Shopping moves into fast lane

LAURA WALTERS
Last updated 05:00 08/02/2014

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Retailers are automating customer services in a bid to cut costs and give consumers independence but with mechanisation come risks.

While shoppers are increasingly being encouraged to scan their purchases and pay for them using automated checkouts, the system also presents a hotbed for opportunists looking to pinch a kilogram of eggplant or a bottle of liquid laundry detergent.

Last month 40-year-old Napier woman Tracey King stole $1053.42 worth of groceries from Pak ‘n Save after using the self-service checkout.

She pleaded guilty in the Napier District Court to scanning the items but then pushed the trolley out without paying.

The driving force behind the shift to shopping automation and less customer-staff interaction is unclear.

Is it to save the retailer labour costs by reducing the number of check-out staff, or is it what customers want?

Possibly both, says Chris Wilkinson, managing director of retail consulting firm First Retail Group.

Customer "empowerment" is driving services such as click and collect and self-service.

Information kiosks and retail assistants could even be replaced with smart phones and tablet apps. Already in-store beacon technology, which detects customers in the shop, can automate customer service features such as welcoming shoppers, helping them find specific products instore or alerting staff they need assistance.

Smartphone apps using the beacon technology will engage shoppers with bricks and mortar stores again.

Beacons are used in the United States by Macy's department stores and by Super Bowl promoters. It is also being trialled in New Zealand as part of an automated coffee loyalty programme.

"The trend is not necessarily about saving money. We know customers love to be empowered," Wilkinson says.

The rise in online shopping shows that customers want to make their own decisions without the pressure of someone standing over them while they shop, Wilkinson says.

Time pressures also mean they want fast and easy ways to shop.

Retailers turn to automated services to keep labour costs down, and it can also be a "real challenge" to find people with the right skills in retail, Wilkinson says.

Self-service in supermarkets and budget retailers, such as Big W in Australia, tackles both the staffing issue and helps customers feel empowered, he says.

First Union retail secretary Maxine Gay says automation has led to fewer people employed in retail and is also altering established days and times of work.

Fewer staff has also led to security issues, Gay says.

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"The problem with self-service checkouts, is that stores will have fewer staffed checkouts and late at night there can often be only one person on their own at the front of the store and the self-service checkout, which raises significant security concerns for us."

Automation is expanding beyond food retail, with Kmart introducing self-service checkouts, Gay says.

Despite the savings for employers, research shows customers are using self-service to grab a bonus of their own.

According to a recent UK survey, shoppers steal £1.6 billion (NZ$2.3b) a year in groceries using self-service checkouts at British supermarkets. Almost a fifth of the more than 2600 people questioned in the survey admitted to stealing this way.

However, New Zealand supermarket giants Progressive Enterprises and Foodstuffs say self-service has not led to an increase in theft overall, though neither is prepared to provide details on how much is lost to shoplifters.

New Zealand supermarkets began installing self-service checkouts in 2006, and today Foodstuffs uses them in all its Pak 'n Save and New World supermarkets.

Foodstuffs' South Island general manager of retail operations, Alan Malcolmson, says the company took the prevention of stock loss "very seriously".

Theft does occur at self-service checkouts but there has not been a noticeable increase in shoplifting from Foodstuffs stores, he says.

A Countdown spokeswoman also says shoplifting has not increased since the introduction of self-scanners.

Countdown and Foodstuffs say most customers are honest and like the convenience of self-service.

But automation is not all doom and gloom. There are other ways retailers are cutting down customer-staff interaction that are not synonymous with theft. Click and collect, where customers order and pay online and collect instore, is taking off in New Zealand.

Wilkinson says big Kiwi retailers such as The Warehouse, Dick Smith, Supercheap Auto, Sony and supermarkets are building click and collect services.

Westfield in west London has set up a lounge where customers can order and pay online for goods from 260 stores, then try on clothing in the room before taking their purchase home. Meanwhile, Tesco supermarkets in Britain let customers order online and pick up from the London underground.

Managing director of retail marketing agencies JustONE and .99, Ben Goodale says that although Kiwis are embracing the new technology, Tesco's approach might be a step too far for New Zealanders, who like to get out.

IT'S A STEAL

Otago University marketing professor John Guthrie's 2003 retail crime study shows customer theft cost $564 million a year, while total "shrinkage" including lost or damaged goods cost $705m a year.

However, Guthrie estimates total shrinkage everywhere is actually costing retailers about $1 billion a year, with supermarket shrinkage accounting for as much as 40 per cent of that.

Small New Zealand retailers do not have the resources to deal with theft, Guthrie says. "Most of them would say it's the cost of doing business."

It is hard to gather specific information on supermarket theft as companies do not provide the figures.

"You can ask people until you're blue in the face but they often won't tell you. They know it's gone somewhere but they don't know where it's gone."

Guthrie says self-service checkouts are as much about making the shopping experience convenient as they are about saving costs.

First Retail Group's Wilkinson says there is a different culture between shoplifting in New Zealand and Britain where a recent survey found shoppers steal £1.6 billion (NZ$2.3b) a year in groceries using self-service checkouts at supermarkets. Almost a fifth of of those surveyed admitted to stealing from self-service checkouts, with the majority doing it regularly. "We're a very trusting culture in New Zealand."

This trusting nature is part of the problem, says Steve Davis, Retail Association security consultant and director of retail security firm Davis Consulting. He believes New Zealand retailers lose between $1.2 billion and $1.5b from customer theft, staff theft and collusion, and damaged or lost stock each year.

Customer theft or shoplifting accounts for about 35 per cent of retail "shrinkage", he says, with supermarkets losing a "huge amount".

Davis says New Zealand has a few problems when it comes to shoplifting.

Firstly, everybody trusts everybody. "It's the most trusting society on Earth."

A lot of stores do not know how much they are losing because of poor stocktaking systems, he says. And employees are reluctant to act on their suspicions.

Davis says a lot of shoplifting is not discovered, with just one in every 50 shoplifters detected by stores.

"Self-service checkouts simply give shoplifters one more methodology, one more avenue that they can use. It's basically an honour system," and easy to fool, he says.

Shoplifters use devious methods such as swapping barcodes from cheap items onto expensive items and scanning them through.

They also enter codes for cheap produce on the scanner when buying expensive produce.

Supermarkets themselves are "very reluctant" to say how much they are losing through self-service checkouts because they don't want people to know how easy it is.

Supermarkets say the savings in labour costs for not having to open more checkouts offsets the "pilferage". However, they are not giving the true picture. Store layout, a lack of staff training and security staff used for "cosmetic purposes" make it easy for shoplifters, he says.

The supermarkets say they have security measures in place to prevent theft.

Foodstuffs and Countdown say they have professional security staff, cameras in and around stores and staff manning self-service checkouts.

However, Davis says the average thief steals a hundred times without being caught. And a hard enough stance is not taken when they are.

"Shoplifting is about as heinous a crime as overdue library books in New Zealand," Davis says, and it's only going to get worse.

Some US supermarkets are even bagging self-service checkouts after internal surveys show customers prefer traditional checkouts.

- BusinessDay

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