Retail Smart Check-Out Solutions Explained

By: Tayla Carpenter - Guest Contributor on October 30, 2023
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For retail CIOs to keep pace with the shift toward AI in the shopping space, it’s important to understand the current use and potential of smart check-out solutions. By leveraging smart check-out systems, retailers make it easier for customers to make purchases and save time in the process. Smart check-out also frees up employees to focus on other value-adding tasks, such as answering customer questions, restocking shelves, and other ways to support the sales process.

A failure to keep up with this trend or to implement smart check-out solutions can result in outdated sales processes, frustrated customers, and inefficient use of your human workforce. In this article, we dive into what smart check-out solutions are and examine their most compelling benefits, their key components, and how to prepare your business for a smart check-out implementation.

What are smart check-out technology solutions?

Smart check-out systems combine computer vision, sensors, and AI to enable customers to complete purchases without having to go through a check-out lane. [1] A smart check-out solution accomplishes this by identifying the customer, tracking the products they choose and put back, automatically adding up their total, and applying any applicable discounts or loyalty rewards.

To pay, the customer can use a digital wallet or a physical point of sale (POS) system as they leave.

For retail small-to-midsize business (SMB) owners, taking advantage of smart check-out technology can give customers a far more convenient shopping experience, making it more likely for them to return to your store.

An example

To illustrate, imagine going to a traditional grocery store the day before a holiday. You need the ingredients for a salad, a main dish, and a dessert. While you know you can grab what you need in about 10 minutes, you have to factor in another 15 minutes—or longer—to wait in the check-out line. That’s option one.

Now, picture option two: a store with smart check-out. You walk in and scan a card as you enter. Then, you grab what you need and walk out. Your account automatically gets charged for the items in your bag. Which store would you choose?

In addition to attracting more customers, smart check-out solutions solve some other challenging business problems. You can make better use of your human resources by having employees available to address customer needs and make sure shelves are well-stocked and presentable.

You can also better engage with customers, offering them discounts and specials based on their buying habits. Your smart check-out app collects all the data you need, and you can use AI to design everything from special offers to advertisements that appear on customers’ screens. But let’s take a deeper look at the benefits of smart check-out.

What are the benefits of smart check-out solutions?

With smart check-out implementation, businesses can streamline multiple functions, including those that involve interacting with customers and those that impact operations behind the scenes.

Intelligent customer insights

Smart check-out systems double as data collection mechanisms, enabling you to harvest and analyze data regarding many facets of customer behavior.

For instance, you gain insights into:

  • What customers buy

  • When shoppers tend to make certain kinds of purchases, even down to the time of day

  • How long customers spend in your store

  • The amount of time it takes for shoppers to choose items they want

  • How often customers pick an item and put it back

  • The different combinations of items shoppers typically purchase together

You can also correlate this data with other information as you formulate a business intelligence strategy. For example, suppose you, as well as the retailer or storekeeper, want to see how price increases impact purchasing behavior. The team hypothesizes that a price increase of 10% on organic chocolate milk would reduce its sales volume by about 8%. But using the data from your smart check-out system, you notice something interesting. A 10% price increase did indeed result in about 8% lower sales volume for that kind of chocolate milk, but there’s more. Customers who purchased it anyway ended up spending less on their total purchase for that visit when compared to the last time they bought the item.

There are thousands of ways to leverage the customer insights you glean from a smart check-out system. In some cases, the resulting revenue benefits may significantly reduce your system’s net cost of ownership (NCO), i.e., how much it costs to own and operate a solution.

Merchandising and assortment intelligence

Should you position Nike’s newest basketball sneaker closer to the entryway or next to the gym shorts section? Is it best to organize eyeshadow according to shade or brand? Should shampoos and conditioners be put side-by-side in pairs or get their own sections?

Using a smart check-out system, you can try different merchandising strategies, see how they impact buying behavior, and then make adjustments.

Since one of the primary draws of smart check-out is the speed at which shoppers can make purchases, you could also analyze how merchandising impacts time spent shopping. If your highest-grossing customers also have the lowest time-to-dollar spent ratio, facilitating speed may be the best move.

Also, you can use data regarding where shoppers go in your store to inform your assortment decisions. For example, in a convenience store, it may make sense to keep premade sandwiches next to refrigerated beverages and fruit. During the lunchtime rush, you make it easier for customers to grab all they need from your shelves and jet back to the office.

At the same time, your data may reveal something else. Either way, a smart check-out solution enables deeper, profit-supporting decisions.

Improved inventory management

What’s the correlation between how long a vegetable sits on the shelf and the chances of a customer purchasing it? Can you use this data to adjust the price to improve liquidity? Do customers spend less time picking out produce when it’s all fresh? How does this impact sales volume?

You can answer these and similar questions using the data from a smart check-out system. Armed with these kinds of insights, you can optimize:

  • When you purchase certain items.

  • The amount of atmospherically unique storage your store needs, such as low humidity or refrigeration.

  • Your supply chain strategy, choosing less expensive vendors when possible.

  • Your approach to warehousing, using less space by making adjustments to when you purchase inventory to align with customer buying habits.

You also have the option of taking advantage of a smart check-out system’s real-time insights. For instance, you can predict exactly when an item is about to run out on the shelf. Instead of having your customer support staff randomly roam the aisles looking for gaps in the shelves, they can get an alert and refill items as needed. This gives them more time to support customers who may need assistance.

What are the key components of smart check-out solutions?

Smart check-out solutions involve a technology stack with several components, all of which work together to automate key elements of the purchasing process.

  • Artificial intelligence (AI). AI plays a central role in powering computer vision and analyzing customer data. AI uses pattern recognition to ascertain when customers are picking up and replacing items, where they’re moving through the store, and verifying that individual items are paid for.

  • Machine learning (ML). Machine learning facilitates product recognition, scanning barcodes, and authorizing payments. In addition, machine learning plays a role in making recommendations to customers.

  • Payment. The payment system in a smart check-out solution uses item recognition to form a virtual shopping cart. It then calculates the total, presents payment options, and authorizes the payment once the customer makes the purchase.

  • Computer vision. With computer vision, a smart check-out solution captures images of products, detects their presence and movement, scans barcodes, and tracks their quantities. Computer vision serves as the “eyes” of the system, verifying product location and watching it move through the buying process.

  • Sensor fusion. Sensor fusion involves combining the data from multiple sensors to ensure an accurate, secure shopping experience. For instance, a system may use data from RFID readers, cameras, and scales to make sure an item is what the system says it is.

Prepare your business for implementing smart check-out technology

Like all tech implementations, smart check-out involves some important considerations, especially when it comes to making sure your system is competitive and supports your higher-level goals.

  • Assess your store’s current performance and set goals you’d like to achieve with a smart check-out implementation. It’s also best to start off by using this tech to support what’s already working in your store instead of revamping everything out of the gate.

  • Consider hybrid alternatives. It may take time to onboard enough smart check-out-only customers. By offering hybrid solutions, including traditional check-out and self-check-out, you can build a smoother, more gradual runway.

  • Make a human resources plan. You’ll want to reallocate and retain your cashier associates, using them for other important tasks. Smart check-out shouldn’t be used primarily as a downsizing tool. Rather, you should dig into ways to help your current staff better support sales.

Next steps

When used as described above, a smart check-out system creates more convenient experiences for shoppers, enables deep buyer insights, and frees up your cashiers to invest their efforts in other tasks. By preparing your business for smart check-outs, you increase the chances of a smooth rollout that everyone—especially customers—can get behind.

Your next step is to explore different retail management and POS solutions and start thinking about how you can interweave these with a smart check-out system. These resources may be valuable: