isu web 102224 728x90

Self-checkout poised for more growth in Greater Des Moines

/wp-content/uploads/2022/11/BR_web_311x311.jpeg

Try talking with someone who’s using the Wal-Mart self-checkout lane during a weekday lunch hour, and it’s easy to see why it’s a popular choice for busy people.

“I’m in way too much of a hurry to talk to you,” said one well-dressed woman at the retailer’s Southeast 14th Street supercenter, who appeared to be on her way back to the office. Ditto over at the next self-checkout aisle.

Given national trends, the odds are good that Central Iowans will see self-checkout lanes at a wider variety of stores within the next few years, as retailers continue to install systems in the hope of freeing up scarce labor to provide customer service elsewhere within their stores.

Overall, Wal-Mart Stores Inc. offers self-checkout lanes in more than 850 of its 3,000 U.S. stores. The world’s largest retailer, which began installing the systems in late 1997, now has self-checkout lanes in 33 of its 53 Iowa stores and supercenters.

Home improvement retailer Home Depot Inc., which has deployed self-checkout lanes at more than 800 of its stores nationwide, has plans to install them at its Ankeny and South Des Moines stores, according to a local manager.

Other large national retailers, including Walgreen Co., Staples Inc., Office Depot Inc. and Lowe’s Cos. Inc. are rumored to be testing self-checkout systems.

Nationally, an estimated 25 percent of grocery stores now provide self-checkout service. Industry analysts believe that self-checkout transactions at large grocery chains account for anywhere from 15 to 40 percent of daily transaction volume and up to 30 percent of the daily dollar volume.

West Des Moines-based Hy-Vee Inc. has had a self-checkout lane at six of its stores for about the past five years, including two in Greater Des Moines. However, the company says it’s holding back on further installations until the technology matures further. Competitor Dahl’s Foods Inc. says it has no current plans to install self-checkouts.

A Tennessee-based consulting company that tracks the self-checkout industry predicts that the volume of self-checkout transactions in North America, estimated at $42 billion last year, will mushroom to $337 billion by 2007.

Smart retailers will use it as a way to differentiate themselves from Wal-Mart by freeing up employees to provide better customer services, said Greg Buzek, president of IHL Consulting Group Inc. in Franklin, Tenn.

“It’s a way for them to lower costs in one area of the store so they can increase service in another,” he said. “How these retailers are going to succeed is by selling items in the store that have a higher margin. For example, you’re not going to beat Wal-Mart on cereals or toothpaste, but you can on floral or team sports items.”

The technology also allows supermarkets to more quickly serve their best customers, those spending $50 or more per visit, by diverting the unprofitable small purchasers to the self-service lane while providing personal service to the bigger purchasers.

Based on the costs to operate a single register, “(grocers) have to sell $15 worth of stuff at each transaction to break even,” Buzek said. “So the person who’s buying $50 to $100 is the person you’re making money on.”

Self-service checkout also allows stores to staff with fewer employees at non-peak hours, so that they can have more people on duty during peak times, particularly weekends, he said.

“Home Depot is doing this to allow its salespeople to better serve customers and find out if they have everything they need for their project while they’re still in the aisles,” Buzek said.

At Wal-Mart, “the feedback we get is very positive,” said Sharon Weber, a company spokeswoman at its headquarters in Bentonville, Ark. Use of the self-checkout lanes is spread among a variety of types of customers, she said.

“There’s really not a typical customer that uses them,” she said. “We see customers of all ages use the self-checkout.”

Des Moines resident John Harding, a customer at the Southeast 14th Street Wal-Mart Supercenter, said he and his girlfriend, Kerri Colby, use self-checkout “every time we come here.

“It makes things a little easier,” said Harding, who was checking out a full cart of groceries. “Sometimes there’s no waiting.” And it’s also more convenient to use when his 2-year-old and 2-month-old are with them, he said.

The eight self-checkout lanes were installed at the South Side store about two months ago, and “they’re getting used a lot more than I thought they would,” said Brian Becker, an assistant manager. On average, customers using the lanes have about eight items to check out, he said. He estimated the lanes probably account for less than 10 percent of sales at the supercenter, which might have all 37 regular checkout lanes open on a busy Saturday.

The choice of which stores have the lanes is based largely on the need at the individual locations, Weber said, and “what’s going to enhance the overall service for our customers.” In some stores, it’s “not logistically possible” to offer them, she said, while for other supercenters and neighborhood markets, there are plans to retrofit them for self-checkout.

Though labor advocates are concerned that workers freed up by self-checkout will be laid off, Weber said that’s not the intent.

“What this does from our viewpoint is offer our customers a choice of a full-service checkout, express checkout or now self-service,” she said. “That’s really the big thing for us. It does not cut down on the number of people hired; the people who would have worked the checkouts are now working in other areas of the stores.”

Buzek said that labor shortages for retailers are a reality that self-service checkout helps to address.

“Rather than eliminate labor, these systems will allow retailers to finally have their stores staffed more appropriately by having more personnel available in higher-need areas,” he said.

At Hy-Vee, the most common users of the self-checkout lanes are customers that have medium-sized orders, said spokeswoman Laura Mitchell.

“Also, customers that like the sense of having more control over the transaction, and customers who are more comfortable with technology use them,” she said. “We have a core of customers who really like them.”

Mitchell said Hy-Vee is waiting to see how the technology evolves before it commits to investing in more lanes, which on average cost about $25,000 to install.

“It’s something of a Catch-22,” she said. “Retailers want to get customer acceptance before we adopt it, but you have to have it before there can be acceptance. Ease of use is an important element.”

Ironically, Buzek has found that customers using self-checkout to save time actually spend more time than they would if an experienced clerk scanned their items.

“Because there’s often a smaller line at the self-checkout, there’s a perception it will be faster,” he said. “And because there’s personal involvement in the scanning process, it makes the time go faster than if you’re standing there watching your items get scanned.”