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Artificial Intelligence AI in Grocery Stores Self Checkout

03rd April 2024

Image shows a woman putting an item in her pocket without paying for it. The featured image is above an article discussing the benefits of AI in grocery stores for shining a light on retail shrink

Artificial intelligence (AI) in Grocery Stores – Uncovering shrink at the self-checkout

SeeChange was recently invited by a European grocery retailer to help identify where at self-checkout shrink was happening. The retailer believed they understood the ‘when’ and ‘how’, and expected the results to show that barcode switching was the main theft method at self-checkout. However, solutions that deliver real ROI address the true pain points, not just test assumptions. We set out to demonstrate the when and how, and also pinpoint the where, why and revenue impact of each shrink type. We put AI to work, and what we learned may surprise you.

Discover how SeeChange and Diebold Nixdorf are transforming the retail checkout

Shrink is hitting the retail industry hard. In the US, shrink represented $112 billion in losses in 2023, with 65% of that attributed to internal and external theft. In the UK cost of shrink has doubled year over year to $2.3BN in 2023. And nowhere is shrink being felt more than in grocery retail.

Grocery operates on notoriously tight margins, yet worsening shrink KPIs and opaque insights make getting to the root causes of shrink and then addressing them challenging. Historically, retailers have factored in between 1% and 1.5% for shrink, yet for many that figure has grown quickly with some now experiencing over 3.5% and the situation showing no signs of slowing.

With rising costs on one hand and reduced consumer spending power on the other, the only impactful opportunity to improve the landscape is to reduce shrink.

Image of self-checkout layout in grocery store image highlights the trends AI recognises and empowers retailers to take action

Logically, self-checkouts placed in potential blind spots for the attendants do create opportunities for shrink that determined shoplifters will capitalise on. Examples include:

  • Shoppers not scanning items, instead putting items into pockets or bags at their feet, bypassing the weigh scales entirely
  • Barcode switching on expensive products enabled by fruit and veg weigh scales in aisles
  • Walking away from transactions with the goods without paying

To a busy attendant it will look as though transactions are progressing normally, when in fact the opposite is true.

In fact, contrary to the assumption that barcode switching was the most prominent cause of self-checkout theft for this retailer, it was revealed that intentionally not scanning items (an effective buy-one-get-one-free) caused the most significant shrink. This means that even when armed with information from store leadership, attendants could be looking for the wrong thing entirely when trying to meet loss prevention expectations.

Embedding real-time retail artificial intelligence shrink solutions in grocery self-checkouts allows for immediate detection, and customised responses to accidental and intentional theft attempts. Equipping attendants with AI-enhanced mobile devices gives real-time oversight of the self-checkout area, with the ability to prioritise interventions and assistance, and enable safe escalation where needed without disrupting customers while ensuring the safety of both employees and shoppers.

Graeme Voller

Director of Product

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