Does self-checkout make sense for Costco?

Discussion
Photo: Getty Images
Jun 17, 2019
Tom Ryan

Six years after announcing plans to get rid of many self-service checkouts, Costco is again testing them to help combat long waits at manned registers.

On its third-quarter conference call, Richard Galanti, Costco’s EVP and CFO, said about 125 self-service stations have been installed across Costco’s 536 U.S. stores. The warehouse club operator plans to extend that to 250 over the next several months.

“It works,” Mr. Galanti said. And works best, he said, “in high-volume locations where it’s got a lot easier,” citing consumers who use contactless credit cards that employ radio frequencies and a one-time code to complete a transaction.

He added, “It’s very fast and customers are using it. Our members are using it. And it’s saving some labor at the front end. As important, on the highest volume units, it’s getting people through the front end faster.”

Costco first announced plans to eliminate self-checkouts in 2013 after tests led management to believe that employees could do a better job. Costco CEO Craig Jelinek told Bloomberg at the time, “They are great for low-volume warehouses, but we don’t want to be in the low-volume warehouse business.”

The new test comes as the self-checkout attention has shifted from physical stations to mobile scanning technologies. Warehouse competitors, Sam’s Club and B.J.’s Wholesale Club, as well as Amazon.com, Kroger, Meijer, Macy’s and others now offer ways for shoppers to scan items and check out via their smartphones. Most require customers to checkout via an express lane.

Costco already has employees checking receipts at exits.

Retailers are still investing in physical self-checkouts. Target last year added emojis to its screens to help shoppers identify produce. Dollar General is expanding its self-service checkouts, while Parker’s, the c-store, is introducing self-checkout to its stores in Georgia and South Carolina.

Moves to self-checkouts could be seen as a threat to retail cashier jobs. Costco regularly ranks near the top of lists best corporations to work for.

DISCUSSION QUESTIONS: Do you see more pros or cons in Costco’s re-introduction of self-scan checkouts? Should Costco have gone straight to a mobile-scan option?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Self-checkout is likely just a short term solution as mobile checkout supported by customers’ own device is on the horizon. "
"There are more pros than cons with this action...better customer experience through faster front-ends and a positive impact on labor hours."
"This would appease those with smaller baskets who don’t want to wait behind someone with two carts full of stuff."

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27 Comments on "Does self-checkout make sense for Costco?"


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Mark Ryski
BrainTrust

The intention of self-checkout was always a good idea, but the technology didn’t work well and ultimately caused more shopper frustration than convenience. Self-checkout technology has been advancing and given the epic checkout lines Costco stores can have, the move to re-deploy an effective self-check system makes good sense.

Neil Saunders
BrainTrust

The self-scan checkouts never disappeared at my Costco in Scottsdale. We use them every time we go as they are efficient and fast, and there are always loads of staff in the area who help scan and pack goods in boxes. The only downside is that for big shops, there sometimes isn’t enough space to easily pack products.

Bob Amster
BrainTrust

There are definitely more pros. Costco should balance the number of self-checkout stations with assisted checkout stations. Many of Costco’s customers are long-time loyal and know the retailer and its stores well. Some of them (hard to tell what percentage) will welcome self-checkout and will use it because one of the few frustrating issues with Costco is having to wait in line. Self-checkout will at least give the perception that one is moving fast through the checkout line. What’s next? The digital membership card on the smartphone!

Dr. Stephen Needel
BrainTrust

Same for us, Neil Saunders – mine never went away in Atlanta and at mom’s in West Palm. The only time we use a regular checkout lane at Costco is when we have a full cart of items and self-checkout would be cumbersome. We almost never need it because how many bottles of Kirkland wine can we buy in one visit? And more visits mean more $1.50 hot dogs for lunch (rated #1 by Washington Post).

David Weinand
BrainTrust

I stopped using self-checkout several years back at BJs as it was a painful experience that always took longer than a manned checkout. That said, the technology has advanced and if the tests show that customers can get through the checkout as quickly or quicker than a manned checkout than it is worth the investment.

Ron Margulis
BrainTrust

The more options the better for Costco and its customers. Cashiers, self-checkout, mobile-scan and BOPIS are all feasible end-of-shop solutions that most retailers should be offering in some way, shape or form. In the medium-term, say 10-15 years, there will be a distinct move away from staffed checkouts and toward automation in the form of mobile. The checkout as an operation will go the way of the 8-track (look it up, kids!) perhaps 10 years after that.

Shawn Harris
BrainTrust

There are more pros than cons with this action. As stated in the article, better customer experience through faster front-ends and a positive impact on labor hours. Adding mobile checkout could be yet another option; I’m sure Costco will want to make sure shrink is contained, so more testing and learning to come…

Kai Clarke
BrainTrust

Yes. These expedite small volume purchases of just a few items, while also providing more access to more checkouts in less space. This means more customers are handled faster, shorter lines and happier customers.

Kevin Graff
BrainTrust

Self-checkout is likely just a short term solution as mobile checkout supported by customers’ own device is on the horizon. Faster, seamless and way less expensive.

I’m not a technology guy. But from speaking with many executives who know this space well, it seems to be the way forward. Why get in any line at all if you don’t have to?

Bob Phibbs
BrainTrust

Gee, am I on the schedule today? We are rapidly becoming numb to the idea of service and told technology is the answer. We’ve seen self-serve come and go multiple times in multiple locations and ultimately go. While technology has gotten better, no one wants to have to figure out how to ring something up. We’re not on the schedule, we’re shopping.

Michael La Kier
BrainTrust

This story strikes me as interesting as our local Costco has had self-scan checkouts for years…they never went away to be reintroduced. That being said, given the mix of shoppers at Costco having a quicker option for those with fewer items to speed up the process is a good thing. At our store, there are always lines and self-checkout is a viable, important option for shoppers. Certainly more pros than cons!

Harley Feldman
BrainTrust

More pros. Self-checkout helps speed the shoppers through the checkout process for those willing to do it themselves. I have noticed that at many of the stores where self-checkout is offered, the self-checkout line is rivaling the length of the regular lines and many people look at the length of the self-checkout line first before going to the full service checkout if self-checkout is too long.

Costco has gone to mobile checkout now since more and more shoppers have smartphones enabling the self-checkout process, and shoppers are more comfortable with using them in the self-checkout process. “Shopper training” to use their smartphones has been done by many other retailers.

Shep Hyken
BrainTrust

The self-service option is great for the customer who has just a few items and is in a hurry. It’s really there for convenience. It doesn’t matter if it’s Costco or a local small retailer. Done the right way, self-service checkout is a better customer experience. It saves time for some customers. It shortens the lines for the regular checkout lanes. There’s just two good reasons to consider self-service checkout.

Ian Percy
BrainTrust

I ditto Neil’s experience with self-checkout at Costco. Works superbly. Now if we have one of those $200 Costco trips we’ll use the manned checkout because it’s hard to get all the stuff on the sensor platform. For alcohol purchases or to decide against a particular purchase, as I did the other day because I misread the price, there is someone there to help you almost instantly. I hope these checkouts are here to stay!

Anne Howe
BrainTrust

Mobile checkout should be happening sooner, not later! But for now, express lanes or self checkouts for ten items or less would make the Costco experience way better for so many shoppers who want to get a fresh steak and a bottle of good wine.

Gene Detroyer
BrainTrust

Self-checkout is the future. The only question is what technology will make it easy and convenient. That may take five or more years. But there is no doubt that manned checkout is an extra step in a process that will be eliminated.

Self-checkout will not only make sense for Costco, it will be the norm for every retailer.

Steve Dennis
BrainTrust

To provide a remarkable experience every retailer should have a deep understanding of their key customer segment’s journey to purchase and aim to eliminate the friction points (what I call “discordant notes” in my harmonized reimagined retail framework) and find ways to “amplify the wow” in the moments that really matter. If their data shows that a substantial number of high-value customers would not only welcome this but it would lead to a more memorable experience AND Costco can execute it reliably at a reasonable cost then the answer is a resounding yes!

Steve Montgomery
BrainTrust

I shop at both Sam’s and Costco. Based on personal experience for someone with a relatively small number of purchases at Sam’s, the checkout process has definitely sped up with the introduction of self-checkout. I know of no reason the same would not be true for Costco.

Ken Morris
BrainTrust

I see more pros than cons with Costco’s approach. Moving to a frictionless checkout is inevitable over time and I see Costco’s move as just a step in the evolution to frictionless. Providing customers the option to choose the checkout process they prefer will minimize frustrations for those that prefer a staffed checkout, offer convenience to those who prefer self-checkout and cut time out of the checkout process.

Costco is also an ideal environment to move to mobile scan and pay for customers that prefer to scan items while they shop and then proceed directly to a receipt checker (on their mobile phone) as they exit the store.

Rob Gallo
BrainTrust

It does make sense to revisit the technology since improvements have been made. This would appease those with smaller baskets who don’t want to wait behind someone with two carts full of stuff. Based on the comments here, that’s who is using self-checkout at Costco where it remains in place. That said, You’d be hard pressed to find a faster, more accurate and generally friendly checkout staff than what Costco offers. I face all of the UPCs upward/outward when I put stuff in the cart (even on big trips). When you get to the checkout all they have to do is use the scanner. In rare cases they are forced to take items out of the cart anyway per company policy (weight restriction).

Ricardo Belmar
BrainTrust
I have mixed feelings about this. The self-checkout never went away at our Costco. My personal experience with most self-checkout systems has been pretty poor whether at grocery stores, or home improvement stores. These systems are typically geared to help solve a problem for the retailer, not the customer, whereas a mobile-based checkout feels much more reliable and customer-first. Many products are awkward to scan, and shoppers aren’t trained to know how to handle them. That said, the technology is continuously improving and if Costco has deployed a more reliable system and their data shows customers use it regularly, there may be merit in having it. Ultimately, I expect this technology to reach the point where it is no longer necessary to scan a barcode of any kind — a photo recognition approach will be the ultimate solution that moves shoppers through the line quickly. In my experience, self-checkout works best for certain products packaged in a way that makes it easy to scan — otherwise, at what point does the customer need to be… Read more »
James Tenser
BrainTrust

I don’t love self-checkout at Costco because many of our trips typically involve bulky items that we leave in the cart where they are hand-scanned. Any process that means more lifting large products to the scanner table and replacing them in the cart seems counter-productive.

I wouldn’t mind a Costco “fast-lane,” however, only for those times when I run in for a roast chicken and a bottle of wine for dinner.

Peter Charness
BrainTrust

A “fewer items” express self check out line at Costco would be good news for Costco, and bad news for my budget. I’d be there all the time. Next up … how about a smart app for finding an open space in their over crowded parking lot, with the overly anxious and aggressive drivers all looking for a space to park?

John Karolefski
BrainTrust

Obviously time will tell if Costco’s latest venture into self-checkout is successful.

I just wonder if shoppers were asking for self-checkout terminals, or if management figured they were needed. That makes a difference, especially if there are glitches with the scanning process.

Mel Kleiman
BrainTrust

If you get this far in reading all of the comments you must really be interested in what the panel thinks. So here is my 2 cents. Open self-check out lanes but make sure they are limited to no more that 8 items. This is an arbitrary number.

Mark Price
BrainTrust

Given that Costco does not do upsell at the register, there is no reason not to embrace self-scan checkout. The lines on the weekend are formidable and it is certain that Costco loses sales because customers choose to purchase items elsewhere rather than deal with the crowds. I believe this initiative will have higher customer satisfaction and increased traffic numbers over time.

James Ray
Guest

The answer to these questions has always been about what does the customer want! An increasing number of consumers prefer to do it themselves; I am one of them. For a big shop, it’s not convenient because the space to scan and continue isn’t adequate, but for a half basket or less merchandise, it’s preferable.

wpDiscuz
Braintrust
"Self-checkout is likely just a short term solution as mobile checkout supported by customers’ own device is on the horizon. "
"There are more pros than cons with this action...better customer experience through faster front-ends and a positive impact on labor hours."
"This would appease those with smaller baskets who don’t want to wait behind someone with two carts full of stuff."

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