You know the drill: You’re at the store, ready to pay, and the shortest line is self-checkout, so you take your chances. You watch other customers fumble around, searching for the barcode on a pack of toilet paper, looking up the code for yellow onions (not white or red or green) or waiting for an employee to come over to approve a six-pack of Bud Light.
Self-checkout machines have been scaled widely at retailers like Walmart, Target and CVS on the premise that they help customers exit the store faster while freeing up employees for other tasks, or allowing the stores to cut back on human workers. The customer experience, however, hasn’t exactly been the picture of perfection.
“Everybody hates them,” said Abhinai Srivastava, CEO of Mashgin, who is trying to capitalize on the sometimes frustrating experience to peddle his own line of newfangled self-checkout machines. “The idea is right, but the implementation has not been that great.”
Mashgin, based in Palo Alto, California, has spent the last eight years leveraging advancements in technology to create a next-generation self-checkout machine that doesn’t require customers to scan items. Instead, the countertop system uses artificial intelligence to identify and ring up items automatically. That allows customers to check out in as little as 10 seconds – eight times faster than a regular self-checkout machine. “Most of that time is spent fishing for a credit card,” said Srivastava. The added efficiency means a retailer can purchase just one of its machines rather than two or three of the traditional kind.
The machines are gaining traction. Circle K is installing them in 7,000 of its stores over the next three years, the retailer told Forbes. This builds on its pilot program of using the technology in 500 Circle Ks. Mashgin has also installed its machines in hundreds of other locations, including convenience stores like ampm and Texas’ Delek, as well as airports, corporate cafeterias and stadiums such as Wrigley Field in Chicago and arenas like New York’s Madison Square Garden.
Mashgin says it has reached an accuracy rate of 99.9%, after processing some 40 million transactions at its kiosks. It has raised $75 million in funding from NEA, Matrix Partners and others, and was recently valued at $1.5 billion.
It’s part of a bid to get rid of checkout lines (and, presumably, many of the human cashiers that staff them), with so-called smart checkout technology expected to process roughly $400 billion in transactions by 2025, according to Juniper Research.
A throng of well-funded companies are tackling the problem in different ways. Amazon, along with startups like Standard Cognition, Grabango and Trigo, are trying to scale fully autonomous checkout technology that allows shoppers to pick up items and leave the store without waiting in any kind of checkout line. Instead, each movement is tracked by a combination of cameras, sensors and artificial intelligence, which can register each item a shopper leaves with and bill them later. All customers need to do is swipe a credit card or smartphone during their visit.
Another solution: Smart shopping carts. Amazon has its own version, called the Dash Cart, in its Amazon Fresh grocery stores, which scans items automatically when they’re added to the cart. Kroger has tested a smart grocery cart made by Caper (acquired by Instacart last year), while Albertson’s has tested another version made by Veeve. Shopic is also developing a smart device that’s affixed to regular grocery carts and registers items put in the cart.
Many retailers are exploring smart checkout technology in some way, but treading slowly, assessing what customers think of the changes and whether it’s worth the investment. Most providers of the technology say it leads to higher sales and bigger basket sizes, because customers can get in and out of the store faster and aren’t deterred by long lines. It can also help retailers identify out-of-stock items faster.
However, it can be difficult and expensive to deploy. Mashgin says its technology can be scaled faster than competitors, with set-up time as little as 15 minutes at a cost of $1,000 a month to run.
Circle K said it decided to install Mashgin’s technology in thousands of stores because of the success it had in its test markets, with 80% of customers reporting that this had become their preferred way to pay. It’s expected to drive more shoppers and help the company meet its stated goal of doubling its EBITDA, or earnings before interest, taxes, depreciation and amortization, in five years.
“It makes the most boring part of the transaction with us much, much faster,” said Magnus Tägtström, Circle K’s vice president of global innovation.
Circle K has experimented with a range of smart checkout technologies, including from competitors like Standard Cognition and Grabango, and said those tests are ongoing. However, they are also far more limited than the Mashgin tests. For instance, Circle K is running Standard Cognition’s tech in just two of its stores in Phoenix. Grabango is up and running in six Circle K stores.
Mashgin has made several updates to its machines to get them store-ready, like giving customers the ability to pay in cash, use a loyalty card and take advantage of frequently changing promotions. Customers still have to request help from an employee to purchase alcohol or cigarettes.
The company plans to continue to focus on convenience stores, airports and entertainment venues in the coming years, where it sees plenty of demand, but said its technology may eventually make it into grocery stores or big-box retailers. There’s no reason it couldn’t be installed over a conveyer belt in order to ring up a cart full of items, Srivastava said, so it can save shoppers the trouble of entering the code for yellow onions and not red, white or green.