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How to manage losses from self-checkout

December 5th, 2018

The ECR Community Shrinkage and On-shelf Availability Group (OSA) together with NCR launched a comprehensive report that assesses the potential impact of self-checkout (SCO) technologies on retail loss and provides best practices and guidance on how to address and balance risks. This report identifies a variety of best-practice operational techniques as well as a range of existing and emerging technologies that retailers can use to keep shoppers honest and accurate.

Retailers count their stock loss typically as a percentage of their sales. This new report suggests that a typical retailer can experience an increase in stock loss of 1 basis point for every one percent of sales that go through fixed SCO machines. For instance, a typical store with 25% of their sales value going through fixed SCO could see additional stock losses of 0.25% of sales value.

Stores using Scan-and-Go technologies could see an increase of between 0.7 and 10.4 basis points of additional loss for every one percent of sales processed. In the study, the average utilisation rate for Scan-and-Go was 2.8% of sales value, suggesting additional stock loss of between 0.01% and 0.29% of sales value.

Using a variant of an existing loss prevention model, the research developed a framework for how retail businesses can go about developing an organisation-wide approach to managing the risk associated with the use of SCO systems, focusing upon 11 key themes:

  • ensuring there is senior management commitment focussed on understanding all the outcomes of investing in SCO;
  • developing cross-functional organisational ownership and embedded responsibility for the control of SCO;
  • establishing a clear set of data management protocols to fully understand the impact of various types of SCO technologies on the business;
  • prioritising operational excellence in how SCO is developed and managed;
  • committing to a programme of innovation and experimentation to improve control;
  • forging better collaboration between different retail functions and with SCO technology providers to not only understand the risk side of the SCO equation, but also develop and evaluate interventions that may help mitigate the identified risks;
  • recognising and prioritising the role people can play in actively managing and controlling SCO systems;
  • striving to develop SCO leadership that can articulate all aspects of its use within retailing, including not only the possible benefits but also the possible risks;
  • ensuring that there is communication with all parts of the business on all aspects of SCO; and
  • delivering store management responsibility by providing them with data to understand the challenges, the training, resources and technological tools to create an environment that minimises risk, and incentivization to ensure that they remain compliant.

Taken together, these factors offer an approach to begin to develop a more coherent and coordinated strategy to begin to better manage the risks associated with SCO systems in retailing, one that continues to recognise the benefits, but also takes more account of the growing challenges that they now seem to be presenting.

Click here to download the full report and learn all about self-checkout in retail.




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