Albertsons LLC Ditching Self-Checkout Chainwide

In what might be the first hints of trouble for grocery self-checkout, the 217-store Albertsons LLC grocery chain confirmed Tuesday (July 6) that it is yanking self-checkout systems from all of its stores because of a "very high focus on customer service." This comes on the heels of word from Kroger that it is experimenting with a self-checkout-less store design and an IHL report last week that "Publix continues to be on the fence" of self-checkout.

Sources within both Kroger and Albertsons LLC cited the same self-checkout concern, which is that many customers perceive it to be less customer-service-oriented than staffed checkout lanes. Also, an increasing number of products require staff intervention, and that—coupled with consumers making errors in using the systems—can slow the self-checkout lines dramatically.

Albertsons LLC has stores in Arizona, Arkansas, Colorado, Florida, Louisiana, New Mexico, Texas and Utah, and its headquarters is in Boise, Idaho. Its Utah stores are called SuperSaver. To be clear, Albertsons split into two chains five years ago and the other chain—also known as Albertsons but without the LLC—is now owned by Supervalu. Supervalu's Albertsons have not said they are abandoning self-checkout.

Greg Buzek, president of the IHL Group and arguably the most veteran analyst of self-checkout systems, said some of the decisions about self-checkout are strongly driven by customer demographics, which is why self-checkout will work so well for certain stores and more poorly in others. "It's not as popular among those shoppers who are 65 or older. Some of those people remember when the store owner used to know their name," Buzek said.

It's also difficult to evaluate how well self-checkout is doing, given that it can't be done solely by looking at how many transactions self-checkout lanes are processing. Some of those customers might be using it but are very unhappy doing so and actively plotting to start shopping at a direct rival.

In the perception versus reality realm, a problem with self-checkout has been the perception—reinforced often by local media and even some political leaders—that the systems contribute to unemployment. Most grocery retailers deny such suggestions, arguing that it's difficult enough to hire and retain associates and that those associates are merely being deployed to more service-oriented parts of the business, such as in Deli, offering free samples or even carrying customers' bags to their cars. But the perception—even when unfounded—has caused resistance from areas with substantial union member populations, Buzek said.Another problem with self-checkout has been a sharply growing number of product exceptions, which slows the lines. The early grocery self-checkout systems only needed to make exceptions for a handful of age-restricted items, such as tobacco, adult publications, condoms and alcohol. Today, those intervention-requiring—product lists have expanded to include a wide range of over-the-counter medications, plus bleach, vinegar and, in California, spray paint, among many other items, Buzek said. Some are for terrorism reasons and others are simply loss-prevention matters.

Albertsons is also removing the self-checkout lanes relatively slowly, doing it as stores are being remodeled, due to the costs involved with flooring and conduit.

With the self-checkout removed, what's next? "We are removing all of the self-checkout lanes, but there isn't a standard configuration that we're replacing them with," said Christine Wilcox, director of communications for Albertsons LLC. In some stores, self-checkout will be replaced with more express lanes, which is what Kroger is experimenting with. In other stores, Wilcox said, additional regular checkout lanes will be added. "It depends on the store and what that store needs."

As for the reason for ditching self-checkout, that was more explicit. "We feel like having express lanes where a person can actually talk with a checker and have a conversation and check out their groceries" is a better approach, she said.

Self-checkout systems also suffer from something that few other IT systems have to deal with: the people operating the systems—consumers—have no training. And unlike other kiosks, such as airport ticket systems, bank ATMs or Redbox movie-dispensing kiosks, self-checkout systems tend to be rather tricky.

"Any time there's a mistake between the databases, it requires an intervention," Buzek said. "If the customer doesn't put it on the scales properly," it would also require an intervention. Indeed, when KMart halted its self-checkout lanes in 2002, Buzek said, it was because "they never trained or motivated their cashiers," who are the only ones who could train consumers.

One of the intended advantages of self-checkout has been an element of privacy, where consumers might not want stores associates, who could easily be neighbors, to know what all of their purchases are. But whenever an intervention—whether it's due to a customer error or a product that needs an employee's approval—occurred, the privacy went away. And as interventions have become much more frequent, the privacy benefit has been diluted.