IBM Acquires PSI
Self-checkout for retail stores is heating up; technology can allow redeployment of clerks as service reps and upselling agents
IBM has acquired Productivity Solutions Inc. (PSI) for an undisclosed sum, making it a bigger player in the self-checkout marketplace. IBM was previously a PSI partner, helping the company market its functionality to various supermarkets, and made some of the components in PSI hardware.
Self-checkout is already familiar to many supermarket and retail shoppers. The proposition is much the same as kiosk-based self service at airports: reducing waiting times for consumers while also reducing the costs of human service.
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Retail service and self-service are timely topics given a strike involving 70,000 grocery clerks and workers in California. Self-checkout won't be replacing workers anytime soon, says industry analyst Greg Buzek of IHL Consulting Group, but the technology could definitely change the face of retail. "At retail checkout, no one asks 'Do you want fries with that?'" Buzek says. "The cashier is part of the cost of getting the customer out the door."
A study Buzek did last year revealed that stores that had self-service saw 35 percent of total volume flow through that channel. That means freeing up checkout clerks to do something more value-added. "You have labor at the checkout line redeployed in the store to upsell or increase the market basket size," says Buzek. He adds that stores like Kroger, Publix, A&P, and Winn-Dixie are using this strategy, ultimately with an eye on retail giant Wal-Mart. Buzek believes that, for now, getting into a price war with Wal-Mart is unwinnable (as in the case of K-Mart), but stores like Target and Walgreens are having success by upping their service levels to a specific demographic.
Greg Thompson, a spokesman on retail issues for IBM, says that IBM decided to acquire PSI because "self-checkout has really caught on." Like Buzek, Thompson believes that self-checkout may in some cases simply replace clerks (depending on a specific retailer's strategy) but in all cases has the potential to transform what goes on inside the store. "The technology can free up people for customer service," he says, by way of example. "The trend we're seeing is retailers looking to provide more personalized service, especially to their best customers."
Posted by Craig at November 20, 2003 06:20 PM