Self-Checkout Too Easy to Steal?

Self-checkouts are supposed to save retailers in labor costs, because they do not need a cashier and, theoretically, the customer can do the checking out him or herself.  But some retailers are finding that they may be costing more than they save, as incidents of customer theft grow.

Big Y, with 61 Massachusetts and Connecticut stores, and Albertsons, with 217 stores in the South and West, have done away with self-checkout in order to foster more human contact and better customer service rather than having customers struggle with bar codes, coupons and payment.  On the other hand, CVS Caremark Corp. recently implemented self-checkout in some urban markets to make shopping faster and more convenient while saving on labor.

But are retailers really saving money?

At StopLift, we are receiving many more requests for our self-checkout video analytics for finding theft and fraud at the self-checkout, in particular detecting merchandise leaving the store with customers unscanned.  Chains are waking up to the fact that the siren call of labor savings is often coupled with the danger of increased shrink.  And now they are trying to do something about it.

We initially developed scan avoidance detection technology for retail chains to be implemented with manned checkouts.  Our ScanItAll, patented computer vision technology, interprets the behavior of the cashier and customer by analyzing and understanding the operator’s body motions and interactions with items of merchandise at the checkout.  If you visit StopLift.com, clicking on the bottom right of the video window on the home page will show you real videos of customers stealing at the self-checkout.

The dirty little secret is that it’s very easy to steal at self-checkout, and that is why the incidents among many retailers are growing.  Self-checkouts are almost an immediate ‘benefit of the doubt’ afforded to every customer, honest and dishonest alike. And there is no better repeat customer than one who gets free merchandise.

Here are just a few examples of how people steal in the self-checkout:

  • Leaving more expensive items in the shopping cart, while only scanning some of the less expensive items.
  • Leaving items in a recyclable or reusable bag on the floor, while only scanning a couple of other items.  Many self-checkouts read the presence of a recyclable/reusable bag in the output area as an unscanned object, prompting the customer to put it on the floor anyway.  How easy is it to take just a few items out  and scan them, before returning them to that bag of other goodies on the floor?
  • The “banana trick”.  Even though the customer has a $10/pound sirloin steak on the scale, with the bar code facing upward, he or she can indicate it as produce and click on “Bananas” at 49 cents a pound.
  • Overloading the weight scale so that additional unscanned merchandise is not sensed by the self-checkout.
  • Scanning an item with one hand while dropping another into a reusable bag on the floor.

These are just the tip of the iceberg.  It never fails to amaze me just how creative and ingenious people can be in figuring out how to steal in the self-checkout.  The beauty of it from the customer’s standpoint is this:  Every item in their order is a chance to purposely try – or inadvertently discover – how to beat the system.  And if the customer is noticed incorrectly ringing up the transaction or skipping an item, he/she can always plead ignorance about how to properly use the system.

That brings me to the self-checkout attendants.  While their primary purpose is to be available to help customers at self-checkout, they are also supposed to watch and keep customers from trying to game the system.  Even with complete attention and presence of mind, keeping an eye out for customer theft is a very tough job.  Compounding the problem, however, is the fact that these attendants are often not around.  They may be helping another customer, or they may be sent off on another task by store managers who see them as “extra bodies” just standing around.  Or, as I’ve witnessed personally at my local grocery store, the attendant might be at his or her station texting.  Without attendants available and attentive, not only does customer service falter, so does security against customer fraud.

The growth of self-checkouts throughout the retail and grocery industries has increased demand for self-checkout video analytics.  That, in turn, is driving deployment of cameras above the self-checkout registers just as it has with manned checkouts.  Although StopLift’s systems work with both kinds of cameras, while retailers previously defaulted for analog CCTV cameras, we now see them opting more and more to use our system with digital IP cameras over self-checkouts in order to be “future proof”.  Since retailers also want to react directly from the shop floor with mobile smart phone and tablets, we see increased interest in our mobile smart phone and tablet applications as well.

As self-checkouts continue to grow in popularity, one thing is for sure:  we will continue to see a growing market for video analytics and related technology to help retailers catch the wrong kind of repeat customer.

Mobile POS Enhances Marketing

Point of Sale (POS) systems do much more than track inventory and record financial transactions. They can also alert merchants to the personalities of their customers and help define a marketing direction. So much easier for all involved than the old “customer comment card” found at some establishments, mobile POS (MPOS) can capture data quickly, accurately and with little intervention into the consumer’s time. Sales associates can engage better with customers and the merchant benefits from a stronger client relationship and data that can help target marketing dollars.

An April 30, 2013 report from PYMTS provides an overview of the major players in the MPOS marketplace. While acknowledging that the MPOS sector in the retail market is expected to grow rapidly over the next five years, it will in all probability remain a small percentage of overall sales. According to the report, “MPOS will account for only about one tenth of one percent of all retail sales.”

A recent survey conducted by Constant Contact reports that 71 percent of small businesses using mobile technology now accept mobile payments and 52 percent use a mobile-/tablet-based MPOS system. However, many small businesses are not taking advantage of this technology, citing perceived customer disinterest, lack of time to learn the system, irrelevance to their business, and other issues.

MPOS remains relevant, however, because of the proliferation of mobile smart phones and tablets, allowing both consumers and merchants opportunities for easy transactions at points of sale. A recent Forrester Research report predicts that one billion consumers will have smart phones by 2016.

Javelin Strategy and Research also released a report in late April 2013 that projects up to $1.1 trillion in annual sales through mobile POS. Javelin’s report involved interviews with executives at 14 mobile POS providers, as well as data from a random survey of 6,651 consumers, identifying key trends and themes in the market. An area of weakness in MPOS that came to light in the survey was security. Javelin found that only 28 percent of consumers consider mobile credit card processing as secure, but this was counterbalanced by the level of convenience offered by mobile applications.

Most MPOS systems provide immediate access to inventory and price information, expediting sales transactions from anywhere in the store or even outside the store. In terms of marketing strategy, access to the customer’s purchase history and interests are tracked, allowing retailers to increase up-selling and cross-selling with positive impact on revenue.

MPOS is good for the merchant, as it captures purchasing behaviors without intrusion into consumer’s time or personal space. It helps speed customer interactions while providing a positive retail experience that goes beyond the traditional “loyalty program.” Information about the products purchased are stored and used to create personalized prompts a store clerk could access to cross-sell or up-sell merchandise. And the marketing team could use the information stored in the database to create campaigns which would send relevant marketing content directly the customer on their mobile phone or email based on customer behavior.

There are many POS software products on the market, so the decisions on which to choose should be based on the evaluation of specific business needs, options and budget. It should not be difficult to find a solution that’s easy to install and use at a reasonable cost for purchase and maintenance.

 

Jack Dorsey unveils Square Stand, new iPad point-of-sale system

Jack Dorsey, co-founder of San Francisco payments startup Square, is making another big push to expand into larger restaurants and retailers with a sleek new point-of-sale device.

The Square Stand is made out of molded white plastic and swivels either to the merchant or to the customer. It bolts to a checkout counter or a cash register box and runs Square’s point-of-sale application called Square Register. It comes equipped with a credit card reader and USB ports as well as a bar code scanner, receipt printer and a cash register box.

The new product is a shift for Square, which will now be taking on traditional point-of-sale system makers as well as companies that make a new wave of registers built around the iPad.

In a news conference held at Blue Bottle Coffee in San Francisco, Dorsey said the new product is aimed at high-volume brick-and-mortar stores.

Square has become popular with small merchants who use its credit card swiper that plugs into smartphones and iPads. But the company has come up against resistance from larger retailers.

Now it’s going after that much bigger piece of the transactional pie by bringing together hardware and software into one device.

“Fundamentally, we do believe that hardware makes software better,” Dorsey said.

It’s unclear if Square –- even with its celebrity founder and hundreds of millions in funding –- can chip away at merchants who still use traditional registers and checkout stands.

The Square Stand goes on sale in July for $300 on the Square website and in Best Buy stores. Thirteen merchants in more than 30 locations will begin testing the stand this week, including Blue Bottle Coffee outlets.

Asked if Starbucks will begin using Square Stand, Dorsey said Starbucks CEO Howard Schultz, who sits on Square’s board, is “excited” about it. Starbucks invested $25 million in Square last year, and Square processes Starbucks’ credit card transactions in the U.S.

More Bad News for NFC and Mobile Payments

It seems there has been a lot of bad news lately for NFC technology. Previously, we reported that the new iPhone 5 would not come with NFC capability, signaling that technology giant Apple believes NFC will not be the wave of the future for mobile payments. Now there is further evidence of a reticence among retailers to put stock in NFC. Tesco, a UK-based retail power player, seems to believe NFC is not only an unlikely contender for contactless payments dominance, but also that the time for NFC technology has passed.

In an interview with NFC industry publication NFC World in conjunction with a recent mobile payments conference, Tesco enterprise consultant architect Lyndon Lee is quoted downplaying the value of NFC for the retail chain. According to Lee, “NFC was revolutionary 10 years ago but I think it just might have passed its sell-by date… We are developing a digital wallet, focusing on marketing and loyalty aspects, but payment may not enter the wallet.” Lee continues: “Is mobile NFC at the right place, at the right time? I don’t see any real movement or activity. NFC usability is not really revolutionary and, for the general public, is it really that cool? I think the next generation won’t think it’s cool enough for them and they won’t use it.”

It seems that for Tesco, the opportunity cost of investing in NFC is too high. With multiple players in the field and a perceived reluctance on the part of consumers to utilize NFC-enabled mobile wallets for payments, it seems NFC payments may not be strong players at the point of sale. Later in the interview, Lee indicates that Tesco will continue to develop proprietary mobile wallet technology, but it will be used more for loyalty and incentive programs, not payments. For Lee and Tesco, it seems the old “if it ain’t broke” adage might be a major influence: “We have a payment system in place already and we don’t want to disrupt it if it doesn’t add any value.”

It seems NFC technology is taking quite a beating lately, and without a major retailer investing in the technology or a smartphone producer standing behind NFC as a must-have feature, it is uncertain how long it can be considered a real contender in the mobile payment wars. What is interesting is the assertion that NFC may still have value in a mobile wallet format – just more for loyalty and marketing purposes than payments. With the increasing familiarity and popularity of loyalty rewards in the form of key ring fobs, could NFC-powered loyalty programs pick up where those pesky key tags leave off? I for one hate flipping through the fifteen or so barcoded loyalty tags on my keys; perhaps a quick NFC swipe at the point of sale might ease my burden and encourage me to come back again and again? Looks like that’s what Tesco is betting on.

This is one of those moments when you have to wonder: in the face of adversity, can the tenacious NFC “Davids” stand up to naysaying tech “Goliaths” like Tesco and Apple? Innovation is the key to triumph in this scenario, methinks. So the question is: can the yea-sayers in NFC’s corner come up with an irresistible use for the technology that will make consumers demand it? Or will it fall by the obsolescence wayside along with floppy disks, 8-tracks, and flip phones? The answer remains to be seen, but for now things are not looking bright for the future of NFC technology.

Mobile Payments more Hygienic than Cash?

Bacteria are everywhere. They live in soil, they live on our skin and they live in our guts. They even live in the Mariana Trench and the hot springs of Yellowstone National Park. And yes, they live on dollar bills. Is this something that should concern us? MasterCard would have us believe so. In fact, they’ve shown that we—or at least our European counterparts—already do believe so.

MasterCard recently funded a study about Europeans’ perceptions regarding the cleanliness of cash. One thousand participants across fifteen countries were asked to select what they believed to be the least hygienic item in a list that included cash, escalator handrails, payment terminal buttons and library books. In nearly every country, at least half of the participants chose cash as the dirtiest item. Finland was the least wary of cash, with 48% choosing the euro as the dirtiest item. Italians were the most wary, with 66% selecting the euro as their dirtiest item. Overall, 57% of participants believed cash to be the least hygienic item of the options listed.

Obviously, MasterCard is not an unbiased party. They funded this study for a reason—they want to promote the use of MasterCard products. In a cashless society, MasterCard would number among the winners. Thus while it’s always important to consider context, it’s especially important with regard to this study.

For example, MasterCard’s press release about the study avoids any mention of whether or not cash actually is the dirtiest item with which people come into regular contact. It instead presents some scary-sounding numbers and quotes a professor as saying those numbers are “sufficient for passing on infection.” The same professor admits “there is merit in a wider study tracking the spread of resistant strains [of harmful bacteria] through movement of bank notes globally.” But that study was not this study. This study consisted primarily of the perception questionnaire discussed above. Twenty-five bank notes across six countries were also tested to determine the approximate number of bacteria on each—and to give us our scary numbers. The amount of bacteria found varied hugely, ranging from an average of 11,066 per euro to over 4 million on either the krone or the ruble—or perhaps that’s an average of the two; the chart MasterCard provides is unclear to me on this point—for an overall average of 26,000 bacteria per note. The single cleanest note tested harbored 2,400 bacteria.

Clearly, cash is disgusting and we should all immediately switch to the exclusive use credit cards and mobile payments. Right?

Not so fast. Sure, those sound like big numbers, but let’s consider their context. In a typical gram of soil, you’ll find about 50 million bacterial cells. According to one 2007 study, a kitchen sponge can contain about 10 million bacteria per square inch, and a dish cloth about a million. And guess where a 2012 Wall Street Journal piece reported finding between 2,700 and 4,200 units of a disease-causing bacterium called coliform? Mobile phones. 2,700-4,200 are low numbers compared to what we’re seeing in the MasterCard study, but that was just one specific kind of bacteria—as far as I can determine, the MasterCard study includes all bacteria, of which there are so many different types that most haven’t even been scientifically characterized. With a little context, that 26,000 bacteria per bank note statistic is sounding a little less scary, isn’t it?

The press release regarding MasterCard’s study implies that handling cash can make a person sick, but it doesn’t actually report finding any harmful bacteria on the cash they tested. The professor MasterCard cites simply says that harmful bacteria have been found on bank notes in previous studies. While this is true, it is also true that the vast majority of bacteria are perfectly harmless to humans. A certain amount of exposure to bacteria can even be beneficial to a person’s health. I’m not suggesting that if you find a dollar bill on the bathroom floor you should pick it up and lick it, but bacteria are precisely what you’re eating when you take a bite of probiotic yoghurt. Also, studies have shown that exposure to bacteria is essential to a child’s developing a healthy immune system, and that creating an over-sterile environment can be detrimental to the health of both children and adults.

There are many upsides to mobile payments and going cashless. Business owners should absolutely be instituting mobile POS solutions in their businesses—the reasons for this are manifold and are explored regularly on this site: convenience, connectivity, security, customer preference… the list goes on. Has this study from MasterCard done anything to convince me that hygiene belongs on that list? My answer is a resounding “No.”