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The No Checkout – What’s the Big Deal?

May 14, 2014         By: Jane Genova

The idea of consumers shopping at brick and mortar stores without checking out is making the rounds.

This is not self check out. It’s “no checkout.”

One phrase associated with it has even become sticky: “It feels like stealing.” But eventually “stealing” could become a standard option in stores.

However, the media attention ducks a tough reality. In itself, no new introduction in the payment system will do much to transform the distressed brick and mortar retail sector.

Essentially, with no checkout, electronic virtual networks link the identity of customers and how they prefer to be billed with the merchandise selected.

For example, a shopper tries on a dress, likes it and wears it out of the store without scanning or having it scanned at a checkout. And that’s about all most customers need to know regarding the sensors which are picking up, transmitting, and aggregating data.

It’s hardly futuristic.

For a number of years, it’s been leveraged in Apple retail through the iPhone.

Also, the transaction will not likely “feel” like stealing. Shoppers sophisticated enough to be using it are well aware that there is a bill waiting for them in cyberspace.

In addition, in some sectors, electronic ways of payment have become commodities. They are expected or represent the price of entry. Not having them could put them at a competitive disadvantage but their presence isn’t necessarily experienced by customers as competitive differentiation.

For instance, in the flat fast food industry, some chains such as Burger King and Wendy’s have been embracing mobile payments. Their objective is to win back market share from casual restaurants and convenience stores. Not too many stock analysts are bullish that the tactic will be effective.

This isn’t to say there are no benefits to retailers who want to enable a no checkout system.

At the top of the list is reducing operational costs. Those extend from the amount of floor space needed to personnel headcount. Another is a faster and more efficient service by eliminating a step from shopping. Accuracy could be increased. The presence of a constantly enabled network could deter theft, both by shoplifters and employees.

In addition, customers who have come to dislike the cross-selling at human checkout points get to avoid it completely.

But much more than a sophisticated payment system is needed to address the challenges brick and mortar is dealing with. This is the era of the omnichannel in retail.

The customer shopping experience has become fluid, including both online and brick and mortar. They go to the physical store for a myriad of reasons.

If it’s to actually purchase something, too often, unlike online, it is isn’t available. Brick and mortar inventory systems tend not to have kept up with those online.

Should the visit to the store be to have staff provide information and insight about the products or services, they might be disappointed. Expectations have been raised by the kind of expertise available at Apple and other leading retailers who pride themselves on the knowledge their employees possess about the products and services that they’re offering.

The purpose might be to take advantage of discounts only provided at the store. However, it might be customers who inform clerks about them and who have to be alert that they are rung up accurately.

The benefits of no checkout can be incorporated in solving some of these problems. For instance, funds saved can be invested in improving the inventory system. Personnel freed up can be developed as experts for special lines of products and services.

The bottom line may well be that the payment function can’t exist as a silo in the retail organization.

Mega successful Starbucks frames payment introductions as simply an aspect of their all-encompassing plan to enhance the customer experience.

Shouldn’t that be the goal of all businesses?