Paper on Self-checkout System for Customer Satisfaction : Tesco

Dissertation
(Examining Self-Checkout System &
its Impact on Customer Satisfaction)
Tesco Case Study

Table of Contents
CHAPTER 1: INTRODUCTION..................................................................................................1
1.1 Overview of research.........................................................................................................1
1.2 Rationale of the study........................................................................................................2
1.3 Research aim and objectives...........................................................................................2
1.4 Research questions...........................................................................................................2
CHAPTER 2: LITERATURE REVIEW.......................................................................................3
2.1 Overview..............................................................................................................................3
2.2 Self-checkout system.........................................................................................................3
2.3 Self-service information technology................................................................................4
2.4 Concept of customer satisfaction.....................................................................................5
2.5 Theories related to customer satisfaction.......................................................................7
2.6 Multi-channel self-service experience.............................................................................7
2.7 Impact of self-checkout system on customer satisfaction level..................................8
2.8 conclusion............................................................................................................................9
CHAPTER 3: RESEARCH METHODOLOGY........................................................................10
3.1 Overview............................................................................................................................10
3.2 Research philosophy.......................................................................................................10
3.3 Research method.............................................................................................................10
3.3.1 Stage One......................................................................................................................11
3.3.2 Stage Two.....................................................................................................................12
3.4 Sampling method..............................................................................................................13
3.5 Data analysis.....................................................................................................................13
CHAPTER 4: RESULT AND ANALYSIS.................................................................................15
4.1 Overview............................................................................................................................15
4.2 Thematic analysis.............................................................................................................15
4.3 Quantitative Data Analysis..............................................................................................18
4.3.1 Descriptive analysis of the data....................................................................................18
4.3.2 Inferential data analysis................................................................................................20
CHAPTER 5: DISCUSSION AND CONCLUSION................................................................25

5.1 Introduction........................................................................................................................25
5.1.1 Self-checkout system....................................................................................................25
5.1.2 Effectiveness of Self-checkout system.........................................................................25
5.1.3 Customers satisfaction..................................................................................................26
5.1.4 Effect of SCS on customer’s satisfaction level.............................................................26
5.1.5 Advantages and disadvantages of the use of SCS........................................................27
5.2 Conclusion.........................................................................................................................28
5.2.1 To examine the self-checkout system that is adopted by Tesco...................................28
5.2.2 To examine the current satisfaction level among customers of TESCO......................29
5.3 Recommendations...........................................................................................................29
REFERENCES............................................................................................................................31
APPENDIX...................................................................................................................................34
A. Semi-structured interview.................................................................................................34
B. Sample of the online survey.............................................................................................35

List of Figures
Figure 1:Age group of the respondents...................................................................................18
Figure 2: Ease to use the SCS.................................................................................................19

ABSTRACT
Self-checkout systems are rapidly changing the way supermarkets make
transactions with their customers. Supermarkets have started adopting SCS as a
mechanism to reduce cost as well as provide quality customer service. The
process transforms customers into co-producers. This paper examines if self-checkout
system is a reliable mechanism for improvement in customer satisfaction within Tesco.
The study adopts a multiple methods approach by initially using an online survey
of 120 supermarket shoppers for empirical research. A semi-structured interview was
conducted on the managers of TESCO with an aim to identify the effectiveness of self-
checkout systems, as well as identifying management’s view of customer behaviour.
Findings from the research suggest that Self-Checkout Systems are very
advantageous to supermarket. The online survey revealed that people of young age
prefer to use SCS compared to older age groups. It also identified speed of service and
convenience as major factors that affect customer satisfaction. The Semi-structured
interview also revealed that management views SCS as a long-term investment, which
in the long runs will result in cost reduction. Data from Tesco and NCR showcase that
SCS adoption is on the rise and that customers are more than willing to engage with the
technology, with Tesco already receiving benefits such as increased revenue and high
customer flow.
Key words: Self-checkout system, Service Quality, Customer Satisfaction, Information
Technology.

CHAPTER 1: INTRODUCTION
1.1 Overview of research
In today’s era, there are rapid advancements in technology and increased global
competition. This kind of competitive environment has led retailers to develop new
services and machinery in order to reduce cost, so that customer satisfaction can be
enhanced. Supermarket chains have chosen to employ Self-Checkout Systems (SCS)
in order to reduce the cost and improve customer experience, while also trying to
resolve the issues which are faced by industries at the time of adopting new
technological advancements in the place of traditional systems (Hernon and Altman,
2010). SCS has also become the prime cause of erosion of human capital, need for
fewer men on the jobs and spiked supermarket redundancies (Demirci Orel and Kara,
2014).
Customers are now frequently using Self-Checkout Machines when visiting their
local retail stores. Retail shoppers have become dissatisfied and disillusioned with the
long wait times they have to encounter whilst waiting to purchase items from their local
stores, with cashier staff even relaying the burden of packing the goods purchased onto
customers. (Lee and et. al., 2010). This all results in poor customer services leading to
the possible low amount of purchases by displeased customers. Self-Checkout System
(SCS) is a self-service technology aimed at addressing these problems whereby
customers can skip long queues and make quick easy purchases via a computerised
interface (Kallweit, Spreer and Toporowski, 2014).
The present report is based on Tesco, which performs its operations in
supermarket or grocery. They are offering their services throughout England so their
business model is suitable for this study (Orel and Kara, 2014). It is the third largest
retailer based on their profits and revenues. They have their outlets in approx. 12
countries and listed on London Stock exchange. Therefore, the firm has a strong
customer base. Supermarkets have adopted the use of Self-Checkout Systems to
reduce cost and increase customer service. The purpose of this study is to verify
whether the use of self-checkout systems can actually result in improving customer
satisfaction in a more efficient or valuable manner as compared to the traditional
method where manned checkout systems were used.
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1.2 Rationale of the study
What is the research issue?
Tesco has rapidly been adopting self-checkout technology in order to improve
customer satisfaction and speed of service. The current research is focused on whether
self-checkout systems improve satisfaction level of customers.
Why it is an issue?
The issue has been arising due to the changing environment and the changing
requirements of people. In the competitive world, an enterprise has to adopt such kind
of innovation so that they can achieve their competitive advantage.
Why it is an issue now?
Now, the issue is arising due to high competition in the market as each and every
firm is performing better so that they can become more successful.
What could this research shed light on?
The present study is focused on whether self-checkout systems affects customer
satisfaction. By conducting this analysis, researchers will be able to achieve the
specified research aim and objectives.
1.3 Research aim and objectives
Aim: To examine the self-checkout system of Tesco and its impact on customer
satisfaction - A Case study on Tesco
Research objectives: The researcher has formed the following objectives so that
the current study can be conducted in a concise manner. The objectives are as follows:
 To examine the self-checkout system which is adopted by Tesco
 To examine the current satisfaction level among customers of TESCO
1.4 Research questions
These questions will allow a suitable evaluation to be performed in an effective
manner so that the ways in which customer satisfaction level can be enhanced through
self-checkout systems are identified. These are stated below:
Q1. What is the self-checkout system?
Q2. Does self-checkout system improve consumer satisfaction level?
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CHAPTER 2: LITERATURE REVIEW
2.1 Overview
Different literatures and past studies need to be researched in order to create a
foundation of knowledge related to the field of study. For this, information has been
extracted from secondary resources such as books, journals, past research papers, the
Internet and newspapers. This chapter seeks to explore the previous research on self-
checkout systems as well as identify existing themes and research gaps. The literature
review would also help to supplement the discussions in this dissertation. Through this,
a valid and reliable outcome can be drawn. Essentially, this section needs to be built
across the aim and objectives of the dissertation.
2.2 Self-checkout system
NCR’s (national cash register) self-checkout systems are introduced to offer
customers more control, convenience and a speedier checkout option (Beck, 2011).
These machines are introduced so that people can process their purchases in an
effective manner. This is an alternative option of traditional cashier checkout system.
Here, in this kind of approach, service users can scan the items and make a payment
for the item through the system. While retailers claim to install SCS to improve customer
service, traditional cashier checkout systems are costly in terms of labour, so there is
also a benefit in reducing labour costs (Hafeez and Muhammad, 2012). It has been
stated by Fernandes and Pedroso (2016) that in today’s world, there are many
supermarkets that are adopting the latest technological advancements so that they can
perform better than their rivals or competitors. The needs and demands of people are
changing on a continuous basis, so supermarkets have to adopt these in order to fulfil
their requirements. By using different technologies, business organization will be able to
offer more innovative or quality services to their customers, therefore their satisfaction
level can be enhanced.
Latest technology of self-checkout system is also attached with some sensors and
verification software which help the firm in identifying threats occurring at the time of
checkout Gruber et.al.(2015), through this, the overall efficiency can be improved. SCS
can help people save time, as they don't have to stand in a long queue, which will
reduce their frustration and enhance the customer satisfaction level (Beck, 2011). Some
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