How Technology is Impacting on the Business world: Grocery Shopping Industry

My topic is about The industry should be convenient stores/ grocery stores. Main points -Increased numbers of self check out -More gluten free/ vegan options & -Curbside pick up
It should be single spaced, 4 pages including headers

Executive Summary

The grocery shopping industry has widely embraced the use of information technology (IT). Several stores within the sector have implemented various types of technological systems to improve their services, convenience, and reduce the cost of operations in order to increase profits. One of the technologies is self-scan and checkout, such as fixed SCO, Scan and Go, and Mobile Scan and Go, which supports customers’ self-service. Although the systems improve convenience and speed up customer service, they have various drawbacks. The research compares the rate of shrinkage losses in stores with and without the technology. Notably, the reults indicate that those  that have employed the technologies experience more losses than those using traditional checkout systems. Therefore, stores management and other stakeholders should understand the source of the losses, such as non-scans, and implement relevant changes.

How Technology is Impacting on the Business world: Grocery Shopping Industry

Technology is increasingly changing the way companies interact with their customers and the ultimate experience of the same. One of the leading changes in the IT affecting grocery stores is the use of self-scan and checkout systems (SCO), such as fixed SCO, Scan and Go, and Mobile Scan and Go. Although SCOs are created to improve customer experience and reduce the cost for store owners, they have a limitation that implementers should consider. The current project explores the risks associated with the use of the inventions in the grocery shopping industry to help participants at Young Business Leader’s Conference to understand the risks associated with SCO and propose some practical ways of addressing the issues. The background includes the definition of key terms. The results section indicates the significant risks involved in the use of SCOs. The discussion consists of the impact of the risks and potential solutions, while the conclusion reveals the current state of the technology and the forecast for future use. 

Background

The definition of the following key terms:

• Grocery Shopping Industry: The sector consists of retail food channels, including sellers of edible products, such as canned and frozen foods, poultry and seafood, fresh and prepared meats, dairy products, and fruits and vegetables. The sector also includes convenience stores that boost customer experience to meet their shopping needs.
• Self-scan and checkout technology (SCO): SCOs are systems designed to provide a new experience in self-service in convenience stores, supermarkets, and grocery stores, among other similar retail outlets. They are meant to increase customer convenience, as well as optimize and speed-up in-store operations. The technologies are a strategy to create completely automated stores and ensure stock optimization.
• Fixed SCO- the technology involves a designated machine within the convenience store that consumers scan their products.
• Scan and Go- a system in which the retailer provides consumers with a scan gun to scan their products.
• Mobile Scan and Go- the technology involves the use of consumers’ mobile devices to scan products at the stores.
• Convenient Shopping- this refers to shopping in the grocery industry where customers buy at their comfort, such as through technology-supported mechanism. SCOS is one of the ways of boosting sales in the retail sector.

Results

The study focused on determining the impact of Fixed SCOs since they are commonly used in various stores today. The technology aims at improving customer experience and reducing operations costs. The study involved interviews with stakeholders in the store and a review of their records in generating data to test the hypothesis. Results from 13 retail companies were obtained for use in comparison and computation of information. When the data were compared, based on dates when the stores had Fixed SCO and did not have the system, the results revealed high losses in days before the implementation of the technology. Some of the case studies indicated losses between 33% to 147% in stores with the technology (An 4). Indeed, the systems had a seemingly negative impact on revenues.

In another case study, data focused on the difference between stores with the technology, but without the system to check weight. The research established that in establishments without a weight system, 147% higher losses were recorded compared to those stores that did not use any SCO system (An 4). According to the data, the more transactions were processed using SCO, the higher the losses. For example, in settings where 55-60% of their dealings passed through systems, the stores registered more losses, by 31%, than in less automated stores (An 4). Another data source compared the level of losses in terms of the number of SCO machines that the stores used. The results indicated that settings with a higher number of devices also reported more significant loss compared to those with few or no machines. Stores with an average number of technological tools were expected to post higher losses, by 31%, compared to those with the industry average (An 4). Stores using more than the average number of machines could experience upto 60% in losses (An 4). Technology implementation improved customer experience, but it also led to significant losses.

The study also used video analysis and technology monitoring to establish the possible sources of losses posted by stores with SCO technology. The data revealed that failure to scan at Fixed SCO machines was the leading cause of the losses. The failure accounted for 0.44% of SCO sales, which accounted for 9.5% of all the entire losses recorded in the store (An 4). Non-scanning behaviors alone (excluding walk-aways and mis-scanning) are the leading causes of the losses experienced by various stores. The results of the study discount any previous hypothesis that the use of technology does not add to the level of loss experienced by companies operating in the grocery shopping industry. The SCO-related losses are significant, especially given the amount of revenue the industry forfeits. The data estimates that for every 1% of SCO use, a retailer should assume a shrinkage loss increase by at least 1 Basis point (An 4). The loss does not account for other types that the retailer could experience concurrently, such as lost margin and lost profits caused by out-of-stock situations

Discussion/ Impact

Retailers are always concerned when sharing information about losses in their businesses. Regardless, available data indicates that one of the unintended consequences of the use of SCOs is the opportunity for crime, especially committed by people coming into the stores to shop. The technologies provide grounds for a crime, which leads to shrinkage losses for the involved stores (Beck 407; Beck and Hopkins 1080). The study indicates that the rate of the loss in companies using the technology is higher than in those that have not adopted the technology. While managers could know about the loss, they mostly fail to understand its sources. Leaders are more focused on the convenience and the cost-saving advantage of the SCOs and forget about the risk of crime, which is also equally expensive (McWilliams et al. 79). The findings of the study not only provide evidence of the risk, but also indicates the possible source, which is non-scan. 

Besides investing in the systems, a company could suffer considerable losses if they continue using the SCOs without fixing the major cause of the risk, non-scan. Technologies are significant investments for companies in all sectors; hence, stakeholders support them to benefit from convenience and to reduce operational costs (Taylor 160). For example, SCOs are recommended in convenience stores since they reduce the cost of hiring and training customer care staff. However, the investment is counterproductive in the end due to the shrinkage losses. Therefore, stores operating in the grocery shopping industry should understand the risk of employing automated systems and find ways of countering the possible losses (Andriulo et al. 207). Indeed, the pressure of implementing the systems to remain relevant or beat the competition in the market can be detrimental in the end if adequate securities to protect the business against losses are not imposed.

Retailers have the opportunity to learn from companies that have succeeded in the use of SCOs to improve their customer service and reduce the cost of employees. Toshiba, Zebra Technologies, and Profitect are some of the leaders in SCO implementation and have succeeded in avoiding losses associated with the systems as the companies have implemented systems that can mitigate losses (Labruno para 2). The technologies are necessary for improving convenience and speeding customer service; thus, their users could benefit from innovation that will help them to manage shrinkage losses (Taylor 553). Therefore, before implementation, stakeholders should always take time to understand the technologies and their impact on their businesses before moving forward. The parties should also invest in the most up-to-date technologies, such as those with the potential to track transactions, to avoid shrinkage losses, and ensure they remain profitable. Besides, if the losses persist, even after using the most effective technology, they should re-evaluate the systems to make relevant changes.

Conclusion

The grocery retail industry has witnessed an increase in the use of various technologies to make stores more convenient, reduce operational costs, and improve customer experience. As a result, more stakeholders are implementing new technologies every day. One of the main changes is the use of self-scan and checkout technology (SCO), which improve self-service. With technology, companies are reducing the cost of staff and speeding up customer services as the clients simply scan their items as they leave. Regardless of the perceived benefits of the self-scan and checkout technologies, they have limitations that stakeholders should address. Specifically, intentional and non-intentional non-scan by consumers is the leading cause of shrinkage losses in retail shops. The comparison between stores with and without the technology established higher rates of losses in those with the SCOs than in those without.

The significant difference in losses between stores with SCOs and those without indicates the need for retail businesses and their stakeholders, to rebalance their assessment of the perceived benefits that could be obtained from the technologies. They should reconsider their cost-benefit analysis and develop strategic approaches to prevent further losses. The recalculation should consider the negative impact of technology and find new ways of improving their service-provision without the risk of losses. The executive also should garner support from senior management in the assessments and the attempt to re-strategize. Notably, the changes are not only necessary to eliminate the losses, but also to remain profitable in the highly competitive retail market. If stores in the industry continue making uncontrolled losses, they risk losing their market to competitors. Therefore, the industry increasingly invest in research for the available foolproof technologies in order to mitigate the risk of shrinkage loss. Generally, stakeholders should analyze the challenges, invest in training, resources, and systems that will help them to increase profitability and competitiveness.

Works Cited

An, E. C. R. “Self-checkout in Retail: Measuring the Loss.” An ECR Research Paper, 2018.

Andriulo, Serena, Valerio Elia, and Maria Grazia Gnoni. “Mobile Self-Checkout Systems in the FMCG Retail Sector: A Comparison Analysis.” IJ RF Technol.: Res. and Appl. vol. 6, no.4, 2015, pp. 207-224.

Beck, Adrian, and Matt Hopkins. “Scan and Rob! Convenience Shopping, Crime Opportunity and Corporate Social Responsibility in a Mobile world.” Security Journal vol. 30, no.4, 2017, pp. 1080-1096.

Beck, Adrian. “Reconceptualising Loss in Retailing: Calling Time on ‘Shrinkage’.” The International Review of Retail, Distribution and Consumer Research vol. 27, no.4, 2017, pp. 407-423.

Labruno, Lisa. How to Measure and Manage Losses from Self-Checkout Tech, Retail Industry Leaders Association, 2019

McWilliams, Alexis, Ismet Anitsal, and M. Meral Anitsal. “Customer Versus Employee Perceptions: A Review of Self-Service Technology Options as Illustrated in Self-Checkouts in US Retail Industry.” Academy of Marketing Studies Journal vol. 20, no.1, 2016, pp. 79-82.

Taylor, Emmeline. “Mobile Payment Technologies in Retail: A Review of Potential Benefits and Risks.” International Journal of Retail & Distribution Management vol., 44, no. 2, 2016, pp. 159-177.

Taylor, Emmeline. “Supermarket Self-Checkouts and Retail Theft: The Curious Case of the Swipers.” Criminology & Criminal Justice vol. 16, no.5, 2016, pp. 552-567.