Nov 26, 2019
In a follow-up conversation with Karen Webster from Pymnts.com, Carl von Sydow from Diebold Nixdorf recounted that self-checkout store data is not complicated or complex — it’s pretty simple information, including time stamps, the number of items in a basket and whether certain items are age-restricted, but paying close attention to the data will ensure an optimal customer journey throughout the check-out process.
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Previous Carl Von Sydow Podcast:
Karen Webster: 00:00 Hey, Carl, thanks for joining me today. I'm looking forward to having a follow up conversation that will build on the last chat we had about using data to increase checkout conversions in the store. We talk a lot about checkout conversion online, and in the store, using the right data, can certainly help to increase that process.
We set the stage last time we chatted, now we're going to dig into the details of exactly how to do it. So, thanks, as always, for making the time.
Carl: 00:43 Well, thank you. Happy to be here again.
Karen Webster: 00:46 Okay. So, let's get practical about what to do with the data that has been collected, and observed. Now, action is ready to be taken. How would one go about actually putting a checkout conversion plan together when looking at their data, for figuring out how to do that?
Carl: 01:10 Well, first of all, I just want to come back a little bit to what we said last time, perhaps. [Core 00:01:18] data we are talking about, first of all, is not complicated or complex, it's pretty simple information. I don't anyone to believe that we are doing some highly sophisticated, rocket science analysis here. It's more or less about the timestamps, amount, number of items in the basket. Is there age-restricted items or not, et cetera? It's pretty simple information, it's just how you interpret that information.
But, coming back to your question, first of all, you have to, when you collect the data, you have to think a little bit about from what period you picked the data. You can have data from a slow week, or a busy week, or some kind of average week, but the important thing is that you know from what type of period you pick your data. Or, you can choose to have a data from a longer period of time, like work with averages. That's one thing that's important.
When it comes to conversion rate, you have to look through the data, and put together what might have an impact on your conversion rate. Conversion rate, of course, is being the ratio of customers coming into the store, buying respectively, as not buying anything. You want to have as high conversion rate as possible. You want all customers that comes through your doors to buy something.
Typically, the customers that leave the store are customers with few items. They come in, they are in a hurry, they want to buy just a few items and get out of there. The good thing is, like, self-service is ideal for customers like that, with the few items. If you look at your store data, and you can identify a group of customers with small baskets, less than five items or something like that, then you have a good potential to increase your conversion rate if you, then, add more self-service, or add new self-service to that store location.
Karen Webster: 03:12 So, when you think about the impacts of conversion, and looking at data on the efficiency of the experience throughout the store ... we're talking grocery stores, I guess, and other stores where people are going in and out, and buying things. Convenience stores, I guess, would be another category. There's the consumer angle to this, which is obviously very important, that drives sales.
There are also other behaviors that, looking at data, and trying to make decisions about checkout efficiency, is also very important. Can you talk a little bit about the staff impacts, the management impacts, some of the investments in technology that need to be considered in looking at this bigger picture?
Carl: 03:55 We have one example. We have a customer I'm working with right now, they didn't have self checkout. They installed card-only self checkout in their exit area, four lines. We studied the data before and after. All of the after, only a few weeks, we could see that we had an adoption rate of 25%.
Karen Webster: 04:17 Wow.
Carl: 04:17 Which was really good.
Karen Webster: 04:17 Mm-hmm (affirmative).
Carl: 04:18 It was four lanes out of a high number of lanes in that store. They were careful with the investment, self checkouts is expensive. They didn't know how their customers would react to this new concept. This is actually this summer, so we retailers just adding self checkout.
Karen Webster: 04:38 Mm-hmm (affirmative), Mm-hmm (affirmative).
Carl: 04:38 So, what we could see, when we looked at the data, we could see some signs that, perhaps, they have some possibilities for, first of all, add more self checkout. We could easily see that we had a lot of customers going through the normal lanes, still with very small baskets, paying with credit cards, that would be ideal to try to push them to the self checkout. So, the potential was clearly there.
We could also see, since we can go in and look in 15 minute brackets when lanes are open, I could see that, for some reason, they didn't open the self checkout lanes until after two, three hours later in the day. They could have several [manned 00:05:18] lanes open before they open the self checkout.
So, we had a discussion with that retailer about that. It was all about it being really careful with customer satisfaction, and customer experience, and also staff training. They felt that they didn't have trained enough staff to be able to man the self checkout area.
Karen Webster: 05:41 Mm-hmm (affirmative).
Carl: 05:42 Then, we went there and made some observations. It's always good to see everything -
Karen Webster: 05:46 Sure.
Carl: 05:46 - live, as well. Numbers are one thing, but you have to see it for yourself. We could see that as soon as they opened the self checkout, the line of customers waiting for the other manned lanes immediately gravitated towards the self checkout. Because, customers today, they know that self checkout is a very quick way to leave the store, and that's what they want.
Karen Webster: 06:12 Mm-hmm (affirmative), Mm-hmm (affirmative). Yeah, I mean, it's interesting because ... I'd be curious to get your thoughts when you observe this. People just don't like waiting in line, right? If they have a small number of items, and they have an option to use self checkout, and they can do that without standing in line, it seems like an obvious choice. So, you get -
Carl: 06:33 Yeah.
Karen Webster: 06:33 It's not as if consumers are going to put their basket down and walk out. They've already made the investment to go there, park the car, and select their items. You know, they may not come back the next time if the experience is difficult for them, or the association with the store is, I'm always going to have to stand in line when I've got five items that I want to just buy to get in and out. It plays on basic human behavior.
Carl: 06:57 Yeah, it is. As I said, it's common sense, it's like an after thought. Everything is so easy when you look at it afterwards.
Karen Webster: 07:05 Sure.
Carl: 07:06 And you have the good example in front of you. It is actually very simple.
Interestingly, in you take just the transaction process itself, a cashier is always faster than us normal customers, when we go and go through self checkout.
Karen Webster: 07:23 Yeah.
Carl: 07:23 We have the same number of items, a cashier would scan them faster and all that than we can do ourselves, but the perception that we have as a customer is that the process is faster, because we are in control.
Karen Webster: 07:38 Yeah.
Carl: 07:39 We do everything ourselves. So, there is a lot of objective things that make the customers gravitate towards self-service nowadays.
Karen Webster: 07:47 Mm-hmm (affirmative).
Carl: 07:48 They are getting more and more simple to use.
Another trend, a little bit, is that some retailers, they add more staff in the self checkout area. Perhaps, deactivate or disengage the wait security during peak hours.
Karen Webster: 07:48 Mm-hmm (affirmative).
Carl: 08:05 To increase the throughput and make it easier to scan and just go. That's a sensitive topic, of course. More and more retailers, I think, they're looking at the throughput rather than the hard fact, security, and you have security features and all that. Add more customer service, more staff monitoring and helping the customers, and you will have a higher throughput, and everybody will be more happy, really.
Karen Webster: 08:29 Yeah.
Carl: 08:29 Throughput is more important than every, I think. The speed that you get customers through the self checkout.
Karen Webster: 08:35 Yeah, no, for sure. I think you're right. You fumble around to get the bar code, sometimes, and then you have to -
Carl: 08:43 Exactly.
Karen Webster: 08:43 - push your stuff down the chute, and then you have to bag it. All that takes time. You do feel better, because it's you that's doing it. You don't have to wait behind someone that has 50 items in their basket, and that takes forever.
As we all do, we scan the lines to make some mental decisions about what line will probably move the fastest. I always pick the wrong lines.
Carl: 09:10 Yeah.
Karen Webster: 09:10 I think that's what consumers do.
What about the convenience store environment, which is not the same large format as grocery stores? What are you seeing there, in terms of best practices with self-service, self checkout?
Carl: 09:27 With convenience stores, it's an interesting store format right now, for self-service. They have a different challenge, in a lot of cases, compared to bigger supermarkets and [hyper 00:09:38] markets, in the way that they have not so many staff in the store. They could have one lane open, or two lanes open, typically. Then, perhaps a maximum capacity of four or five lanes. Conversion rate, they are very sensitive for that, because especially in a convenience store, customers tend to go out immediately if the lines are too long at the checkout.
Nowadays, when we have smaller, more efficient from a footprint perspective, self-service solutions, the door has opened a little bit for convenience stores to start to use self-service. On top of that, there are some clever hybrid self checkouts on the market, as well, where you can have a lane in self checkout mode, and then you can easily just switch that self checkout, without turning anything around or anything, just you switch the software application so it turns into a manned lane.
Karen Webster: 10:39 Mm-hmm (affirmative).
Carl: 10:41 For example, we have another project with a C-store customer in the Midwest. They have four lanes in that store. Typically, they had one, two lanes open. Then, peak hours, they went up to four quite often. Difficult to plan staff, because it went up and down, up and down, over the day.
We discussed with them, looked at the data. We took out two of the four lanes, and put in three self checkouts instead.
Karen Webster: 11:08 Hm.
Carl: 11:09 Which means that, in any given point during the day, with one person, they will have four lanes open.
Karen Webster: 11:17 Yeah.
Carl: 11:17 That person will operate the manned lane, but she will also have three self checkouts available. So, the maximum capacity, at any given time, increased dramatically.
Karen Webster: 11:28 Yeah, sure.
Carl: 11:28 If you do that, then it will take much longer for lines to build.
Karen Webster: 11:32 Yeah.
Carl: 11:32 When a customer comes in.
Karen Webster: 11:34 Yeah.
Carl: 11:34 So you have, immediately, a positive impact on the conversion rate.
Karen Webster: 11:39 Yeah.
Carl: 11:39 When you need the maximum capacity, you can switch the self checkouts to manned lanes, and the capacity you need is available.
Karen Webster: 11:47 Yeah, I think in those stores, the opportunity for abandonment is very high, because the abandonment happens because consumers will walk in, they'll see these long lines and say, "Forget it." When you're going to the grocery store, you're committed because it's bigger format, and you don't always have that same visibility because lines are dynamic.
Carl: 12:09 Yeah. Typically, convenience stores, an argument you'll always hear, or very often, at least is that, "Oh, well, most of our customers pay with cash. Self checkouts with cash is very expensive."
Karen Webster: 12:22 Mm-hmm (affirmative).
Carl: 12:24 They are difficult to use, a lot of maintenance, and all that. Which is true, to some extent. Then again, if you take the time and really analyze the data, you will see that, all right, you might have 55, 60, or even more, 65 percent cash, but you still have quite a lot of card customers.
Karen Webster: 12:24 Right.
Carl: 12:42 Why don't install self checkouts to address those customers? They will be happy, too, if they can come in and pay with their card and get out of there, instead of just leaving without buying anything.
Karen Webster: 12:52 Mm-hmm (affirmative).
Carl: 12:55 I always try to open the door, to think a little bit. Be brave, look at self-service. It doesn't have to be with cash, even though cash is king, cash is forever here to stay.
Karen Webster: 13:11 Yeah.
Carl: 13:11 Just be flexible, open-minded.
Karen Webster: 13:14 A lot of retailers are looking at these smaller format stores. I mean, certainly, grocery, but when you think about the expanse of stores that are looking to locate in urban areas, where they don't have the ability to have the same size store, but want to be able to serve customers. I'm curious to get your thoughts on where to put some of these self-service lanes? You've got this consumer that is, perhaps, going to opt in to self-service because they're in a hurry, but the store operator wants people to, perhaps, see other things while they're there, making their little journey, making their little shopping journey, and pick up things that they hadn't planned to buy when they walked through the door. I can see the pros and cons, but I'm curious to get what's considered best practice there?
Carl: 14:10 Yeah, we always try to push for having self checkout, or any kind of self-service solution, whatever you have, as visible as possible when the customer enters the store.
Karen Webster: 14:10 Mm-hmm (affirmative).
Carl: 14:20 When the customer enters the store, she or he will know that is a possibility for them when they go and checkout. I don't really understand, when they put self checkouts in a wall in a corner, or somewhere it perhaps fits from a floor plan perspective, and is not in the way for anything, but in contradicts the whole idea with the self checkout, right? It's more customer service orientated than ever, and you have to pay that price with floor plans, perhaps. I would definitely not put it somewhere where it's not easily visible. Yeah, that's my recommendation anyway.
Karen Webster: 14:58 Seems logical to me. It also seems logical, as you said at the beginning, Carl, that you're not talking about data that requires a rocket scientist to go dig up, it's pretty simple data that stores have available. Why is it that these data aren't used more effectively, or more regularly, to make some of these decisions?
Carl: 15:22 Well, I think a lot of retailers really do look at their store data. Absolutely they do, especially a lot of the retailers that have been using self checkouts for a lot of years. They know a little bit about what and how to look for information.
But, quite often, after a while, they tend to trust their gut-feeling more than anything else. We have developed this very simple, easy to use, data tool, which makes this super easy to do on a regular basis. A lot of retailers I've talked to, they typically use Excel, and that's it. They do the number crunching in front of the computer screen. That is perfectly okay, but it takes time, and is a little bit more cumbersome. If you have a good tool, that helps you, it's fast.
We have another customer, actually. They were so happy. When they saw our scorecards, the application that we have, they wanted to use that as their management tool to improve their self checkout performance, as a management tool, which is perfect. Again, it's nothing really super seriously advanced we're talking about, but it's just a simple way to look at data.
Absolutely, a lot of retailers do look at their data, but perhaps not close enough, or they're not drilling close enough. It's a mix, I would say. It's not like it's new for everybody.
Karen Webster: 16:47 Right. Is the motivation, though, different today, perhaps, than it once was? I can imagine that, one of the original drivers of self-service was to reduce staff. It sounds like the emphasis is shifting to not just that, but improving checkout conversion in the store?
Carl: 17:09 Yeah, that's a very good comment, and I couldn't agree more. If you look at the self checkout, self-service drivers, 10 to 15 years ago, it was very much ROI-based, headcount reduction, efficiency, and all that. Now, it's much more customer service driven. Retailers add self-service because customers expect it, they demand it more or less. So, the driver is very different.
That's why it's more important to really understand, or identify, what's your target group when you install these self checkouts. That's also why, I think, the standard self checkout with cash, and weight security scales, and bagging platforms, that was the only version that existed for so long. No one really looked at it. Now, we have a wide range of different alternatives, different solutions. More big ones, et cetera. That's a big change, I think, in the driver, why we are looking at some many retailers looking for self checkouts nowadays.
Karen Webster: 18:15 Are they thinking about it from the perspective of, yes, customer satisfaction, but, perhaps, redeploying staff in other parts of the store, to help address customer service issues, or better merchandising of products? I'm thinking of things that help drive basket size, at the same time self checkout is trying to drive conversion by making it less time consuming to actually take the times you want to buy and check out.
Carl: 18:49 Yeah. I mean, just the other day, I think it was yesterday, I read an article on LinkedIn about ... This was from Europe, by the way. It was an article from the Trade Union paper, concluding that, looking at the numbers, the staff count working at the checkouts had reduced. That was just a fact, compared to five, six years ago. Then, on the other hand, the number of floor associates, working inside the store, had increased. That's exactly the purpose.
Karen Webster: 19:21 Right.
Carl: 19:21 You want to move your resources, the valuable resources you have, from the checkout into the store. That will only increase customer satisfaction, improve customer service. I was so thrilled, but it was a Union representative that had written that article. They have been so negative over the years about self checkout.
Karen Webster: 19:43 Sure.
Carl: 19:44 Of course. But, here they were, saying, "Wow, this is not a bad thing, actually, because we are moving the staff into the store." The staff, of course, sitting in the checkout, it's a pretty repetitive work, actually. All the cashiers working out there, they're doing a pretty tough job.
Karen Webster: 20:01 Yeah.
Carl: 20:02 Repetitive, scanning items, tough environment. To, instead, be walking around in the store, helping customers, of course, that's much more rewarding, also, for the staff. I think it's a great ... I was really happy when I read that article.
Karen Webster: 20:18 So, Carl, if the motivation to initially install self checkout was staff reduction, and now it's different, how are retailers measuring? What are the KPIs that they're using to evaluate success? It seems like there's just a lot more input now, right? Inputs into coming up with those KPIs.
Carl: 20:44 Yeah, that's a tricky question. I don't have a good answer to that.
I mean, the KPIs the retailers are using are, of course, basic ones. Number of transactions, how many customers come in, what's the average transaction value, average basket size, traditional traffic KPIs. They have been there, and they are still there. I think as retailers add self-service solutions, different self-service solutions, it could be click and collect, or home delivery -
Karen Webster: 21:13 Yeah.
Carl: 21:13 - or self checkout, hand scanning, whatever, I think a lot of retailers in Europe, they are actually really proudly presenting their adoption rate, the numbers.
Karen Webster: 21:23 Hm.
Carl: 21:23 How many customers are using our self service solution. So, perhaps that is one way to look at a KPI that's getting more and more important, and a competitive advantage, sort of, since customers, as we said before, are driving this a little bit right now.
Karen Webster: 21:39 Mm-hmm (affirmative).
Well, I mean, consumers, as we've looked at on so many levels, and our research shows this on so many different touch points, whether it's in the retail or banking sector, or payment sector, consumers are driven by convenience. That's what they gravitate to. How do you make it easy?
Carl: 21:57 Yeah.
Karen Webster: 21:58 How do you eliminate the friction? How do you make it more convenient? You know, this certainly is the big step to doing that in the store, especially at the end, right? I mean, that is where, still, a lot of the friction remains. Checking out, whether that's payment methods, or standing in line, or not having to stand in line. I mean, there's just a lot of friction to remove from the checkout experience.
Carl: 22:21 Yeah. No one really likes to stand and checkout, right?
Karen Webster: 22:24 No.
Carl: 22:24 Because you're shopping journey is over at that time.
Karen Webster: 22:27 Yeah.
Carl: 22:27 You're not really going to sell anything more, you're not going to buy anything more. The only thing you want to do is to scan your items, and pay, and leave, and do that as fast and convenient as possible. Anything that improves that, makes it faster and more convenient, is a good thing.
Karen Webster: 22:45 Yeah. Yeah, also ... Then, I'll let you go. This has been a fun conversation. You know, the longer people stand in line, the more they consider what they've put in their basket. I don't know about you, but I've been behind people who, you know, if they stood in line a long time, maybe they won't buy the magazine, maybe they'll put it back.
Carl: 23:03 Right.
Karen Webster: 23:03 Or, maybe they won't buy this, maybe they'll put it back. So, you know, there are a lot of little things that go into the standing in line part that can work for the retailer, in the case of making it more efficient. Or, against, in the case of making it less efficient.
Carl: 23:18 Absolutely.
Karen Webster: 23:19 There's that, too.
Carl: 23:20 Yeah, I agree.
Karen Webster: 23:21 All right, Carl. Well, listen, this has been a fun conference. Thank you so much for making the time. It certainly seems as though this is a great way to satisfy what retailers are looking to do to make their operations more efficient, and to serve customers better, and clearly what consumers want, as well, who are always in search of convenience. Thanks again for making the time.
Carl: 23:41 Thank you very much for having me. It was fun.