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Guy Richard Clodfelter: Associate Professor in the Department of Retailing at the University of South Carolina, Columbia, South Carolina, USA
Introduction
The use of price scanners in retail stores offers benefits to both customers and retailers. The elimination of item pricing has netted retailers substantial savings. For example, retailers save 1 to 2 percent of costs in checkout productivity, eliminate item pricing, and reduce the number of employees (Chain Store Age Executive, 1993; Cutler and Rowe, 1990). Additional savings also accrue with improved efficiency in automatic ordering, improved shelf allocation, improved sales analysis, and better item tracking (Chain Store Age Executive, 1990; Welch and Massey, 1988). For customers, the implementation of scanner technology provides faster store checkout, more detailed receipts, and price reductions resulting from retailers passing along cost savings. Customers have also been promised more accurate pricing as they go through the checkout; however, many people (including media reporters, consumer advocates, and some government officials), report that retailers have not delivered on this last promise.
Academic, government, and industry studies, as well as media stories and news reports, have found pricing errors at the checkout to varying degrees. Numerous media reports and surveys have accused retailers of failing to ensure that posted prices match the scanned prices that customers are actually charged. Some reports even cite large numbers of pricing errors predominantly in the retailer's favor. These reports have made retailers look guilty of unethical practices by using price scanners to intentionally cheat customers.
Background
Approximately 95 percent of all mass merchandisers and grocery stores in the USA use scanner systems today (Chain Store Age Executive, 1990). This rapid adoption of technology has occurred in a relatively short period of time - the first scanner capable of reading Universal Product Codes (UPC) was installed in a grocery store in Troy, Ohio, in 1974 (Greenfield, 1992). Since that time, scanners have received both praise and criticism. Although grocery stores were the first segment of the retailing industry to widely adopt scanner technology, many small convenience and specialty stores have also installed scanners in recent years.
Studies of pricing accuracy at retail stores using scanners fall into three broad categories - studies by government agencies, by the media, and by academic institutions. Most of them, however,...