trapped in technological cul-de-sacs while an industrial revolution ripples through the market.
The status of self-service
The self-checkout machine was first invented by prolific inventor David R. Humble in 1984. He thought it up as he waited in queue in a South Floridian grocery store.
The machines were popularised in the 90s and became ubiquitous by the turn of the millennium.
And up until quite recently, the self-service checkout machine was the pinnacle of point of sale technology – and it is not hard to understand why.
Labour is by far the biggest operating cost when it comes to retail. Self-checkout machines gave businesses a way to reduce headcount while maintaining their capacity to process payments.
It’s a common sight to visit a store with just one member of staff manning a kiosk and bank of self-checkout machines.
However, self-checkout machines are not without flaws. They can be frustrating for customers to navigate and increase the potential for customer theft, according to an independent study by the University of Leicester.
It is also recognised in the latest report by the British Retail Consortium that there are an estimated 424 incidents of violence and abuse daily by the general public on store staff. At the self check-out these incidents are often the result of store colleagues intervening to prevent customer fraud or declining age related sales which put enormous strain on store staff.
So, while the machines will always be a significant chapter in retail’s history books, with current developments in Artificial Intelligence, mobile and wearable technology, it’s unlikely they’ll remain the pinnacle of point of sale technology for much longer.
The new age of customer service
The last few years have seen an acceleration in retail innovations. Companies are searching for the next technology of choice which will match their customers’ rising expectations of ease and convenience.
For a while, it seemed like retailers had ordained mobile technology as heir to the self-checkout throne. In April of 2019, Sainsbury’s even opened an experimental till-less store in Holborn.
The firm developed SmartShop Scan and a Pay & Go app which allowed customers to scan items and pay from their phones, so they had no reason to queue.
However, the store has subsequently reinstalled tills in the store, commenting in a blog post that “It’s clear that not all our customers are ready for a totally till-free store”.
Even the shining achievement that is the Amazon Go stores still require an incredible amount of infrastructure to enable the level of ease they offer customers. And even then, for a while the store had to simply accept that there were going to be shoplifting incidents.
The future is simply too unclear to make long-term predictions about right now. However, it seems likely that as an industry we are driving towards a future that will deliver a ‘frictionless shopping’ experience for customers.
And even if they can’t afford to experiment like the bigger players, retailers do need to ensure they’re able to capitalise on new developments when they present themselves.
While the future might not be written, the choices retailers make today will still have a significant impact on their ability to compete tomorrow.
Unfortunately, due to manufacturer enforced product obsolescence many retailers are having to predict the future today and make investment decisions that will shape their self-service strategy for the next 8 years. Like smart phones, the latest manufacturer software updates will only work on the latest hardware and their Self-Service provider withdraws service and support for older model of machine that are still operating perfectly.
At a time when the industry is being buffeted by increased costs, low profit margins, and low growth, retailers are looking to remove cost from their operation. But with an upgrade cost of a single unit around £6000-£7000 – this means that larger retailers with thousands of units will face upgrade costs in the millions and offer little or no return on investment.
Whilst the upgrade of these self-service machines is costly, disruptive, and environmentally wasteful, it also shackles these retailers to the technology for the foreseeable future.
However, not every retailer will have to do this, which means some business will have the choice to hold on to their capital until the market seems clearer, meaning they’ll be in a much more competitive position when the time comes.
At a time when the market is drifting towards simplicity, sustainability, and cost efficiency, upgrading and replacing old systems for no real reason seems like a poor choice.
However, one of the benefits of living in such innovative times is that you rarely only have one choice. For instance, the Fujitsu USCAN self-checkout solution is able to run on soon-to-be prematurely retired self-checkout machines.
Fujitsu’s software and support services will provide customers with a modern and supported self check-out environment with improved performance, enabling retailers to continue to realise the value in their self check-out estate, and introducing new functionality to improve the customer experience, channel availability and colleague productivity, and reduce customer fraud and loss.
If you want to ensure your business is prepared for an uncertain future, get in touch today to see if we can help.