The time required to resolve both the custom orders and big-ticket purchases actually took more time for customers than it would have taken to just go through the traditional checkout lanes. The lack of information workflow, process, pricing, and employee knowledge of the processes was evident by watching the series of transactions completed. The triage or problem solving of the store manager took an inordinate amount of time to troubleshoot the pricing discrepancies on the service contracts alone would have made it much simpler to have also gone through the traditional check-out lanes. The more complex the transaction the greater the need for Home Depot to have managers and senior sales people involved. It appeared that navigating the many exceptions to these processes was the most critical step the senior managers in the store had to contend with, in effect learning about gaps in the self-service checkout through trial-and-error of finding problems and correcting them. This triage was present on the most complex transactions that Home Depot associates pointed customers to self-service checkouts to complete. Conversely, the ability of the self-service checkout lanes also greatly expedited the sale of the more common packaged products that did not require exceptions to complete the transaction. The occasional question of how to use a payment method besides cash, the use of a gift card, and confusion of where change was provided were all questions customers had as they completed their transactions through the self-service checkout lanes. Despite these efficiency gains however for simpler transactions, the loss of customer goodwill as a result of the many apparent process and system disconnects that plague the self-service checkout lanes was not quantified as part of this study. Yet it was clearly apparent with the customer being charged 20% more than they expected for the water heater and its installation, and the many problems buying cut-to-order products including process goods like rolls of linoleum. The lack of pricing consistency caught on the linoleum also will make customers trust these systems less than in-person counterparts.

Balancing Automated and Personalized Service

The retailing strategy of higher-end stores that provide personalized assistance and service for higher-ticket items seems to be required for Home Depot as well. The legendary personalized service of Nordstrom's, a higher end department store headquartered in the Pacific Northwest, is a case in point. For those customers purchasing products over $300, for example, need to have a high level of personalized service to complete the transaction. Home Depot's front desk staff did this to an extent; yet did not completely finish the transaction, leaving the automated system to enter and charge for the order. Home Depot needs to intermediate their use of automated service for highly standardized transactions while providing personal assistance for the higher-end, more complex transactions. It would not be feasible for Home Depot to pursue a high service model as Nordstrom's does, yet it would be advisable to at least balance the cost reduction strategies that drove the use of self-service lanes in the first place with a focus on customer service.

Clearly it was not possible to measure customer satisfaction from those transactions that required little if any time to complete, mostly involving off-the-shelf products. From the transactions observed however there is a fair degree of frustration on the part of customers who don't like necessarily having to pay to replace a water heater in the first place, much less go through the frustration of being overcharged for it. The challenge for Home Depot is to work out selling and service strategies in their stores that allow customers the flexibility of how they want to buy. The self-service checkout at the builder desk, much less visible and much less rushed due to no lines, had less requests for assistance from staff. Possibly the customers using the self-service check out at this location in the store knew it was best for those items they needed to pick up quickly. In any case, the self-service checkout systems, designed to reduce the costs of operating the store while freeing up associates to better serve customers, didn't actually lead to a higher level of efficiency in checkout times. As the more complex transactions continually failed to deliver the right results through the self-service checkouts, customers wanting for the systems either would put down their merchandise and leave or go to the checkout lines staffed with people. It was very clear from this observation exercise that customers dislike waiting in line to check out quite a bit, as the stares and exasperated sighs showed. It was clear that that this reaction to the checkout delays for complex transactions further caused stress for those checking out. The impatient body language and stares just made these customers of customized products and a water heater all the angrier at Home Depot...

In short, the lack of integration of the self-service checkout lanes actually contributed to both the customers and the waiting lines more than the efficiency of these automated checkout systems.
Conclusion

Do-it-Yourself (DIY) retailers continue to invest in self-service checkout lanes despite their relative low use and evident frustration as seen in this research, due to the significant cost reductions possible even with low usage rates. According to Paula Rosenblum, Research Director at AMR Research, self-service checkout lanes cost on average $100K to $125K each to set up, including the software to capture the sales data (AMR Research 2003). Given this expense per lane, retailers look first for returns on this investment in the most expensive category they have, which are salaries. Retailers often move staff from standing at registers to training so they can be subject experts in aisles and provide service throughout aisles to increase shoppers' satisfaction. According to AMR Research (2003) Home Depot had targeted 30% of all transactions in 2003 through 760 store locations. AMR estimates that this amounted to 40 million transactions in the U.S. alone. The freeing up of personnel to better advice and serve customers through the aisles is considered a major competitive advantage by Home Depot. So highly thought of is self-service checkout that the CEO of Home Depot during the 2003 earnings call mentioned that this technique is responsible for significant strategy in managing to cut down on theft, as more personnel are in the store aisles assisting customers and discouraging shoplifting. On the upside, having more associates in the aisles also increases same store sales by encouraging up-sell and cross-sell of additional products. Altogether, the role of self-service checkout is to provide retailers with the opportunity to get higher levels of productivity from the sales associates by both providing personalized service, alleviating the potential of theft in the aisles, and most importantly, increasing the potential of up-sell and cross-sell opportunities as well. On a final note behavioral studies like the one completed by Cap Gemini (2003) showing that shoppers' main frustration is with waiting to check out of stores, and that self-service checkout lanes are specifically created to address that pain point of shoppers so they will return to the same store and chain.

References

AMR Research (2003) - Self-Checkout Systems -- Waiting for the 'Aha!' Moment. Wednesday April 9, 2003. Paula Rosenblum. Boston, MA

AMR Research-1 (2003) - the Aha Moment Arrives Wednesday April 9, 2003. Paula Rosenblum. Boston, MA

CapGemini (2003) - TRANSFORMING the SHOPPING EXPERIENCE THROUGH TECHNOLOGY, a Study in European Consumer Buying Behaviour. Accessed from the Internet on November 6, 2007 from location: http://www.no.capgemini.com/m/no/tl/pdf_Transforming_The_Shopping_Experience_Through_Technology__A_Study_in_European_Consumer_Buying_Behaviour_.pdf

Appendix a:

LEGEND:

Location:

1. Home Depot Self-Service Checkout at Builder Desk

2. Home Depot Self-Service Checkout by regular registers

Service Classification:

Technology Performed as expected and checkout completely automated

Technology performed some tasks; required the customer to re-do specific tasks

Technology worked only on clearly marked items; required operator assistance

Technology did not work and the customer left the self-service kiosk or location

Transaction Classification

Paid for using credit cards

Paid for using cash into the automated transaction system paid for with personal check paid for with gift card

Personal Support Needed?

SELF-SERVICE CHECKOUT LANES at HOME DEPOT date of observation

Location observation

Service Classification

Transaction Classification

Personal Support Needed?

Purchase of paints and brushes, and drop cloth

Purchase of plants and fertilizer; plants not marked and had to be scanned multiple times

Purchase of electric lawn weeding equipment; wrung up the wrong unit price and part number

Purchase of light bulbs and lighting equipment

Purchase of hot water heater after the customer service reps told the customer to use the automated line to pay for it; it never did take the scan card the service gave the person

Purchase of replacement filters for heating unit

Purchase of latches and items for cabinets

Purchase of storage shelving for a garage

Purchase of portable fan for drying paint

Purchase of Halloween Holiday Flag

Purchase of a step ladder and Halloween lights

Purchase of screaming and light-up welcome matt

Purchase of tree trimmer and weed whacker

Purchase of blinds for a home

Purchase of casters for furniture and…