Wal-Mart Customers Check it Out

For the past year, Wal-Mart Stores Inc. has been testing four different self-checkout scanning systems in stores across the United States, said Tom Williams, a spokesman for the world’s largest retailer.

The machines allow customers to scan the bar code on items and pay for them without the assistance of a cashier. Wal-Mart has more than 2,700 stores worldwide, and a rollout of self-checkout machines to a majority of those stores would have a significant impact on Wal-Mart and the company chosen to provide the machines.

The machines would be particularly useful in Wal-Mart’s 1,060 Supercenters because of the number of customers in those stores and because the Supercenters have large grocery sections.

Self-checkout machines first were put into use by supermarket chains such as Kroger. More than 70 percent of grocery chains with 150 stores or more are now using self-checkout machines, according to an October study by SunTrust Robinson Humphrey Capital Markets of Atlanta.

“We calculate the total market opportunity at just under $7 billion, with less than 7 percent, or $440 million, currently penetrated,” the SunTrust study said. Of that amount, $3.9 billion pertains to U.S. grocery chains, with $340 million “captured” so far.

Although the self-checkout machines would save Wal-Mart money on labor costs, Williams said, the main reason they’re being tested is because they would make checking out faster and more convenient for customers.

“Anything we can do at the front end of the store to alleviate [lines] for the customer, we’re going to do,” Williams said.

Williams compared it to the newspaper business. Even if you have a great newspaper, if the delivery person doesn’t get the paper to the doorstep every morning, then the customer is inconvenienced to some degree.

“Your store can be great,” he said, “but the front end really deserves attention.”

Williams said the self-checkout machines are being tested in every Supercenter in Northwest Arkansas.

Williams wouldn’t reveal the names of the four companies, but with a little Wal-Mart shopping and Internet surfing we came up with three of them. None of them would tell us how much their self-checkout machines cost, saying prices vary depending on system, features and the number of machines purchased. But SunTrust estimated the cost to be between $20,000 and $25,000 for one small self-checkout machine. If Wal-Mart purchased one small machine for each supercenter, the cost would be more than $20 million.

NCR

“We’ve been fortunate enough to have been working with [Wal-Mart] for years now,” said Jennifer Nugent, marketing manager for self-checkout NCR of Dayton, Ohio, the company known during much of the 20th century as National Cash Register.

“They are doing their due diligence, and they are looking at our system,” Nugent said. “We hope they make their decision soon and have a rollout. They definitely like them, absolutely. That’s why we’re seeing more stores install them.”

NCR shipped more than 5,000 self-checkout units last year to stores worldwide. Nugent wouldn’t say how many of the machines had been purchased by Wal-Mart. NCR self-checkout machines currently are being used at the Wal-Mart on Mall Avenue in Fayetteville and the company’s Neighborhood Market store in south Rogers.

NCR has more than 30 retail customers. Besides Wal-Mart, NCR self-checkout scanners are used by supermarket companies such as Albertson’s, Shaw’s, K-VA-T and Shop Rite.

NCR self-checkout machines also are used by Kmart Corp, which filed for bankruptcy protection in mid-January. Kmart reported in May that some of its stores had processed almost 40 percent of their total sales through the self-service stations, according to the NCR Web site.

NCR also specializes in bar-code scanners and point-of-sale software, which Wal-Mart uses to track sales data.

Nugent said it’s difficult to monitor how stores can benefit by using the self-checkout machines. She said retailers are trying to determine how much time the machines save shoppers by allowing them to check out quickly.

Optimal Robotics Corp.

Robin Yaffe, marketing manager for Optimal Robotics Corp. in Montreal, Canada, said Wal-Mart purchased the company’s U-Scan Express systems to test in 25 of its stores. Each system consists of four checkout lanes.

Yaffe said Optimal Robotics is the market leader with 1,500 systems in 45 states and Canada. More than 900 of those systems are in Kroger supermarkets.

Yaffe wouldn’t reveal the cost of the U-Scan machines.

“Typically, we like to tell retailers they’ll see a return on their investment in nine to 12 months,” she said.

Yaffe said the self-checkout machines save money particularly on labor costs. Cashier jobs are usually low-paying positions with high turnover. The self-checkout machines allow the retailer to eliminate some of those jobs. One employee is used to monitor four U-Scan checkout lines.

“The U-Scan allows them to make better use of their existing labor,” she said, and it’s more convenient for customers who are in a hurry.

The U-Scan Express has four levels of security to prevent theft. The weight scale and bar-code scanner work together to agree that the item being scanned is the item being placed in a bag. A camera is used to observe the transaction, and, in the case of Wal-Mart, the U-Scans have incorporated “electronic article surveillance stations,” Yaffe said.

In other words, the scanner demagnetizes a security tag on the item being purchased.

U-Scan machines processed more than 350 million sales transactions last year, Yaffe said.

The current popularity of self-checkout machines is similar to the automatic teller machine phenomenon of the 1980s, she said.

Productivity Solutions Inc.

Wal-Mart also is testing the Automated Checkout Machines from Productivity Solutions Inc. of Jacksonville, Fla.

PSI’s machines are in operation at the Wal-Mart Supercenters in Bentonville and Rogers. The Bentonville store is across the street from Wal-Mart headquarters and is often used as a showcase store for visiting VIPs, so PSI’s machine there gets lots of attention.

“That should tell you something,” said Tina Horne, a spokeswoman for PSI.

PSI self-checkout machines are being used by A&P, Food Lion, Giant Eagle, Hannaford Brothers, Lowe’s Foods, Pathmark, Stop & Shop, Weis Markets and Winn Dixie.

The PSI Automated Checkout Machine originally was known as the Check Robot, the first self-checkout product. In 1994, PSI acquired the machine, initially developed by Sensormatic, and began redesigning it.

“It was the first one, and it has gone through several enhancements,” Horne said. “It is the easiest one to use. It has some great features.”

Horne said the PSI machine is “lane-based” and can allow four terminals in a space that normally allows for three. The PSI machines are versatile and don’t require a person to monitor the checkout process, she said.

When asked about Kmart’s use of NCR self-checkout machines and the company’s bankruptcy, Horne quipped, “I don’t know how many they have installed, but I think it’s a direct cause and effect.”

PSC Inc.

A spokesperson for PSC Inc. in Portland, Ore., told us an executive at that company said PSC wasn’t currently participating in a “pilot” testing program with Wal-Mart.

The Business Journal of Portland reported in August that PSC cashier-operated scanners are used by Wal-Mart in China.

PSC’s QUICKcheck self-checkout machines are similar to the others Wal-Mart is currently testing.

PSC made the U-Scan machines for Optimal Robotics until that agreement was severed at the end of 2000.

According to the Nov. 1, 1999, issue of Shopping Centers Today, Wal-Mart was one of the first retailers in the United States to try the Optimal Robotics system (then made “in conjunction with PSC”) at a store in Fayetteville.

Now, both of the Fayetteville Supercenters use self-checkout machines made by NCR, although the two NCR systems are different models.