Is self-checkout tech the answer for DSW and other retailers facing associate shortages?

Discussion
Source: DSW promotional video
Jul 01, 2021

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.

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 important if current labor challenges persist.

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.

Best Buy and Walmart are among chains that have shifted a greater percentage of their workforce to full-time while investing in employee training and career development for associates.

Walmart is giving more than 740,000 associates free Samsung smartphones this year to support the launch of an app designed to help make it easier for them to do their jobs. The devices can also be used for personal use outside of work hours.

DISCUSSION QUESTIONS: Do you see current labor challenges hastening the expansion of self-checkout technologies in retail stores? What do you see as the most effective and sustainable path to addressing retailers’ staffing shortages and, at the same time, profitability concerns?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Self-checkout could be an option in a few stores to test the market but it is not a long-term solution."
"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."
"Look to Japan, which has turned to automation in response to labor shortages and I think you will find the answer is YES."

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33 Comments on "Is self-checkout tech the answer for DSW and other retailers facing associate shortages?"


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Melissa Minkow
BrainTrust

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. 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. Retailers would greatly benefit from focusing more on the value missing because of the labor shortages, rather than the operational inefficiencies created. Providing better perks and culture to employees, investing in allowing consumers to feel better informed when making purchase decisions, and raising wages mean everybody wins – employees are happier, culture is strengthened, and shoppers experience a more positive environment.

Rick Watson
BrainTrust

Unless you are at a discount store, most consumers will not be willing to do this. I think this is fraught with a lot of challenges.

Ananda Chakravarty
BrainTrust

Rick, I disagree with you on this issue – this Forbes article highlights the acceptance rates of consumers. This is a familiar technology and, more important, customers are expecting some level of self-checkout at most retailers, especially those with many terminals or high traffic. Customers want the option, and it will become part of the checkout mix of manned, self-checkout, hybrid, and even Just Walk Out tech in the store.

David Weinand
BrainTrust

In short, yes. The habits formed over the last 18 months have contributed to a desire for more contactless buying journeys from shoppers. Combine that with a massive labor shortage at the associate level and it sets up for technology to come and fill that gap. What I’m confounded by is that where have these associates gone? I understand the unemployment benefit rationale from 2020 but that is over – so where are these employees going to make a living? I get the sense that a certain percentage will be knocking on retailers’ doors in Q2 2021.

DeAnn Campbell
BrainTrust

I agree with you David that the hiring wheel will eventually come back around. If retailers can up the pay rate a little and, more importantly, create a more fulfilling work environment, workers will come back.

Ken Morris
BrainTrust
Self-checkout will be an essential response to the labor shift. Tech has a whole bag of tricks for this, including leveraging RFID. The goal is to turn shoppers into cashiers. Tag all possible items with RFID and enable customers to pass through an RFID reader station and walk out. Another option (or in conjunction with RFID) is to turn shoppers’ phones into self-checkout devices. This approach is riskier than RFID for LP purposes, because it’s just using the honor code. Still, it can offer shoppers price lookup and potentially item location in the aisles — both labor-saving features in their own right. With RFID, retailers can move to authenticated returns via serialized inventory. It also enables real-time inventory management for BOPIS and BOPAC. There are labor-saving implications for all of this. We are at an inflection point with the increased cost and decreased availability of labor meeting the decrease in the technology price of RFID. That’s why RFID use cases that have not been leveraged are now front and center. Faster self-checkout and traditional checkout,… Read more »
Richard Hernandez
BrainTrust

While I have seen more self checkouts in stores other than supermarkets, I don’t see this becoming the norm. Businesses are going to have to offer perks other than increased pay to get people to come back to work.

Paula Rosenblum
BrainTrust

I think this is a terrible idea. 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. Then there’s the matter of feeling resentful over doing a retailer’s work for them.

As I said — a terrible idea.

Bob Amster
BrainTrust

Paula, could you please tell us how your really feel about this? 🙂

Paula Rosenblum
BrainTrust

I am truly just repeating what I have heard shoppers say. My own opinions are well-known and didn’t have to be said here.

Cathy Hotka
BrainTrust

Self-checkout at a company that didn’t have it pre-pandemic would scream “people don’t want to work here.” Huge mistake.

Venky Ramesh
BrainTrust

Increasingly larger retailers are adopting self-checkout and as a consumer, the biggest benefit I see is that of shorter waiting time. E.g., Walmart has some 10 self-checkout terminals with a single line rather than people waiting in multiple lines for each manned terminal. Based on Queuing Theory 101, mathematically, we know waiting time goes down in a single waiting line system compared to a multiple waiting line system. Now one can argue about if there is even a need for a waiting line, which is fair. Amazon Go, Hudson Non Stop, Amazon Fresh cart check out and even Walmart+’s benefit of scanning using their app is testimony to the fact that newer line-busting technologies are on the rise.

Suresh Chaganti
BrainTrust

Self checkout has been operational in big box stores and large regional grocery stores for a while now. The uptake is slow in low foot traffic stores like specialty ones, or even department stores like Macy’s.

This is yet another miss by retail stores. By lagging on tech investments, they have backed themselves into this position, where it is impacting sales and customer service because of labor shortages.

Ananda Chakravarty
BrainTrust

Self-checkout (SCO) will continue to grow rapidly, labor shortage or not. 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. Retail labor remains the key SG&A cost for most retailers. Reducing these costs with longer term, longer lasting investments will enable retailers to establish the right mix of associates and manned registers to SCO for a profitable balance. Expect to see rapid growth in this space, not just for labor availability but for labor costs.

Bob Amster
BrainTrust

Typically, retailers will implement self-checkout in order to reduce labor costs over the medium to long term and to expedite the checkout process. Labor shortage is a present problem and not something that can be fixed overnight with self-checkout. If the trend is expected to become a matter of fact long term, then self-checkout will mitigate the problem.

Liza Amlani
BrainTrust

Self-checkout could be an option in a few stores to test the market but it is not a long-term solution. Humans crave interaction, especially when buying apparel and footwear. There is still that customer that would prefer to get in, get what they need, and get out. But a retailer has such a huge selection that a sales person can only help the customer buy more.

Self-checkout is not the answer to solve the workforce shortage. 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.

Nikki Baird
BrainTrust

Look to Japan, which has turned to automation in response to labor shortages and I think you will find the answer is YES. However DSW has some particular challenges that I will be interested to see how they work around. The cashier checks every box to make sure that the shoes match the box (and the barcode/price). They also check to make sure both shoes are the same size. DSW is either giving up on these practices, or I have no idea how you don’t still end up with associates doing most of the heavy lifting on the transaction – computer vision is good, but I don’t think it’s quite that good yet!

Mohamed Amer
BrainTrust

Forward-thinking companies are rethinking the value creation levers in their business models. Retailers realize that in the main, checkout is a low value add and, at times, a high friction point in their models. Helping customers find the right product, solve a problem, and counter purchase doubts are a better use of people in a process that can be automated. There are always exceptions, as in the Trader Joe’s model, where the checkouts are fast, friendly, and used to reinforce the brand’s values. For the rest, automate what you can and leverage your trained people in the sales conversion process.

Jeff Weidauer
BrainTrust

Self-checkout has never been a solution – only a stop-gap. Retailers like to believe it is a solution, even though it’s expensive, increases shrink, and creates a different set of problems. Retail has a reputation for low-paying, high-turnover jobs. Changing that reputation will take time and a massive investment in employees.

DeAnn Campbell
BrainTrust

Self-checkout is all fun and games until something doesn’t work properly, then you’ve lost that customer for good. DSW might be able to succeed at adding this as a supplementary checkout lane to stretch existing staff because their customers are typically buying less than three items at one time. But retailers with higher purchase quantities are only adding to their customers’ frustration by adding complexity and time to the customer’s purchase experience. I for one don’t appreciate having to give free labor to a retailer and still paying full price for my purchase. I feel for retailers right now as they struggle to hire sufficient staff, but technology is an assist, not a replacement if you want to maintain customer loyalty. Shoppers don’t want an online purchase experience inside a physical store and if this is the only option available they might as well stay home and shop online – increasing the likelihood they end up at a competitor.

Neil Saunders
BrainTrust

Self-checkout is a partial answer and should be an option for consumers who wish to use it. However retailers – especially in non-food – will still need manned registers simply because some consumers expect and want them. The bottom line is that stores are about experience and a big part of the experience is interacting with other people. Take that away and you dehumanize part of the experience.

Jeff Sward
BrainTrust

I already helped myself with my selection and fitting. Self-checkout seems like a no-brainer here. It is certainly easier than a shopping cart full of fresh produce.

Bob Phibbs
BrainTrust

Am I on the schedule today? I hate self-service as a way to push off a business’s own shortcomings. Shorten your hours, manage your processes better but don’t expect me to do your work. #customersarenotyouremployees

Natalie Walkley
BrainTrust

I’m with you. I HATE self checkout.