Blog: AI to Combat Shrink in Retail

As the study ‘Self-Checkout: Market Survey 2023’ by EHI Retail Institute shows, the proportion of stores with self-checkouts in Germany has risen by more than 150 per cent in the last two years: Retailers have long recognised the considerable potential of self-service technology. At the same time, retailers are recording an increasing number of inventory discrepancies. To counteract this trend in the self-service area, Diebold Nixdorf now offers its customers one of the most comprehensive AI-powered solutions to protect against shrinkage in the self-service area and beyond.

Self-service checkouts offer numerous advantages. They enable greater customer convenience, optimised sales areas and better staff deployment options, for example, in customer service. Nevertheless, retailers are confronted with a number of challenges around self-checkout that need to be solved. One problem is the possible loss of goods due to unintentional or deliberately missed scans, the manipulation of barcodes or when customers leave the checkout zone without making a payment. According to Statista, inventory discrepancies in German retail have risen slightly in recent years. In 2022 alone, retailers lost revenue of 4.6 billion Euros as a result. Part of the shrinkage is attributable to the checkout area.

To help retailers tackle this problem, Diebold Nixdorf has introduced Vynamic® Smart Vision | Shrink Reduction, an AI-powered solution for fraud prevention at self-service checkouts. The software, first introduced in early 2024, uses Smart Vision technology to detect unconscious and deliberate operating errors during self-checkout. It provides store employees with the information they need to react accordingly. The software complements the AI-powered solutions for automated age verification – Vynamic® Smart Vision | Age Verification – and fruit and vegetable recognition, Vynamic® Smart Vision | Fresh Produce Recognition, which has already been successfully introduced by Diebold Nixdorf. The three solutions are part of Diebold Nixdorf’s Vynamic® Smart Vision AI platform.

Discover now Diebold Nixdorf's AI-based solutions:

Powerful: three solutions for many challenges
With this offering, Diebold Nixdorf provides retailers with one of the most holistic toolboxes currently available to eliminate potential losses and friction points at self-service checkouts. The software for automated age verification has already been used successfully by the British Co-op as part of a sandbox test initiated by the government, as has the software for fresh produce recognition, which Aldi Süd is currently testing in Cologne and Aachen (The Retail Optimiser reported). Diebold Nixdorf provides its customers with the fraud prevention solution as part of the software package for self-service checkouts. Implementation is simple and the rollout across several branch locations and regions is quick and uncomplicated. This allows the technology to be optimally scaled.

Used together, the three solutions can make the most of their strengths and advantages and eliminate potential problems in a wide variety of situations. With Vynamic Smart Vision | Shrink Reduction, the most common causes of shrinkage can be identified, for example, if the scanned barcode does not match the item – such as when a label for bananas is attached to a whiskey bottle and items are deliberately or unintentionally not brought to the scanner. Other examples include when two items are held in front of each other, when customers pass an item past the scanner without actually scanning it or walk away from the self-service checkout without paying after a canceled transaction.

Easy to integrate and individually configure
To use the solution, each self-service checkout is equipped with a camera that is aligned with the scanning area. If an incorrect operation is detected during the video analysis using AI, the self-checkout system can inform the customer directly via a message that an item has not been scanned correctly. At the same time, the employees are notified of the incorrect operation with the help of the intelligent assistant. On a mobile device, for example, they can review the transaction – which is recorded in compliance with the GDPR without storing personal data – and point out accordingly that an incorrect operation has taken place. If there has been deliberate manipulation, the self-service checkout can also be automatically blocked.

Retailers can define, individually configure and customise the response to each incorrect operation themselves. Thanks to the option of fast real-time analysis, retailers can make data- and fact-based decisions and ultimately secure their sales and prevent losses at the self-service checkout. The technology also makes employees’ day-to-day work easier. In cases where the customer has unknowingly made a mistake, they can provide support without directly assuming theft and thus scaring the customer off. In the event of an obvious attempt at fraud, security staff can intervene immediately, and employees are protected from potentially critical situations.

Vynamic Smart Vision | Shrink Reduction is based on SeeChange’s AI and machine learning cloud platform and is initially designed for the checkout area and explicitly for the self-service environment. However, its use in other areas of the sales floor is also conceivable in the future. This is possible thanks to the mainly hardware and software-independent design of the solution.

Originally published in Retail Optimiser