The End of the Cashier? Israeli Retailers Finally Adopt Self-service Checkout

Slow to take on the technology, some still not sure it can replace humans

File photo: A shopper in Super-Sol.
Rami Shllush

Could the Israeli cashier be going the way of the dinosaur?

More than a few people would be glad for anything that would put an end to long lines filled with short-tempered shoppers running off to put one more item in their overloaded carts.

Israeli retailers have learned that long lines take a toll on sales. But not all of them are convinced the technology has been perfected, or they aren’t sure that taking away the human element of shopping is for the better.

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Besides the obvious alternative of online shopping — which Israelis have begun using in large numbers in the last few years — the major alternative at bricks-and-mortar stores is automated checkout. Cashier-less stores using sensors and cameras to record purchases as shoppers make them are on the horizon and Israeli startups have been at the forefront of developments.

But even Amazon’s Go chain of stores, a pioneer in the technology, numbers only nine locations.

Self-checkout isn’t cutting-edge technology (the first systems were introduced in 1992) and are widespread. According to a 2017 study, there were 191,000 automated checkouts around the world in 2013, a number that was expected to grow to 325,000 by the end of this year.

Israel has been a laggard in adopting automated checkout. Super-Sol, the country’s largest supermarket chain, first installed them in 2010. Today, said CEO Itzik Abercohen, about 40% of sales are no longer done by human cashiers. Of those, two-thirds are by self-checkout and the rest online.

But most Israeli retailers only began self-checkout in the last two years and mostly at big chains. At Ikea Israel, the first systems were installed 18 months ago and now 87 of 160 checkout stations around the country are automated. Super-Pharm, Israel’s biggest pharmacy chain, installed its first systems at the end of 2017, but more than a year later, they exist in just six of 240 stores.

Rami Levy, the founder and CEO of the eponymous discount supermarket chain, is ambivalent about automated checkout. He only began installing systems at the chain’s 45 stores a year ago, and today they account for about a fifth of checkouts. Levy said they are popular with people purchasing a limited number of items.

“Not every customer knows how to use these checkouts and they make a lot of mistakes,” Levy said. “There’s also the important personal element. When you go to a regular checkout, there’s a cashier you can talk to and ask questions. There’s a good feeling talking to the cashier who knows how to help you — and that influences your next shopping trip.”

Levy said the only reason he has installed so may automatic checkouts is because of the labor shortage.

Despite the slow rollout at Super-Pharm, Yossi Cohen, its vice president for organization and information systems, said the chain is enthusiastic about self-checkout. Executives have been studying the matter for some time and even experimented a decade ago with a smart cart with a computer terminal onboard to scan purchases.

“The concept was amazing, but apparently then it wasn’t quite ready,” he said. Instead, Super-Pharm opened its first self-service checkout six months ago at a busy outlet in Ramat Gan’s Ayalon Mall.

“The response was amazing. This is a branch full of lines, and we saw how it shortened them. Today, four of the six checkouts in the store are self-service,” Cohen said.

The early experiment with a smart shopping cart required too much time instructing customers how to use it. “But today most customers are experienced in using gadgets and they learn quickly. Even 80-year-olds use smartphones. The fear of technology is past us,” he said.

Automated checkout also faces problems of theft and erroneous bills. Even though most systems have technology to prevent theft, the rate remains very high.

According to Malay Kundu, founder and CEO of the U.S. company StopLift Checkout Vision Systems, the rate of theft from an automated checkout is five times human checkouts.

The most frequent method is to change barcodes on products to ones with lower prices or simply not to scan one or two items on a list. Customers who are caught can always say it was a mistake or an error on the part of the device, he said.

But Israeli retailers say theft is not terribly widespread. “It’s very a marginal phenomenon,” said Super-Pharm’s Cohen. “We don’t blow it out of proportion, and don’t let it dictate our strategy. As time goes on, we’ll learn to cope with it.”

And what about the cashiers themselves? Between automated checkout, the growth of online shopping and the emergence of cashier-less stores, the future of the job category looks endangered. That would help the bottom lines of retailers, but eliminate a large number of jobs for low-skilled workers. Israeli retailers say the day when cashiers are no longer employed is a long way away, and may never come at all.

”We won’t reach a situation in which 100% of checkouts are automatic,” said one executive at a major Israeli retailer who asked not to be identified. “You’ll always need human employees, either because customers are looking for personal contact or someone needs to supervise the automated checkout. Someone has to be there when they make mistakes.”

Prof. Yuval Elbashan, dean of the law faculty at Ono Academic College, is not so sure.

Elbashan is famous for leading the legal battle a decade ago winning the right for cashiers to sit down while they work. Initially at stories where automation has already occurred, machines often lead to an increase in staffing because the retailer continues offering personal service as usual but also needs employees to guide shoppers through the new-fangled system, he explained.

“But in every retail sector that has automated, after a running-in period, there’s a 50% reduction of personal service,” said Elbashan. He said that transition period typically runs two years, or a bit longer, before staff is cut dramatically.