Article Originally Published Here
As shoplifting incidents rise, many retailers are reassessing the use of self-checkout systems.
Self-checkout can reduce labor costs by shifting the responsibility of scanning items to customers. However, this system also opens up opportunities for theft, whether intentional or accidental. Retailers find it challenging to distinguish between genuine mistakes and deliberate theft attempts, such as when a customer fails to scan an item properly.
Statistics show that self-checkout areas experience a 65% increase in theft compared to traditional checkout lanes, as reported by Capital One. This ease of theft, combined with a low risk of arrest if caught, has led some consumers to exploit the system repeatedly. According to the same report, 15% of consumers admit to stealing via self-checkout, and 44% of them plan to do it again.
Retailers Respond to Self-Checkout Challenges
Five Below Reduces Self-Checkout Lanes
Some major retailers, including Walmart and Target, have reduced or eliminated self-checkout options in specific locations. Five Below, a discount chain known for its affordable products, has recently implemented significant changes to its self-checkout systems. During a fourth-quarter earnings call, CEO Joel Anderson detailed the company’s strategies to address shrinkage, a term used for loss due to theft, damage, or administrative errors.
“We’ve tested various shrink mitigation measures, including product-related adjustments, front-end initiatives, and security guard programs,” Anderson stated. “The most impactful change was reducing the number of self-checkout registers and placing associates to assist customers at these lanes.”
In high-shrink stores, Five Below has shifted primarily to traditional checkout counters staffed by associates, with a goal to have 100% of transactions handled by employees in the most affected locations.
Dollar General Eliminates Most Self-Checkout Stations
Dollar General, another discount retailer with over 20,000 stores, has also taken steps to combat shrinkage. CEO Todd Vasos highlighted the company’s comprehensive approach during a first-quarter earnings call, noting that self-checkout theft was only part of the problem.
“Our strategy includes improving supply chain efficiency and reducing inventory levels, alongside enhancing in-store security measures,” Vasos explained. “A key part of this initiative has been the removal of self-checkout in the majority of our stores, about 12,000 locations so far.”
Despite these changes, Dollar General’s stock has seen a 6% decline in 2024, potentially due to increased costs and a shift in consumer preferences towards lower-priced items. Similarly, Five Below’s stock has dropped by over 50% year-to-date, partly influenced by shrinkage and a projected 3-5% decline in same-store sales for fiscal 2024.
