Retailers Are Rethinking Self-Checkout As Shrinkage Rises

Many stores began to prioritize self-checkout options during the pandemic as a way to lower costs and help balance reduced workforces, but some major retailers seem to be having a change of heart when it comes to self-checkout lanes.

What's Going On:

Retailers are reporting increased amounts of "shrinkage," the industry term for the loss of goods caused by shoplifting, employee theft, fraud and other related events. According to the 2023 National Retail Security Survey, retailers saw $112.1 billion in losses from shrinkage in 2022, up from $93.9 billion in 2021.

Interestingly, the rise in shrinkage coincides with an increased number of self-checkout registers. According to a Fast Company report, retailers are starting to rethink their strategies as mounting losses from shoplifting and customer error may be outweighing the cost benefits.

Retailers Making Changes:

Dollar General Corporation DG installed self-checkout lanes in half of its 19,000 locations and even tested stores without cashier lanes and only self-checkout options. However, in the company's latest earnings call, CEO Todd Vasos pumped the brakes on the initiative.

"We had started to rely too much this year on self-checkout in our stores. We should be using self-checkout as a secondary checkout vehicle, not a primary," he said. 

Target Corporation TGT is testing a new "10 Items or Less" self-checkout policy at some locations, requiring customers with more than 10 items to use the traditional, staffed checkout method.

Costco WholeSale Group COST has reported that some non-members are using borrowed membership cards at the self-checkout registers. The retailer is pushing back by adding more staff to its self-checkout areas.

Walmart Inc. WMT announced earlier this year that it would begin reducing the number of self-checkout stations it has in its New Mexico stores and increase staff in self-checkout sections.

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Image: Charles Thompson from Pixabay