MONTREAL -- Optimal Robotics here, a major supplier of self-checkout systems, announced last week that it was laying off approximately 45 people, roughly 10% of its workforce.
The move comes as self-checkout systems, which allow shoppers to scan their own purchases at the checkout and pay without human assistance, have gained much wider acceptance among food and other retailers in recent years. Nonetheless, Optimal said in its announcement that "under current business conditions Optimal does not expect demand for self-checkout to increase in the near future." The company blamed "difficult economic and competitive conditions" for causing the supermarket industry to reduce spending and making demand for self-checkout "fragile."
IHL Consulting Group, Franklin, Tenn., which tracks shipments and installations of retail technology, said in a report on self-checkout released in June that the installed base of self-checkout systems throughout retail grew 47% year-over-year in 2002. The study predicted that the retail self-checkout business in North America will surpass $1 billion in market value by 2005.
But the growth in self-checkout last year tended to occur in retail segments other than the supermarket industry, especially home improvement, observers noted. "The breadth of customers that installed was much higher [in 2002]," said Greg Buzek, president, IHL Consulting Group.
The expansion of self-checkout across retail segments has apparently not benefited Optimal as it expected, said Buzek. The company had geared up to tap other markets besides supermarkets in early 2002, hiring people in development and sales. "This added overhead, combined with the slowing economy and delays in orders led to the financial hardship," he said. Prices of self-checkout systems have declined since 2001 as a result of Home Depot's large rollout, he added.
Also, noted Buzek, unlike its competitors, Optimal lacked the one big rollout that could have helped sustain it. By contrast, NCR has benefited from Home Depot installing its system in hundreds of stores, while Productivity Solutions Inc. is rolling out "significant quantities" to BJs, he said. Optimal's big customer, Kroger, is not rolling out as fast, since the chain already has many units installed, Buzek noted.
Other retailers are installing systems in "very small quantities" rather than full rollouts, he added. Roundy's, for example, last week announced the installation of NCR systems in six stores.
"We remain very bullish on the technology and its future," said Buzek. "Those retailers that are doing self-checkout right are seeing great returns."
