Select, Scan and Be Gone: How Mobile Self-Checkout Has Gained Traction Over More Expensive Set-Ups

Select, Scan and Be Gone: How Mobile Self-Checkout Has Gained Traction Over More Expensive Set-Ups

Charles Keenan

Charles Keenan

Charles Keenan has written about payments since joining the American Banker as a staff reporter in 1997, a time when automated teller machines were appearing just about everywhere but people's living rooms thanks to the relaxation of surcharging rules.

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Fairway Market, a grocery chain situated in New York, quietly rolled out a mobile self-checkout app for customers at 10 of its 15 stores last November. If the early numbers are any indication, the app is off to a promising start.

At Fairway's store in Kips Bay, a neighborhood on the east side of Manhattan, mobile self-checkout volume rose to 6.5 percent of all sales as of late February. Even though one-third of its stores have yet to offer the service, 2.5 percent of all sales at the company were going through the Fairway Mobile Checkout app, up from 1 percent early this year.

Perhaps more importantly, the new service offers something for both the merchant and its users. Because items are already scanned as soon as they're put in the cart, shoppers have averaged less than 13 seconds to check out of Fairway, according to its vendor, FutureProof Retail.

"It's helping eliminate lines," says Mike Penner, director of retail applications and technology at Fairway. "It's not just technology for the sake of technology. Everybody benefits from this."

Scan and be gone

The checkout method Fairway uses is referred to as 'scan and go,' and the retailer's early success with it could be a harbinger for the way brick-and-mortar retailers will encourage people to buy more goods via their phones. While other technology platforms exist, many of them rely on much greater hardware investments by the retailer up front.

By the end of February, Amazon had opened 10 of its Go stores with 'autonomous checkout' — where customers check in, put items in a basket, and simply walk out. But the stores require heavy investment in hardware, such as cameras and various sensors. So less expensive options have more appeal for now.

"You are going to be seeing more examples of the scan-and-go providers out there because there is a much larger market to penetrate," says Raymond Pucci, director of merchant services at Mercator Advisory Group.

With scan-and-go apps, customers scan in items as they shop, using their phones. They pay using the app, then receive a bar code on their screen, which is read at a station in front of the store. Rather than relying on scanning equipment handed out to consumers, or cameras and weight sensors, the system's main hardware includes a bar code reader. Fairway has deployed additional weigh scales in its self-service areas such as produce, where customers need to generate labels to scan.

Pilots and pitfalls

Sam's Club has served as a pioneer of sorts, implementing scan-and-go technology at its stores in 2016. Other big retailers have followed: Macy's debuted its Scan & Pay solution last year. In November, 7-Eleven announced a pilot in 14 of its stores in Dallas, and plans to expand the service this year to other cities.

The progress comes despite hiccups for mobile self-checkout. Walmart pulled the plug on a pilot last year, citing low participation rates. And then there's the reality facing consumers of having to actually scan each item, versus letting someone else do the work. Theft can also undermine any savings of self-checkout programs.

On the issue of consumers scanning to do the work, speed and control are key incentives for adoptees. At Fairway, the average basket size near the end of February was about $32, according to Penner.

"People want that experience of just wanting to get in and out of the store," Penner says. "And it puts them completely in control of their shopping experience."

To combat theft, there are two things to note: technology is getting more sophisticated, and mobile phone owners are identifiable, notes Di Di Chan, president and cofounder of FutureProof, based in New York. "People who want to steal want to remain anonymous," she notes.

Fairway's app also uses an algorithm to randomly check customers' bags, with 99.8 percent of randomly audited items registering as correct. And as customers keep checking out with a correct basket, their likelihood of getting selected for a bag check goes down, Penner notes.

Leveraging BYOD at a lower cost

The low barriers to entry have appeal. Scan-and-go features could lure merchants of all sizes in terms of cost. For bigger stores, FutureProof's standard price is $250 per location per month, and 22 cents per transaction. For the smallest merchants, there's the option of $15 per location per month, and 2 percent per transaction.

By contrast, while Amazon's approach might enamor some retailers, they'll need deep pockets. "You are going to see more Amazon Go-type systems, but they'll probably right now be for very large merchants with the capital to invest," Pucci says.

In the scan-and-go market, FutureProof is aiming to differentiate itself with flexible software that is hardware agnostic, Chan notes. That has allowed the company to pursue other verticals such as fashion, stadium vending, airport concessions and micro-markets in workplaces — each with their own unique retail setups.

Meanwhile for Fairway, so far, so good. Scan-and-go technology comes with a lower investment, and consumers see the value. "It's also driving new customers to our locations," Penner says. "People want to use the technology."

The statements and opinions of the writer do not necessarily reflect those of TSYS.

Other Articles by Charles

Charles Keenan

Charles Keenan has written about payments since joining the American Banker as a staff reporter in 1997, a time when automated teller machines were appearing just about everywhere but people’s living rooms thanks to the relaxation of surcharging rules.

His work at the American Banker included writing about credit and debit cards, merchant processing, and bank stocks. He later freelanced for the Banker and industry publications such as Banking Strategies, Bank Director, Community Banker, and U.S. Banker. He also writes about investing, insurance and health care, and is based in Los Angeles.

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