MARKET ESTIMATES AND FORECASTS: TERMS
- Base Year/Forecast period:
- 2009 shipments (revenues, units and average factory selling prices)
- 2010-2014 forecast (revenues, units and average factory selling prices)
- Segmentation parameters:
- Geographic Region
- Americas: US, Canada and Latin America
- EMEA (Europe, Middle East & Africa)
- Vertical Market
- Department Stores, Mass Merchants, and Super Stores
- Drug Stores / Pharmacies
- Gasoline / Convenience Stores
- Grocery Store / Supermarket
- Specialty Store
- Distribution Channels
- Direct-to-End User
- Private Label Partner
- Two Tiered Distributor
- Value-Added Reseller (VAR)
- System Integrator (SI)
Self-checkout proves more resilient to the global recession than core POS technologies; Future prospects are bright
- Self-checkout solutions suppliers realized nearly $344.3 million in
revenue during calendar 2009.
- The market is expected to grow at 14.2% over the next five years to $668.1
million in 2014.
- Annual spending on most core retail automation product categories
contracted mightily in 2009, as retailers extended their refresh cycles in an
effort to maintain their already thin margins in the thick of the global
recession. Investments in retail automation will continue to be heavily
scrutinized in 2010/2011, and recovery for many core product categories will
- Self-checkout didn't fare as badly as many of the traditional retail
automation technologies on a global level. This is because self-checkout's
value proposition resonates with retailers and customers alike, enabling
scarce resources to be deployed more effectively while addressing a core
customer complaint: long waits at check out.
- The value propositions associated with self-checkout solutions, coupled
with the changing nature of the consumer, will appropriately position these
solutions as a center of convergence for a retailer's transaction
automation, branding and customer support over the next five years.
- The most successful self-service solution providers are focusing on a
multi-dimensional value proposition that begins with cost impact, carries
forward to customer experience and branding, and is supported by
increasingly quantitative impact assessments.
- Future expectations are especially encouraging. Accelerated adoption of
self-checkout solutions is expected in coming years, becoming increasingly
commonplace in grocery stores, supermarkets, mass merchandisers, specialty
retailers (hardware/DIY) as customer familiarity/acceptance grows.
Those suppliers that address barriers to adoption will grow faster than the market
- While growth for self-checkout solutions is outpacing other POS
technologies by a wide margin, adoption has yet to reach the levels originally
anticipated by suppliers. Significant barriers to adoption must be overcome,
and suppliers are addressing this requirement.
- High Price Points: The AFSP for a SCO solution in 2009 was
$17,272.6. At this price point, Tier 2 and Tier 3 retailers continue to have
difficulty justifying investment in this technology despite its proven value
propositions. This is changing with suppliers developing SCO systems that
address the low cost, small footprint demands of these smaller retail
- Product Shrink: Concerns over shrinkage (including intentional
theft and the failure to scan an item before bagging it) continue to plague
retailers. Shrinkage cost the industry more than $48 billion in 2009. Some
of the most prevalent shrinkage techniques used at self-check out include:
- Switching bar codes or using fake bar codes to reduce expenditures.
- Scanning inexpensive items and placing expensive items on the conveyor
- Intentionally using the wrong price look-up (for i.e. with perishable
- Placing smaller items within larger ones.
- Suppliers are addressing these concerns with new features and capabilities:
- Tunnel scanners, allowing customers to place items on a conveyor belt
where they are scanned at a high speed through the tunnel.
- Integrating weighing scales with advanced systems of checks and balances
to ensure product identification and pricing.
- By keeping the SCO system design highly flexible and modular, suppliers
are aiming to address the high price point barrier associated with
traditional self-checkout solutions. Retailers are now able to incorporate
as many features as they deem fit for their SCO solution at a justifiable
Technical and commercial requirements for self-checkout vary widely, driving the need for customization
- Self-checkout solutions are seen far more than platforms for transaction
processing. Retailers are using these devices to enforce their brand, enhance
customer loyalty and identify incremental revenue opportunities.
- In order to address customers' nuanced requirements, leading suppliers are
responding with direct sales models, treating each engagement as a stand-alone
project with high customization requirements.
- Instead of taking the “one size fits all” approach, suppliers
are building modular self-checkout solutions which can be customized to a very
large extent to meet retailer's requirements and specifications.
- Potentially disruptive technologies including: kiosks, interactive
displays and personal shopping systems are not seen as a threat by
self-checkouts suppliers. Instead, these retail automation technologies are
seen as complementary tools that can be deployed to meet application specific
Summary Observations & Expectations
Integration with other customer-facing systems is the key to unlocking information regarding retailers profitable customers, and their preferences
- While self-checkout's value proposition is compelling for the operational
efficiencies that can be delivered to retailers immediately, more value can be
derived from these systems as information regarding customers and their
preferences captured at the POS is linked with information captured by other
customer facing systems.
- As disparate customer-facing systems are linked, more data than ever will
be available regarding customer preferences, data that can be used to drive
incremental revenue and improve profit margins for retailers and their trading
- Who will assume responsibility for the design, aggregation and management
of this information, turning transaction-related data into information and
information into business intelligence? What role can/will suppliers of retail
- VDC argues that this is the end-game for suppliers of self-checkout
solutions and other customer-facing systems.
- While a short list of suppliers can provide world class self-checkout
solutions capable of improving operational efficiency, fewer still are
capable of harnessing information regarding customer preferences and putting
this information to work for retailers.
- Those who can will be uniquely positioned to serve as trusted advisors
to their retail customers, providing the benchmarks required to measure
performance and the best practices required to drive process improvement
- Herein lies a viable source of competitive differentiation for retail
automation suppliers. And incremental revenue. And more margin.
About the Team
Chris Rezendes, Executive Vice President.
Tom Wimmer, Director.
Richa Gupta, Analyst.
Table of Contents
I. Executive Summary
II. Scope & Methodology
III. Market Definition & Segmentation
IV. Market Estimates & Forecasts
V. Competitive Analysis
VI. Observations, Expectations and Recommendations