Self-Service: Revolution or Evolution?

Posted by Daniel Palmer on 1st July 2008

The self-service revolution is upon us, as Australian consumers demand greater choice and retailers begin to understand the considerable benefits of the new technology. It is changing the way businesses operate and interact with consumers; with supermarkets, airlines and banks key symbols of the trend.

The introduction of ATM’s some 40 years ago can be attributed to the growth of self-service options, but it has only been in the past 5-10 years that self-service technology has really taken off. In fact, the adoption process has been reported to be so smooth in some sectors that it has been described as an evolution rather than revolution.

Supermarkets worldwide have embraced self-checkout machines with fervour, but Australia has been relatively slow to react – especially when you consider that a quarter of US grocery chains had tested self-checkouts by 2003. Woolworths was the first supermarket in Australia to commit to the technology and has now installed NCR FastLaneTM machines in more than 70 of their stores. Coles have also trialed self-checkouts and are, like other retailers, strongly considering an increased roll-out.

Ross Checkley, South Pacific Managing Director of NCR – a global technology solutions company and makers of the NCR FastLane machines, believes that we have now reached a “tipping point” with self-service technology and it is the consumer driving the trend. “It is not forced upon them,” he told Australian Food News. “It is all about choice.” And choice is exactly what the customer is getting with options provided by retailers now including home delivery, traditional manned checkouts, self-checkouts and online ordering for in-store pick-up.

The popularity of the self-checkouts with customers has led to a plan by Woolworths to incorporate the technology in up to 200 stores by the end of the next financial year. “In all the stores where we have trialed this technology, customers have really embraced it. It is so popular that approximately 20 per cent of transactions go through the self serve checkouts,” Retail Operations Manager Marty Hamnett told the media soon after the beginning of the roll-out in April. “These units put consumers in full control of their shopping experience and are certainly a great alternative for the busy shopper.”

The NCR FastLane devices enable the customer to scan, weigh and pay for their groceries via cash (notes and coins), credit or debit cards. They also allow the customer to get cash out, buy and top-up mobile phone vouchers and receive petrol reward dockets, and provide consumers with every option provided at a full-service, manned lane.


New global research commissioned by NCR has found that Australian consumers are now world leaders when it comes to demand for self-service technology. The ‘2008 NCR Self-Service Consumer Survey’, conducted by BuzzBack Market Research, questioned 4,000 consumers in North America, Europe, China and the Pacific, and found that 85 per cent of Australian consumers said they were more likely to do business with companies that offer self-service options.

Fifty-six per cent of Australians had increased their use of self-service in the past year and cited ease, speed and convenience as the primary reasons for their choice to serve themselves. Further, 61 per cent of Australians and New Zealanders indicated that they were “much more likely” to use self-service, comfortably ahead of the nine other countries in the survey.

Another interesting finding of the survey commissioned by NCR was that 52 per cent of Australians said that self-service options actually created a more positive view of the brand, negating fears that a possible decrease in consumer interaction could be damaging to the brand. Mr Checkley suggested that one of the most surprising things about the consumer response was that it was positive “regardless of age demographics,” allaying initial concerns that they may appeal only to younger people.

The potential impact on the labour force is still a concern amongst unions, though. Employers, on the other hand, stress that there will be no major decreases in jobs due to the need for staff to assist people and deal with any issues that crop-up.

Mr Hamnett indicated that Woolworths had discussed the changes with unions and believes jobs will not be lost due to the new technology. “This is not the death-knell of manned checkouts … and any change in staffing will be absorbed throughout other parts of the store,” he said.

Mr Checkley endorsed this view, advising that new jobs are created to counter the reduction of manned checkouts. “People will always be there to assist,” he said. “(They will be) there to help educate first and then to deal with any challenges, such as manual entering of a damaged barcode or authorising restricted items, such as knives.”

Retailers are heavily investing in IT and communications technologies worldwide, to the tune of over $120 billion U.S. dollars this year, according to IHL Consulting Group. Such expenses convey the strong desire of global retailers to update their systems.

“Every successful retailer is either deploying or seriously considering self-service checkouts,” Mr Checkley reported.

The Asia/Pacific market currently represents a mere 15 percent of the worldwide IT spend in retail but the region’s collective retail IT spend is about to catch-up, with growth rates of over 20 percent annually expected for the next 3 years.

So is this the end for manned checkouts? Possibly, but not in the near future as consumers appear to want both the manned checkout and self-service options.

Tesco, the UK’s largest retailer, has now adopted an all self-service checkout model in their US Fresh & Easy stores, which has been met with support from consumers after initial skepticism. Their most recent survey established that 90% of US consumers were ‘satisfied’ or ‘very satisfied’ with the new technology. NCR is not expecting any Australian supermarkets to commit to stores with only self-checkouts in the near future but some smaller, ‘express’ supermarkets may do so in the coming years.

Tesco Fresh & Easy has also updated their systems to better suit the technology, as they now have all their fruit (except bananas) in packages with barcodes to ensure the consumer has fewer potential problems at the checkout.

The success of self-service in the banking, travel and grocery industries is leading the “self-service revolution”. Mr Checkley reported that a pilot program to trial “quick service restaurants” was about to get underway.

The restaurant system is based on the same concept as NCR’s FastLane technology; that is, choice and convenience for the consumer and increased efficiency and consumer satisfaction for retailers. The system involves customers placing their own orders to their own specifications with up-selling options available. Essentially, it puts consumers in control, an advantage consumers always put near the top of the list when talking about self-service. Over US$500b was spent by global consumers via self-service last year, and with the strength of the self-service trend so great it is not surprising to see recent reports indicating this figure could rise to US$1.3 trillion by 2012.

In conjunction with the benefits of consumer satisfaction, retailers have found the ability to keep more supermarket aisles open for a reduced cost a major advantage, particularly at non-peak times.

Already there are nearly 50,000 NCR FastLane units in operation throughout 17 countries and expect this to rise as consumers and retailers worldwide continue to embrace self-service.