Self-Checkout Won’t Solve Retail’s Labor Shortage Problems
Designer Brands Inc., the parent company of DSW, reported in May that its first quarter performance marked the first time the shoe retailer had turned a profit since the pandemic disrupted its business last year. With business on the rebound, however, DSW has not been able to attract the number of associates it needs to staff its 500+ U.S. locations. This situation, not unusual in retailing at the present time, is reportedly behind the chain’s decision to test self-checkout technology at some stores.
In an online discussion on RetailWire last week, some industry experts like BrainTrust member Paula Rosenblum, managing partner at RSR Research, were strongly against the move.
“I think this is a terrible idea,” wrote Ms. Rosenblum. “If you want people to go to stores, you have to make it convenient and actually create a differentiated experience. The other thing that we forget is a lot of shoppers don’t like self-checkout because they see it as a job killer.”
Karen Cho, senior vice president of human resources at Designer Brands, told CNN that the company began testing self-checkouts last year in response to associates’ COVID-19-related health and social distancing concerns, but that challenges recruiting employees has provided additional impetus for the pilot.
DSW has been offering hiring bonuses and expanding benefits to primarily attract part-time associates as most of the chain’s full-timers continued working throughout the pandemic. Ms. Cho said that the company has “relatively lower hiring needs,” but that recruitment has been tougher than in recent years.
Self-checkout technology is typically positioned by retailers as a consumer service at the front end of stores that enables associates to be deployed in other areas more valuable to shoppers. The labor savings aspect, which is typically pitched as one of the benefits to stores that deploy the technology, may become more of a focus if current labor challenges persist.
“I do think more retailers are going to roll out self-checkout as an attempted solution to the labor challenges, but I don’t think self-checkout is the right solution,” wrote Melissa Minkow, retail industry lead at CI&T. “Self-checkout already struggles to prove more efficient, and when it serves as a replacement for sales associates all the knowledge possessed by staff is lost.”
“Self-checkout is generally not a pleasant experience for consumers, so while it may close the worker shortage gap, it won’t delight buyers and will eventually phase out,” wrote Natalie Walkley, director of marketing at Deck Commerce OMS.
“Self-checkout is not the answer to solve the workforce shortage,” wrote Liza Amlani, principal at Retail Strategy Group. “You may need fewer associates but you need the right brand ambassadors on the shop floor who have tremendous product knowledge and customer service skillsets.”
Around 649,000 retail workers gave their notices to employers in April even as the industry sought to staff up in response to the rebounding economy. Amazon.com, Costco and Target have raised their starting wages to $15 an hour, but retail is still seen by many as offering low paying jobs with difficult hours. Retailers have raised hourly wages, offered bonuses and improved benefits, including extending them to part-timers in an effort to boost recruiting.
Not everyone on the RetailWire BrainTrust was sour on self-checkout technology, citing advantages for both customers and employees.
“Self-checkout (SCO) will continue to grow rapidly, labor shortage or not,” wrote Ananda Chakravarty, retail expert. “Economically, the cost savings from SCO are tremendous and become a key part of the mix of checkout services for most retailers. For companies like DSW, associates are needed to engage customers for the right experience in the store. And for relatively small basket quantities, SCO is a perfect solution.”
“Personally, I prefer self-checkout and I certainly don’t think poorly of retailers that use it,” wrote Allison McGuire, vice president of marketing at PaperMart. “I say let’s give retail every opportunity to thrive as we get through this next phase of recovery.”
And one BrainTrust member pointed to precedent elsewhere for an impending self-checkout boom.
“Look to Japan, which has turned to automation in response to labor shortages and I think you will find the answer is YES,” wrote Nikki Baird, VP of retail innovation at Aptos.