Seamus McHugh, CBE’s International Sales and Marketing Manager, spoke with NACS magazine for an article titled ‘Self-Centered Convenience’ in their May Issue. The article on Self-checkout and Contactless payments focused on CBE’s experience in bringing both of these innovations to the Independent Retail Sector in the UK and Ireland. NACS is an international trade association with member companies in nearly 50 countries worldwide, with the majority of members based in the United States.
The article by Fiona Briggs can be read in full below or by clicking this link.
Self-checkout and contactless payment add multiple strings to a store’s customer service bow.
Self-checkout and contactless payments have been filtering down from big retailers to smaller stores for several years now. And while convenience stores were once hesitant adopters of the technology, today they recognize that they an’t afford not to embrace it.
“Historically, convenience stores have exhibited a lot of reluctance because of the impact on customer service, which they see as being a differentiator,” says Seamus McHugh, international sales and marketing manager at CBE, one of the leading suppliers of retail IT solutions in the U.K. and Ireland. “Customer service was a laudable point and made sense at the time, but now technology like self-checkout is not an inconvenience—it’s an expectation,” he says. And, if stores don’t offer it, they risk their shoppers migrating to stores that do.
Convenience is about speed, and for one key group of shoppers identified by the global Institute of Grocery Distribution (IGD)—technology adopters—saving time is their key focus when grocery shopping. This group is 67% more likely than average to have this time-saving mindset, the IGD found. These shoppers are generally leading busy lifestyles and are using all the latest gadgets to make life more convenient. They are also most likely to shop different channels, particularly convenience stores and frozen food specialists.
Self-checkout enjoyed a strong year in 2014 in Western Europe and Japan, despite a fall in the number of global shipments of self-checkout equipment, according to London-based RBR. Self-checkout shipments to Western Europe grew by 19% in 2014, with activity in the U.K., second only to the United States by installations, up by 14%.
Japan recorded renewed interest in the self-checkout market, with shipments of the equipment up by more than 40%. Although a culture of assisted service in retail has been the norm in that country, shifting demographics mean fewer people of working age willing to do lower paid jobs. This has encouraged retailers to look at labor-saving devices such as self-checkout.
Elsewhere, the economic and political crisis in Russia and reduced investment by Tesco held back expansion of self-checkout solutions in Central and Eastern Europe. At the same time, the technology has penetrated new markets with trials underway in Malaysia, the UAE and South Africa. At the close of 2014, self checkout solutions had been deployed in nearly 50 countries, RBR revealed.
Adoption by convenience stores should increase this year with the announcement of a new strategic partnership between CBE and NCR. The duo will supply self-checkout solutions to the independent retail sector, beginning in the U.K. and Ireland. NCR has identified convenience as a key target market.
CBE first introduced self-checkout to retailers in Ireland seven to eight years ago and, while the uptake has been slow, the company found that 100% of adopters would recommend the technology to another retailer.
To improve customer satisfaction, NCR recommends stores deploy a staff member around the units. Since the customer is doing the scanning, the staff “host” can engage with shoppers more than if they were manning a register with a line building up in front of them. “It’s a more soft approach—staff have more time to converse,” McHugh says.
Staff benefits also arise from self-checkout technology, which can be used to realign staff costs or to reapportion labor elsewhere within the store. “If retailers are happy with staffing levels and costs, they can empower them in other parts of the business such as merchandising or in-store marketing to improve the customer service,” McHugh says. “Equally, if a store is in an area that’s under stiff competition and they feel staff costs are too high, the self-checkout could be seen as a way of helping there,” he says.
But it’s at peak shopping periods when self- checkout comes into its own for convenience retailers, generating a much faster throughput of customers. Michael Smith, owner at Smith’s SuperValu in Ireland, is the first store to benefit from the CBE and NCR collaboration. Smith had been contemplating self-checkout for many years before deciding to implement it in his store.
“Initially I was skeptical of the benefits of self-checkout but, having seen it grow in popularity in other supermarket environments, I was keen to explore my options,” he said. “CBE did a thorough analysis of the store to determine if I was suitable for self-checkout and subsequently advised on an implementation strategy that was specific to my store.”
Smith opted for convertible self-checkouts, which can be configured for either self-service or manned operation. This was a particular bonus during the busy Christmas season when trained cashiers were able to operate the units more efficiently than customers. Once normal traffic resumed, the units were converted back to self-checkout mode. In both set-ups, the customer still handles the cash, so there’s no opportunity for fraudulent behavior, says McHugh. But benefits can be realized outside of peak hours as well. Self-checkouts can be used first thing in the morning and last thing at night, freeing up staff time to accept deliveries and take care of other needed responsibilities.
Meanwhile, card-only self-checkout options are ideal for urban areas where stores manage a huge volume of low-value transactions, while zero cash is another bonus in terms of money management and bank charges.
Rise of Contactless Pay
Contactless payments (both card-based and mobile) go hand-in-hand with self-checkout, since both technologies speed the overall transaction. With a trend away from cash—figures from credit card provider MBNA show that bills and coins make up just 3.5% of all money in circulation in the U.K.—convenience stores need to be in on the action for cashless payments.
Barclaycard has warned retailers that they could be missing out on valuable sales by failing to offer contactless payment at checkout, while payments processor Worldpay suggests retailers that don’t offer contactless risk being left behind.
In the U.K., the number of contactless transactions processed by Worldpay rose by 160% in 2015, with monthly payments using the technology peaking at 45 million. Worldpay reports it has now processed more than £4 billion in contactless transactions since 2012. Barclaycard data shows annual contactless spend in convenience stores increased by 100% in 2015 and by 176% in service stations.
Crucially, more “little and often” top-up shopping—the core convenience business—is suited to contactless payments and fits with the demand for an easier, quicker shopping experience.
McHugh adds that with customer expectations continuing to shift, “it’s important that convenience stores—masters of getting people in and out the door quickly and easily—embrace technologies that are fit-for-purpose. With the rise in customers expecting multiple payment options, independent stores that offer the most payment choice—whether that’s cash, chip and PIN, contactless card or a wearable or mobile device—will be the ones that are well-positioned for future success.”
Statistics show that customers are ready and willing to “tap and go,” while the learning curve on self-checkout for shoppers is zero, as it’s already been tried and tested in larger stores. Both technologies buy customers time and allow convenience stores to renew their focus on delivering the best customer experience.
Fiona Briggs is a retail business journalist. She can be reached at email@example.com.