U.S. grocers weigh pros and cons of scan-and-go technology

Last September, Wegmans announced it would no longer allow customers to use smartphones to scan and pay for items in its stores, sparking an uproar on social media as many shoppers expressed disappointment over the sudden decision, which stripped them of the convenience of scan-and-go shopping.

The East Coast supermarket chain blamed unspecified "losses" caused by the service, which it launched in 2019, for the abrupt halt. Previously, Wegmans had touted the service as empowering customers to "shop on their own terms." Wegmans hinted the service could return in the future if it could "make improvements that satisfy both customers and business needs," but offered no further details.

Yet even as Wegmans deemed it too costly to let customers glide through its stores with self-checkout technology, numerous other grocers, including Meijer, Hy-Vee, Giant Food, Kowalski's Markets, and Walmart, continue to offer scan-and-go options for shoppers who want to bypass traditional checkout lanes. Additionally, according to industry officials, other food retailers operating in the U.S. are in talks with suppliers about adopting the technology in the future.

Randy Crimmins, chief strategy officer at Stor.ai, said one reason shoppers are interested is that many are already accustomed to using their phones to buy groceries online and search for product information, making in-store shopping via phone a natural next step. Stor.ai provides digital engagement technology for regional retailers.

Crimmins added that Stor.ai also views convenience-focused solutions like scan-and-go as a way for smaller retailers to stand out when competing against larger rivals.

"The consumer market today is extremely fragmented, and you have to make sure you're offering every possible service to attract customers, not just to grow your customer base but also to retain existing ones, because everyone is vying for their attention," Crimmins said. "The key is not just expanding your customer base but also solidifying your retention base, because competition is everywhere."

Crimmins' company, previously known as Relationshop, adopted the Stor.ai name after acquiring the Israeli e-commerce company a few weeks ago. The company has been developing a scan-and-go system over the past year and is currently testing the technology with an unidentified retailer. Crimmins said Stor.ai plans to officially deploy the system later this year and views scan-and-go technology as a way to reach more customers by providing them with customized nutritional and other product information.

Nico Müller, chief commercial officer at Austrian-based scan-and-go technology provider Shopreme, said his company has also seen interest from U.S. retailers in the service. Müller said Shopreme has held talks with a "large international retailer" with a significant U.S. presence about rolling out its system.

Shopreme has offered scan-and-go systems since 2016, and the technology is currently in use at around 1,000 stores across Europe. Shopreme's clients include German supermarket chains Rewe and Penny. Rewe began using its scan-and-go system last year, while Penny adopted the technology in 2021.

---

"There are other more interesting parts of the experience to focus on, but loss prevention is certainly a major topic, and it's always the first question asked when discussing mobile scan-and-go with retailers."

Nico Müller

Chief Commercial Officer at Shopreme

---

Mining shopping patterns to curb shrink

Even as Shopreme and Stor.ai pitch the benefits of scan-and-go to retailers, they are also keeping a close eye on the technology's downsides.

Müller said the inherent risk of scan-and-go is that customers may accidentally or intentionally fail to scan items, but Shopreme's system is designed to reduce shrink risk by analyzing shopping patterns to identify customers who should be intercepted for audits.

According to Müller, the system looks at factors including whether a customer has used scan-and-go at a particular retailer, their shopping history, and the items they are currently purchasing. The system aims to keep the number of spot checks to a minimum to avoid unnecessarily bothering consumers.

"There are other more interesting parts of the experience to focus on, but loss prevention is certainly a major topic, and it's always the first question asked when discussing mobile scan-and-go with retailers," Müller said. "We have an engine specifically designed to assess which customers to select for audits while avoiding causing hassle, because we obviously want to provide a smooth experience."

Müller said Shopreme's experience working with European retailers proves that retailers can find a balance between deterring theft and offering customers the convenience of bypassing checkout counters. "If they saw huge losses, they wouldn't do it," he said.

Crimmins said Stor.ai is also focused on developing methods to limit spot checks to those most likely to pose a theft risk, so as not to inconvenience scan-and-go customers. He said the company's approach to reducing shrink revolves around a core idea: retailers initially offer the service only to known in-store regulars, then gradually open it up to more people based on the retailer's risk tolerance.

This approach is similar to how Walmart handles its scan-and-go program. The retailer requires customers to sign up for its Walmart+ membership plan ($12.95 per month or $98 per year) to use the service.

"Most of the feedback we've gotten from testing and from other retailers with scan-and-go apps is that the benefits of scan-and-go outweigh the fraud risk or the actual amount of losses," Crimmins said.

Instacart offers scan-and-go as part of its Connected Stores technology suite for retailers. David McIntosh, vice president in charge of the program, said Instacart is also focused on developing strategies to minimize shrink without undermining the speed and convenience that scan-and-go is built on.

The Connected Stores suite also includes Instacart's next-generation Caper smart carts, electronic shelf labels called Carrot Tags, out-of-stock alert technology, a feature that provides customers with shopping lists, and the FoodStorm system, which allows consumers to order deli items through in-store kiosks.

Instacart's scan-and-go technology, called Scan & Pay, uses software that can identify customers who should be stopped for audits based on factors such as how they shop, how quickly they scan, and whether they are known to the retailer. McIntosh revealed this information in an interview in September, when Instacart unveiled its Connected Stores initiative. McIntosh also said Instacart's scan-and-go offering includes equipping store employees with tablets so they can monitor customers' behavior as they move through the store.

Trust is the core issue

Neil Stern, CEO of West Coast supermarket chain Good Food Holdings, said that while checking some customers' orders may help prevent shoppers from leaving with unpaid items, making customers scan their items again could be seen as intrusive. Good Food Holdings is the first chain to sign on to bring Instacart's Connected Stores program to its supermarkets.

Stern said Good Food Holdings has not yet committed to adding scan-and-go to its stores piloting other technologies.

"We don't have scan-and-go, and we have no plans to try the technology in our stores in the near term," Stern said. His company operates dozens of supermarkets under brands including Metropolitan Market, Lazy Acres, New Seasons Market, and Bristol Farms. "That doesn't mean I'm negative about it, it's just not in my 2023 IT plans."

Stern said his caution about scan-and-go stems partly from the audit component built into the concept. "It somewhat undermines the customer experience you're trying to offer," he said. "It either takes time or implies 'I don't trust you,' and neither of those messages is what you want to convey if you're using this product."

Gary Hawkins, founder and CEO of the Center for Advancing Retail & Technology, said it remains unclear whether customer demand for scan-and-go is sufficient to justify its cost. "This technology was developed because technology made it possible, not because there was huge customer demand," he said.

Hawkins added that he views scan-and-go technology as a stepping stone toward frictionless checkout solutions that use AI-driven cameras to automatically identify and record items as people take them off shelves. Although only Amazon has deployed this type of technology, known as computer vision, in large supermarkets, Hawkins expects more retailers to adopt it in the future as they seek to enhance convenience without the risk of customers not paying.

"I think the whole field will eventually move in this direction because it transforms the shopping experience and brings multiple benefits to retailers," Hawkins said.

However, Müller said he doesn't see computer vision technology replacing scan-and-go anytime soon, given the high costs and complexity of installing cameras and other equipment.

"For retailers, deploying a computer vision-based checkout system requires a huge investment," Müller said. "We believe that mobile scan-and-go, if done well, is an excellent technology today, and I think it will remain so for quite some time."