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Target is testing a new self-checkout policy

By Nathaniel Meyersohn, CNN

New York (CNN) — Target is testing a new self-checkout policy as retailers are finding the cashier-less technology can put off customers.

At a handful of stores, Target has restricted self-checkout to customers buying 10 items or fewer. Customers buying more than that are required to use full-service lanes with cashiers.

A Target spokesperson said the test was designed to shorten wait times and “better understand” shoppers’ preferences.

“Our guests tell us they enjoy interacting with our team,” Target Chief Operating Officer John Mulligan said on a call with analysts Tuesday about the changes. The company has “refocused” its checkout areas and since seen a 6% increase in customers using full-service cashier lanes across its stores.

Target and other retailers had expanded self-checkout machines in recent years. Self-checkout was designed to help companies save on labor costs and speed up checkout for shoppers.

But the promise of self-checkout hasn’t always played out.

Self-checkout machines sometimes break. Customers often face errors and glitches scanning items, requiring employees to come over and assist them. This erases potential labor savings and makes self-checkout slower, in some cases, than full-service checkout — the problem it was supposed to resolve.

“Our customers have told us this over time — that the self-scan machines that we’ve got in our stores … can be slow, they can be unreliable [and] they’re obviously impersonal,” an executive at Booths supermarket chain told the BBC. Booths recently removed self-checkout on all but two of its 28 stores. Walmart, Costco, Shoprite and other chains have also revised their self-checkout strategies.

Notably, retailers lose more possible sales with self-checkout than full-service cashiers, both from intentional shoplifting and honest errors by customers. One study of retailers in the United States, Britain and other European countries found that companies with self-checkout lanes and apps had a loss rate of about 4%, more than double the industry average.

Target said that merchandise losses, known as shrink, were not a factor in testing new self-checkout policies.

Target has pointed to theft, both petty shoplifting and organized groups of criminals stealing merchandise and reselling it online, as responsible for the increase in losses. (More than 60% of shrink includes employee theft, damaged products, administrative errors, vendor fraud and other factors.)

“Shrink remains a significant financial headwind,” Target finance chief Michael Fiddelke said Tuesday.

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