By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.
The FT on Friday brings us news from the frontline of the war on cash in the UK, Checking out the UK’s first till-free grocery store:
This week, Sainsbury’s opened what it billed as the UK’s first till-free grocery store. This doesn’t just claim to be cashless, but cardless. After downloading a bright orange app on their smartphones, shoppers scan their own groceries as they walk around, then touch to activate Google or Apple Pay — and simply walk out.
Okay, before getting to some of the problems that may afflict those who choose to use this latest innovation let me address a threshold issue.
What about those who don’t want to download a store’s app to make a couple of purchases?
Ditto those 8 million Britons who the FT notes would struggle in a cashless society – and who tend to skew older, and poorer.
Does Sainsbury’s still want their pounds and pence?
The answer, for the moment is yes – even at this flagship store. The FT relates how after a customer failed to satisfy the conditions necessary to go cashless – being a member of the Sainsbury’s loyalty program and downloading the app – a customer asked whether she could still get groceries at this store:
She was reassured that she could still pay the conventional way — the second member of staff stood behind a low-key counter in the corner where it is still possible to pay by cash or card. There was a queue of five people. Seeing this, another woman who was trying to buy a muffin and a banana put her shopping back and walked out. This is clearly not the bright orange future that Sainsbury’s envisaged.
Which makes me wonder: what is the point?
Of course, I know what the point is. It’s to convince people there is no alternative and to embrace the brave digital future. Which in turn would allow Sainsbury’s to replace paid staff with unpaid customer effort, as well as do deep and thorough data mining of anyone who chooses to use this “service”.
Flaws for Those Willing to Take a Flutter
Let me now turn to a couple of problems with this system for those who either choose to embrace this brave new digital world – or cannot be bothered to resist it.
First, we all know how well these automated systems work in reality. The digital scales that do not register. The conventional self check-out till that doesn’t work – even leaving aside the app issue.
These systems are far from foolproof – and they do fail. In the face of a failure in a self-scan checkout, coupled with insufficient sales staff to assist, does the customer just think to him/herself “screw them” and make off with his/her (nickel and dime) illicit booty?
The Guardian covered this issue in an article from a year ago, Nation of shoplifters: the rise of supermarket self-checkout scams:
A couple of Tuesdays ago, after a difficult day at work, a thing that happens to me more often than I’d usually care to admit happened once again. At a supermarket self-checkout machine a frozen pizza I tried to swipe wouldn’t register, leaving me irked and full of spite. As a kind of reproach, I prepared to bag the item in any case, but a pang of weary guilt set in. Two choices sprung to mind. Carry on as though nothing untoward had happened, and knowingly steal. Or hail the cashier, who at the time was busy at another till, to fix the machine and right the wrong.
I picked the second option, eventually. Though, to be honest, on another day I might have swayed the other way. Plenty of us do. Need proof? Look online, perhaps at a Reddit thread, and you’ll find anecdotes of petty self-checkout theft delivered with something like a stick-it-to-the-man pride. Expensive grapes are scanned as inexpensive carrots. Prime steaks are swiped as potatoes. The barcodes of pricey objects – wine, beer, spirits, cosmetics – are deliberately obscured by stickers removed from significantly cheaper on-sale items. Some scams have names – “the banana trick” (steaks as potatoes), “the switcheroo” (cheap barcodes for pricey ones), “sweethearting” (when a checkout supervisor only pretends to scan an object before handing it to a loved one, gratis) – though there are so many techniques not all of them do.
The Guardian devoted some attention to the personal morality angle. For those of you so interested, look at that piece. What I’m more interested in is that one rationale for moving to digital systems is supposed to be to deter shoplifting, and reduce human staffing levels.
What the Guardian reports may actually be occurring is that shoplifting might be increasing – at least for those who use these systems:
But any financial gains now appear to be marginal, at least in part due to unforeseen spikes in self-scanning theft. In a recent study a team at Voucher Codes Pro, a sales coupon website, quizzed 2,532 shoppers about their supermarket habits and found that close to a quarter had committed theft at a self-checkout machine at least once. (A figure from the same report suggested that the total cost of items stolen through self-checkout machines in 2017 came in at more than £3bn, up from £1.6bn in 2014, though the numbers are speculative.) Some steal by accident, the study found, perhaps on account of a scanning error – honest mistakes. But many perpetrators know exactly what they’re doing.
Unsurprisingly, retailers are loathe to divulging how much theft may be increasing. Nonetheless:
The subject is fraught with uncertainty. Often it is difficult for retailers to discern between malicious actions and honest mistakes – was the customer absent-minded or consciously fraudulent? – and proving intent can be perilous. Charge an honest shopper with theft and lose their business. Let a perpetrator off the hook and suffer a reduction in profit. [Adrian Beck, emeritus professor of criminology, University of Leicester] describes the scenario as “a legal and customer relations minefield”.
And a second issue. What happens when you get home and realize you thought you bought 100 grams of British back bacon but that the AI has charged you for half a kilo of jambon iberico? What do you do then?
Now, you might contact the store and ask them to correct your billing. But if you’re already home, this dispute will boil down to your word against the algorithm’s. Given how little staff time is going to be available to examine discrepancies – and, how difficult it would be even for technical staff to get to the bottom of the issue, possibly requiring review of CCTV footage – there’s going to be a lot of unverifiable claim and counter-claim.
In these situations, most customers will, if they don’t get matters resolved to their satisfaction — e.g., get your money back – will inevitably fall back on getting a chargeback from their card issuer. Here, for once, the system is on the side of the consumer. Credit cards especially have cast-iron chargeback provisions and even debit cards are broadly amenable to making the merchant prove their billing is correct.
All merchants can do is represent that their algorithms are X% reliable. But even if they’re 99% foolproof, that’s not good enough to sustain a chargeback reversal. And given the amount of time it takes to look into each individual claim in a way which will satisfy the card networks high bar of “compelling evidence” before they’ll uphold the merchants’ versions of events (and subsequent billing accuracy) against what will, typically, be de minimis discrepancies, the default response of merchants is likely to be to simply accept the customer’s claim on unchallenged evidence – at least initially.
If these errors skew randomly, I would imagine more customers might report the discrepancy if the mistake hurts them – and stay silent if it’s in their favor. Of course, if it becomes known that Sainsbury’s accepts customer claims without much fanfare, that opens the way to further gaming of the system.
How long, then, will this whole move to a brave till-free world prove to be sustainable before the increased operational losses invalidate the whole business case?
Back to the FT for the last word:
Jonathan Eley, the FT’s retail correspondent, reckons the journey to a cashless society is being partly driven by the desire of big business to collect data about each and every payment we make. “Cash undermines the espionage effort,” he says.