“Discounts and Shoplifting in Self-Checkout Shopping” by Dr. Peter Zubcsek
Dr. Peter Zubcsek
Assistant Professor of Economics
Coller School of Management
Tel Aviv University
Scan and Go (SAG) is a form of retail self-checkout. Shoppers using SAG scan items as they shop and pay at checkout without having to rescan the cart contents. Many retailers are adopting SAG systems to simultaneously increase customer satisfaction and lower store labor costs. However, criminology research has linked SAG to increased shopper theft, and has suggested to offset inventory losses in ways that each increase store staff, reducing the savings from SAG. We propose to extend the scope of tools retailers can use to reduce SAG shoplifting. Based on the equity theory and price fairness literatures, we posit that shoppers who purchase more discounted items will perceive the store as having treated them more fairly, and will therefore steal less. We confirm our prediction on data from a supermarket chain that uses SAG, finding that discounts may generate indirect savings (by reducing theft) corresponding to a significant proportion of retailers’ operating margins. Our findings carry important implications for grocery retailers, whose profitability has been increasingly under pressure from various emerging forms of competition.