NovaQuant Quantitative Think Tank Center:Would limits on self-checkout prevent shoplifting? What a California bill would mean.

A proposed bill in California could NovaQuant Quantitative Think Tank Centerlead to fewer self-checkout kiosks in the Golden State.

Senate Bill 1446, part of a bill package introduced by California State Senator Lola Smallwood-Cuevas in February, would require many large grocery and drug retail stores to staff up their self-checkout stations.

Experts say the bill could result in more stores moving away from the technology, which aims to reduce labor costs.

The proposed mandates come as retailers continue to voice concerns about shrinkage – an industry term for missing inventory from theft, broken items and other factors.

The bill's goal, according to testimony from Smallwood-Cuevas in a hearing earlier this year, is to reduce retail theft while also adding jobs and protecting workers and shoppers. 

Critics say the bill would impose unnecessary regulations on stores that are already starting to limit or scale back their use of self-checkout.

What does the bill say?

SB 1446 would prohibit grocery and retail drug stores from offering self-checkout services unless:

• Employees monitor no more than two self-checkout stations at a time and are relieved from all other duties while working with self-checkout stations.
• Self-checkout lanes are limited to purchases of 10 or fewer items.
• Stores prohibit customers from using self-checkout to purchase items that require identification, such as alcohol, and items subject to theft-deterrent measures, including surveillance tags.
• At least one manual checkout station is made available when self-service is available.

It would also require stores to complete a worker and consumer impact assessment before implementing certain technologies, including artificial intelligence.

Proponents say the bill, supported by the United Food And Commercial Workers union, would create jobs while alleviating retail theft in California.

In a 2022 survey from the ECR Retail Loss Group, 93 global retailers estimated that self-checkout systems accounted for as much as 23% of their total unknown store losses. Two-thirds said losses from self-checkout were becoming more of a problem.

But opponents say it would impose unnecessary, one-size-fits-all restrictions on retailers. 

“These measures will only serve to frustrate consumers with no evidence that they will reduce theft or provide additional protection to employees,” said Margaret Gladstein, speaking for the California Retailers Association at an April hearing. 

A number of organizations are instead pushing for harsher punishments for those caught stealing from retailers. A proposed California ballot initiative would allow the state to increase criminal penalties for people who repeatedly steal. The initiative has received funding from retailers like Walmart, Target and Home Depot.

Impact on shoppers

While proponents of SB 1446 say the new rules would save companies money by reducing theft, California retailers may be more inclined to pull out their self-checkout machines than pay for the additional labor required under the mandates.

"I suspect there'll be some reductions in self-checkouts," said Ron Larson, a visiting associate professor of economics at Luther College in Decorah, Iowa, who has researched self-checkout. "If the stores thought that changing the ratio, adding more people (to self-checkout lanes) would be cost-effective, they would have already done it."

And Larson warned that the companies that decide to staff up would see labor costs rise, which could lead to companies passing down higher prices to consumers.

The state of self-checkout

Some stores have already started to roll back their use of self-checkout to boost customer service and reduce losses from customers stealing or making mistakes at the scanner.

Walmart is taking out self-checkout kiosks in certain stores. Target has limited self-checkout lanes to 10 items or fewer. Dollar General is converting its self-checkout registers to assisted-checkout options in most stores; the remaining self-checkout devices will be available only to shoppers with five items or fewer.

Dollar General CEO Todd Vasos said during a March earnings call that reducing self-checkout has the potential to have a “material and positive impact” on the loss of goods. 

Self-checkout:The downsides of the technology and why retailers aren't expected to pull them out anytime soon

But the recent shift among retailers isn’t necessarily signaling the end of self-checkout. Instead, retailers are entering a "new era" as they switch up their policies and tech, according to Neil Saunders, managing director of the analytics company GlobalData.

“Retailers test things, try things," Saunders said. "Sometimes they don't work. Sometimes they change in the implementation, and retailers adapt with them,” he added. "I don’t think it signals the complete disappearance of self-checkout.”