Is shrinkage in retail a self-service problem?

With an increasingly digital and automated society, solutions like self-scanning and self-checkouts at stores have become more and more popular. Supermarkets and other stores adapt to our on-demand self-service society by giving customers freedom of choice and better service by using self-service units. At the same time, store owners try to save costs because they can use personnel more efficiently. But behind all this, there is one big challenge that comes with self-scanning: shrinkage due to theft.

The problem of shrinkage is not new to retailers. However, due to the introduction of self-service technology, it has been highlighted once again. Research has shown that shrinkage with self-checkout solutions can be as much as double compared to traditional checking out. Theft, whilst using self-scanning, is often mentioned in the press because it is a relatable topic. However, it is not the only reason why shrinkage whilst self-scanning or during self-checkout can occur. When a customer uses a Self-checkout, they take over the role of a cashier. Because a customer is not a trained cashier, mistakes at the checkout can happen more often. Unfortunately, with the errors, retailers' profits shrink as products leave the store without being paid for correctly. So how can we battle both deliberate and this un-deliberate “theft”?

Since the problem is not new to retailers, several solutions are already on the market. However, none of them fully solve the problem or can't be applied in every situation. One of the earliest theft prevention methods seen in most stores is electronic surveillance like CCTV (Closed Circuit Television) or EAS (Electronic Article Surveillance). But systems like these have their limitations. For example, camera security needs constant supervision by staff to pick up theft immediately, and EAS labels do not fit on all products. The same counts for RFID, a newer form of tag security that is relatively expensive, making it less viable for low-value goods like a candy bar or a package of butter.

Even with these measures not being 100% foolproof, being aware of them will lower the theft rate. Options like Barrier control after purchase or checkups from staff can additionally make a difference. Barrier control with a gate that needs to be opened using your receipt will stop opportunists from walking into the store, grabbing something and walking out. In combination with staff overseeing, helping with and controlling purchases, theft can be prevented.

Most of these solutions are focused on deliberate theft. However, frustration during checking out can also lead to higher losses. For example, products not being coded correctly or not scanning correctly could lead to customers leaving the store without paying for them. It is essential to have a user-friendly checkout solution that works intuitively for your customers to battle this. Being aware of this gives you the option of adjusting the software, hardware and your checking out solution to fit your customers' journey. Making sure self-checkout will be smooth, frustrations are kept low, and “theft” will decrease.

About the Research:

With over 50 years of experience in checking out solutions, Pan Oston specialises in just that. For that reason, we are currently researching how to implement self-service solutions in the most optimal way for Retailers. Together with Judith Ditscherlein and the University of Twente, we want to find ways to reduce shrinkage in self-service solutions for Retail.