Franchisees Need More Transparency and Information About Scan and Go Program
7-Eleven, Inc. (SEI) has been testing the cashier-less shopping app Scan and Go in a limited number of stores since late 2018. For today’s busy, on-the-go customer, Scan and Go appears to be a great option, allowing them to scan items as they shop and skip the check out. But the Franchisor has been secretive about its market testing and seemingly unconcerned about the impact on hard-working franchisees.
“7-Eleven is using the pandemic to push through a program that isn’t thoroughly tested or vetted,” said National Coalition Executive Vice-Chairman Michael Jorgensen. “Franchisees haven’t had the time to fully vet Scan and Go. We need to understand the short and long-term economic impact of this program.”
A large majority of the testing sites for Scan and Go were in some of the most affluent zip codes in the country – the Upper East Side of New York City and the financial district of lower Manhattan. Analysis of these tests were provided to the franchisor’s hand-picked advisory body, but did not include crucial information such as labor costs, shrinkage or even how consumers feel about the program.
Those who are familiar with the app have already seen the potential pitfalls. The biggest problem is that Scan and Go eliminates the contact between customers and front-end workers. The customer connects the app to a credit card then scans the items he takes. Once done, the customer leaves. But, the clerk cannot be certain that the customer actually paid for all of the merchandise.
“Scan and Go opens franchisees up to enormous theft potential,” said NCASEF Vice-Chairman Rehan Hashmi. “How do you stand behind the register and know if customers are scanning or not scanning items? Scan and Go could create a situation where the franchisee is accused of profiling customers.”
What’s more, the app relies on the customer knowing how to scan items that are on special – like those where you buy one and get one free (BOGO).
“During the pandemic, we heard that with some promotions like Red Bull BOGO’s, many customers aren’t scanning the second drink,” said Jorgensen. “There’s no interaction with the staff, so the customer doesn’t know they’re supposed to scan both. The store is eating that loss as shrinkage, where the manufacturer was supposed to pay for the free item. The customer really isn’t knowingly stealing from us, but the bottom line is they might as well be.”
A survey of 2,634 people cited in the March 2018 edition of The Atlantic showed that 20 percent of them admitted to having stolen at self-checkout in the past. In 2015, criminologists at the University of Leicester conducted a study of 1 million self-checkout transactions and found $850,000 in shoplifted goods out of $21 million in sales. They believe the ease of theft coupled with the fact that shoppers don’t have to interact with a clerk inspires people who might not normally steal to do so.
It is the opinion of the NCASEF Board that Scan and Go exposes franchisees to all the liability, while leaving 7-Eleven with absolutely none. If there’s a dispute over a Scan and Go transaction, we fear SEI will side with the customer over the franchisee, potentially leaving us on the losing end.
“The problems 7-Eleven doesn’t have solutions for are endless,” said Hashmi. “They have yet to address many problems including ‘ticket switching’ where a shopper covers the barcode of an expensive item with the barcode of a less expensive item.”
A former Walmart executive was quoted on businessinsider.com as stating that shopper theft was a major reason the big-box retailer abandoned scan and go technology.
“Unlike Walmart, the 7-Eleven system forces franchisees to bear the cost of theft. If SEI is willing to share in those losses, we will stand behind this program,” said Jorgensen. “This technology will resonate with our customers, but SEI needs to be transparent about franchisee costs and stop making these kinds of top-down, do this now-or else mandates and start treating franchisees like independent contractors and not like glorified store managers.”
The National Coalition has released a new survey for franchisees to evaluate the Scan and Go program. Please take the time to fill this out and voice any concerns you have.
NCASEF believes a more rigorous, transparent and representative market test of Scan and Go be conducted – and that full results are shared with all franchisees – so we can collaborate on a working plan going forward to ensure the program is beneficial for both sides and not just SEI. 7-Eleven should share equally in the risk as well as the reward with the franchisees, not just get the rose without the thorns.