Why the Self-Checkout Experiment is Failing Retailers
Retailers spent the last decade pushing shoppers toward automated registers to save on labor costs. Now, major supermarkets and big box stores are quietly reversing course. Massive inventory losses and rising customer frustration are forcing companies to rethink automation and bring traditional human cashiers back to the front of the store.
The High Cost of Retail Shrink
In the retail industry, the term “shrink” describes lost inventory. This includes damaged goods, administrative errors, and theft. Over the past few years, executives have realized that self-checkout is a massive driver of this problem.
Studies show that stores relying heavily on self-checkout experience significantly higher shrink rates. A widespread review of retailers in the United States and Europe revealed that self-checkout lanes have an average loss rate of around 4%. In contrast, traditional cashier lanes have a loss rate closer to 1.5%. When you multiply that difference across billions of dollars in annual sales, the financial hit becomes impossible for corporate boards to ignore.
Accidental vs. Intentional Theft
The massive inventory losses do not always come from organized retail crime rings. Much of the shrink at self-checkout registers happens quietly and sometimes accidentally.
Here are the most common ways retailers lose merchandise at automated kiosks:
- The “Banana Trick”: Shoppers intentionally ring up expensive items, like organic apples or premium meats, using the produce code for cheap bananas.
- Bottom of the Cart: Customers simply forget to scan bulky items left on the bottom rack of their shopping carts, such as cases of water or large bags of dog food.
- Scan-and-Skip: Shoppers pretend to scan an item, hovering the barcode just far enough away from the laser so it does not register, and then drop the item directly into their bags.
- Walkouts: In extreme cases, frustrated shoppers who cannot get a machine to work simply bag their items and walk out without paying.
Major Brands Reversing Course
To combat these losses, major retailers began drastically changing their store layouts and checkout policies in late 2023 and early 2024.
Target Imposes Strict Limits
In March 2024, Target made a major policy shift regarding automation. The retail giant officially limited self-checkout lanes to shoppers with 10 items or fewer. Target also gave local store managers the authority to close automated lanes completely during certain hours of the day. By forcing customers with full carts to use human cashiers, Target aims to reduce scanning errors and intentional theft while improving the speed of the checkout process.
Dollar General Pulls the Plug
Dollar General historically leaned heavily into automation to keep labor costs as low as possible. That strategy eventually backfired. In early 2024, Dollar General CEO Todd Vasos announced the company was pulling self-checkout machines completely from 300 stores that suffered the highest levels of shrink. Furthermore, the company is converting self-checkout lanes into assisted checkout stations across 9,000 other locations, putting employees back in charge of the transaction.
Five Below Changes Store Layouts
Discount retailer Five Below also experienced severe profit losses due to shrink. In March 2024, company executives announced they were shifting away from self-checkout. The company stated that stores with human cashiers had significantly lower theft rates. As a result, Five Below is rolling out new store layouts that prioritize staffed registers over automated kiosks.
Walmart and Costco Step Up Security
Walmart quietly removed self-checkout lanes entirely at several high-risk stores in New Mexico, Missouri, and Ohio during late 2023. Meanwhile, Costco noticed an uptick in non-members sneaking through self-checkout lanes to buy groceries. In response, Costco started assigning more employees to physically monitor the self-serve areas and verify membership cards before customers even approach the scanners.
The UK Grocer That Banned Automation
This backlash against automation is a global trend. Booths is an upscale supermarket chain located in the United Kingdom. In late 2023, Booths made headlines when it removed self-checkout stations from all but two of its 28 stores.
Management realized that bagging groceries, scanning alcohol, and managing loose produce was creating a miserable customer experience. They determined that paying human cashiers was a much better investment than forcing customers to do the work themselves.
The True Return on Investment for Cashiers
Companies initially thought automated machines would save millions of dollars on payroll. However, they miscalculated the hidden costs of theft.
A store might save $15 an hour by cutting a cashier shift. But if an unmonitored shopper walks out with $200 worth of unpaid steaks and cosmetics during that same hour, the store actively loses money. Retailers are finally realizing that cashiers double as loss prevention workers. A friendly human ringing up items ensures every barcode is scanned correctly and every item is paid for.
Customer Frustration Reaches a Tipping Point
Beyond the staggering financial losses, shoppers are generally tired of the automated experience. Most people know the annoyance of the “unexpected item in the bagging area” error message halting their transaction. Customers also hate waiting for a single, overworked employee to rush over and clear an age restriction for a bottle of wine or a box of cold medicine.
By bringing traditional cashiers back, supermarkets are attempting to win back shoppers who just want a fast, friendly, and frictionless end to their shopping trip. Retailers are learning that while technology can assist the checkout process, it cannot completely replace the value of human customer service.
Frequently Asked Questions
Why are stores getting rid of self-checkout? Stores are removing or limiting self-checkout to reduce massive inventory losses (known as shrink) caused by theft and customer scanning errors. They also want to improve customer service, as many shoppers find automated machines frustrating to use.
What is the “shrink” rate at self-checkout registers? Industry studies indicate that self-checkout lanes experience an inventory loss rate of about 4%. Traditional lanes staffed by human cashiers experience a much lower loss rate of roughly 1.5%.
Is Target getting rid of self-checkout completely? No, Target is not removing self-checkout entirely. However, as of March 2024, Target implemented a strict 10-item limit for its self-checkout lanes to speed up lines and reduce theft.
Which major stores are removing automated checkouts? Dollar General is removing self-checkout from 300 high-theft stores. Five Below is shifting back to human cashiers in many locations. Walmart has completely removed self-checkout lanes in select stores in New Mexico, Missouri, and Ohio. Booths, a UK supermarket, removed the machines from nearly all of its locations.