Tuesday Sep 11, 2012

Walmart's Mobile Self-Checkout

Reuters recently reported that Walmart was testing an iPhone-based self-checkout at a store near its headquarters.  Consumers scan items as they're placed in the physical basket, then the virtual basket is transferred to an existing self-checkout station where payment is tendered.  A very solid solution, but not exactly original.

Before we go further, let's look at the possible cost savings for Walmart.  According to the article:

Pushing more shoppers to scan their own items and make payments without the help of a cashier could save Wal-Mart millions of dollars, Chief Financial Officer Charles Holley said on March 7. The company spends about $12 million in cashier wages every second at its Walmart U.S. stores.

Um, yeah. Using back-of-the-napkin math, I calculated Walmart's cashiers are making $157k per hour.  A more accurate statement would be saving $12M per year for each second saved on the average transaction time.  So if this self-checkout approach saves 2 seconds per transaction on average, Walmart would save $24M per year on labor.  Maybe.  Sometimes that savings will be used to do other tasks in the store, so it may not directly translate to less employees.

When I saw this approach demonstrated in Sweden, there were a few differences, which may or may not be in Walmart's plans.  First, the consumers were identified based on their loyalty card.  In order to offset the inevitable shrink, retailers need to save on labor but also increase basket size, typically via in-aisle promotions.  As they scan items, retailers should target promos, and that's easier to do if you know some shopping history.  Last I checked, Walmart had no loyalty program.

Second, at the self-checkout station consumers were randomly selected for an audit in which they must re-scan all the items just like you do at a typical self-checkout.  If you were found to be stealing, your ability to use the system can be revoked.  That's a tough one in the US, especially when the system goes wrong, either by mistake or by lying.  At least in my view, the Swedes are bit more trustworthy than the people of Walmart.

So while I think the idea of mobile self-checkout has merit, perhaps its not right for Walmart.

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David Dorf, Sr Director Technology Strategy for Oracle Retail, shares news and ideas about the retail industry with a focus on innovation and emerging technologies.


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