Prior to the debut of debit cards in 1996, customers primarily proffered cash for their convenience store purchases, or maybe a personal check. Since then, there’s been a steady migration toward card-only payments.
More than 40% of Americans exclusively use an alternative form of payment other than cash for all their purchases, per recent research from the Pew Research Center. This transition has spurred on several technology updates in the retail channel.
For example, the magnetic strip on debit cards has been replaced with EMV chips; and tap-enabled smart cards, contactless apps and scannable QR codes are becoming more prominent.
What’s next in this evolution? Point-of-sale (POS) innovation currently being deployed is less about payment technology — although that continues to play a role — and more about the checkout experience.
“When you are buying two or three items, imagine how frustrating it is to be stuck in line behind six people. The convenience store is no longer convenient,” said Art Sebastian, vice president of digital experiences for Casey’s, headquartered in Ankeny, Iowa.
Frictionless Checkout
To mitigate that inconvenience, a growing number of c-store chains are testing self-checkout kiosks. But in addition to traditional self-checkout scanners, some retailers are incorporating systems that use artificial intelligence (AI) and sensors to make the experience even more frictionless.
In 2020 Couche-Tard began introducing smart checkout stations at 500 Circle K sites using the Mashgin Touchless Checkout System. Customers place all their items on the checkout system, which uses cameras to recognize items from any angle and tallies them instantly in a single transaction — no need to scan barcodes. In June, Circle K announced it intends to expand the program to 7,000 stores over the next three years.
Circle K is also implementing frictionless checkout.
Last fall, Circle K partnered with Grabango, rolling out its checkout-free solution at six stores in the Tucson, Ariz., area. The solution uses computer vision technology to track customer purchases. Then, as customers exit the store, they scan the QR code in their app and their payment is automatically processed. The receipt arrives in the app.
Also last fall, Circle K announced it had retrofitted a store in Arizona to feature Standard AI’s checkout-free experience, which uses AI-powered cameras throughout the c-store to track the items shoppers select, automatically recording purchases on the Circle K mobile app and delivering a receipt as shoppers walk out.
This summer, Tulsa, Okla.-based QuikTrip, which operates more than 900 stores in 14 states, opened its first checkout-free store using Amazon’s Just Walk Out system. People scan a smart app to enter the retail site located in Tulsa, Okla. As they grab their snacks, beverages and other items from main aisles, AI, sensors and machine learning programs track each item and charge the bank account or credit card registered with the app accountholder. Individuals walk out without ever queuing up at a traditional register or self-checkout station.
The principle is that autonomous technology empowers individuals to streamline their shopping and frees up staff.
Practical Considerations
“In the past, a major self-checkout driver was to try and reduce store payroll,” noted Perry Kramer, managing partner with Retail Consulting Partners. “This has recently shifted to a focus on keeping the doors open, keeping the lines short and reducing overtime as most retailers are struggling to find and hire team members. We have seen retailers in some store formats that have been understaffed due to an inability to find team members see a 150-200% increase in sales almost immediately after implementing self-checkout.”
“Of equal importance to the success of retailer initiatives in these areas are consumers’ willingness to use contactless payments and broader acceptance of self-checkout technology,” he added.
Some of that willingness revolves around payment options. Not all customers will perceive cashless systems as convenient. Although data reveals more than half of adults under the age of 50 don’t consider it necessary to carry cash, that leaves a substantial portion that still likes to pay with cash.
In fact, the Pew study stated 26% of Black and 21% of Hispanic adults use physical currency to pay for weekly goods. The Federal Deposit Insurance Corporation (FDIC) also reported that more than 5% of households, approximately 7.1 million citizens, are unbanked and rely on cash. However, incorporating cash-abled self-checkout options can increase upfront costs for stores.
“Solutions that accept cash generally require a hardware investment that is four to five times more expensive than a credit and contactless payment-only solution,” said Kramer.
Nor can you forget the associated back-office investments.
“Anything happening in the front of the store needs to have the infrastructure in the back of the store to support it,” said Sebastian. “It requires Wi-Fi connectivity and software, which leads to cybersecurity and that leads to how you deploy software to stores.”
There’s also training and maintenance. Although staff may not have to ring up baskets with frictionless programs, employees should be available to help educate customers on the technology and troubleshoot when kinks crop up.
“You will always need to have a cashier to man the front, not only for customer service, but to handle the age-restricted items like alcohol, tobacco and lottery sales. However, one person can manage the register and monitor two or three self-checkouts,” said Sebastian.
These are all factors he has been contemplating as he leads the business toward a self-checkout pilot program next year.
“We want to find out what it does to the process and how customers respond to it. With 2,400-plus stores in 16 states, scaling a program to every store demands we first know if it will be successful. The next several months will be spent doing a lot of learning,” Sebastian said.
