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Utah Business

Two Utah grocers are adapting to tech disruption in unique and innovative ways. Here's how they're making it happen.

How Two Grocers Are Adapting to Tech Disruption

Self-checkouts began popping up in retail stores two decades ago. Now they’ve become ubiquitous, with self-scan stations dominating the checkout lines in big box stores like Walmart, Home Depot, and Target.

The technology is especially pervasive in grocery stores and its no wonder – the industry has notoriously low margins. While some customers find self-checkouts quick and convenient, others find them abhorrent and annoying. Critics complain self-checkouts force customers to do the work of employees and that the technology is cumbersome.

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“Incessant, erroneous repetitions of ‘please place your item in the bag’ and ‘unknown item in the bagging area’ are among the most loathed phrases in the 21st-century lexicon for a reason, and that reason is that self-checkout is categorically awful,” Brian Merchant wrote earlier this year in Gizmodo.

Is Self-Checkout Killing Jobs?

The biggest complaint coming from critics like Merchant, however, is the impact that self-checkouts have on human employment. In a booming economy bolstered by tax cuts and regulatory rollbacks, retail is one of only two US industries that saw net job loss this year (the utility sector is the second if you’re curious).

The outlook for cashiers is particularly bad, with the Bureau of Labor Statistics predicting a 4 percent decline in employment over the next 10 years, compared to a 2 percent decline in the retail sales sector overall. BLS lays the blame for cashier job loss on technology, including self-checkout stands.

Still, some big retailers in Utah say their self-checkout technology hasn’t had an impact on the number of people they employ. “We have actually been adding employees to the checkout end despite having the self-checkouts in a few of our stores,” said Bob Harmon, vice president for the customer at Harmons grocery chain. Self-checkouts prevent produce and perishables workers and from being pulled off the floor to backup cashiers during a rush, according to Smith’s spokeswoman Aubriana Martindale.

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“That was really our issue, we didn’t have enough cashiers at certain times. Now we can use data and technology in our stores to tell us how many cashiers we need and what our peak hours are,” Martindale said. “There’s a misconception we were removing jobs. We haven’t lost one employee with this transition.”

BLS data show Utah added roughly 1,000 cashier jobs between 2016 and 2018. As of last year, there were roughly 29,000 cashier workers in the state making an average of $11.08 an hour. The number of retail salespersons in Utah grew by more than 7 percent in a single year, from 44,600 in 2017 to 47,840 in 2018.

What Do Consumers Want?

Jobs aside, there’s a reason retailers keep adding self-checkout kiosks to stores – customers want them. Harmons has four self-checkout stands in 16 of its 19 stores, which account for one-third of all transactions.

“Customers have said that self-checkouts are great for a quick checkout option. There tend to be fewer temptations as far as candy and treats for children,” said Amber Harmon, vice president of customer experience. “Some customers just want to keep to themselves and others like the self-checkout option when purchasing more private items.”

At Smith’s, a whopping 60 percent of customers opt for the self-checkout instead of interacting with a human cashier. But self-checkouts could someday see themselves replaced by technology, some of it human-powered.

In an industry where the competition’s stiff, and in an economy where customers increasingly expect to buy things on their phones, grocers must find ways to adapt. Walmart’s online grocery service is clobbering major markets in Phoenix and Dallas-Forth Worth, while Amazon’s plans to open a grocery chain is stoking fears among retailers.

“Technology is the way of the future. We know giants out there are offering online services. We have to stay relevant,” Martindale said. “We may not be where we want to be yet, but we know we’re going to get there.”

Kroger, Smith’s parent company, launched its wireless “Scan Bag Go” technology last year, which allows customers to pay for their cucumbers and Cheerios via an app, skipping the checkout line entirely. The grocer has also partnered with Instacart, which allows customers to order products online and have them shipped and delivered by contractors, similar to how Uber and Lyft operate. The checkout process is done in the comfort of one’s home.Harmons has its own online grocery ordering option, but uses internal staff for the service instead of partnering with a third party like Instacart.

While Harmons’ executives have mulled other retail technology, like kiosk-free checkouts or pinging shoppers with target coupons, they’ve decided to set themselves apart from tradition.

“If it becomes something the consumer wants, we may eventually move into those sorts of things,” Bob Harmon said. “It’s interesting but it takes all the customer service out of the deal, which isn’t really what Harmons is all about.”