LP Magazine

JAN-FEB 2019

LP magazine publishes articles for loss prevention, asset protection, and retail professionals covering shrinkage, investigations, shoplifting, internal theft, fraud, technology, best practices, and career development.

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T he use of self-scan and checkout (SCO) technologies has grown considerably in the past fifteen years, predominately but not exclusively in the grocery sector, where customer and product volumes and space-utilization issues make them a particularly appealing proposition. For many retailers it has provided a significant opportunity to reduce their core costs at a time of increasing competition, and as new iterations of the technology have evolved, there would seem to be a growing appetite amongst certain groups of users to prefer this mode of shopping. However, a fundamental component of the SCO proposition is the transfer of responsibility from the retailer's staff to the consumer for the accurate scanning of products and ensuring correct payment is made. For many of those tasked with ensuring that retailers sell more products than they lose, this growing use of SCO systems has been viewed as a concern, not least in the difficulty in imposing strong enough controls over the way in which it may be used and abused. A new report from the ECR Community Shrinkage and On-shelf Availability Group and an accompanying book provide new insights into this issue, charting the scale and extent of the losses retailers are experiencing from a range of SCO technologies. The research also provides a detailed review of the ways in which these losses might be best be controlled. The two-year study focused on quantifying the risks associated with three forms of SCO systems: ■ Fixed—The consumer scans at a designated machine/robot, ■ Scan and go—The consumer is provided with a scan gun by the retailer, and ■ Mobile scan and go—The consumer users their own mobile device to scan items. The research is based on data collected from thirteen retail companies operating in the US and Europe and two SCO technology providers. Interviews were carried out with seventy-three key stakeholders from these companies, and eleven store visits were conducted to review the technologies in use. In addition, a range of data points were collected from participating retailers, including 140 million scan-and-go transactions, 17 million transaction audits, 486,000 items found not to have been scanned, video analytics of €72 billion ($83 billion USD) of fixed SCO transactions, and comparative shrinkage data from thousands of retail stores. The study does not take into account the likely productivity savings retailers can accrue from using this technology nor any possible reductions in loss as a consequence of employing fewer staff for instance. This needs to be kept in mind when reviewing the data below. It is also worth noting the significant challenges the research faced in trying to collect, collate, and analyze data from retailers on the losses associated with SCO systems—the absence of quality data on this issue was profound and concerning. It certainly shone a spotlight on the current lack of prioritization in retailing to better understand the potentially negative consequences of their use. It would seem that, to date, retailers have been keen to feast upon the positives of SCO but less keen to understand the possible downsides in terms of an increase in retail losses. Impact on Retail Losses: Fixed Self-Checkout Systems Data comparing stores with and without fixed SCO found that levels of loss were higher in the former than the latter, with some grocery case studies recording losses in the region of 33 to 147 percent higher. One case study that focused on the difference between stores using SCO with and without a weight-checking system found that losses where there was no weight system were 147 percent higher than stores not using any SCO technology. Utilization data (the value of transactions processed through SCO) showed that stores with higher rates had higher levels of shrinkage. Stores where 55 to 60 percent of transactions went through fixed SCO can expect their shrinkage losses to be 31 percent higher. Similarly, data looking at rates of loss and the number of SCO machines in use found that stores with higher numbers of machines also had higher rates of loss. Stores with the Understanding the Drivers of Lost Profits from SCO LOST PROFITS FROM SCO Lost Stock Non- scanning Barcode Switching Promo & Multi Variety Errors Walk- aways Coupon Frauds Double- scanning Mis-scanning & Switchng Lost Sales Out-of-Stocks Stock Inaccuracy Lost Margin UNEXPECTED LOSS IN THE BAGGING AREA 52 JANUARY–FEBRUARY 2019 | LOSSPREVENTIONMEDIA.COM

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