California Bill Restricting Self-Checkout Lanes Could Raise Business Costs by Half-Billion Dollars Annually
A California Chamber of Commerce-opposed proposal that dictates store staffing and operations could raise business operating costs by at least $497.1 million annually, according to a recent economic analysis.
SB 1446 (Smallwood-Cuevas; D-Los Angeles) is an overly prescriptive mandate regarding the use of self-checkout stations that will frustrate customers and increase costs to retailers and requires stores to notify all workers and the public any time they choose to utilize new technology.
Raises Cost to Do Business
Specifically, the bill prohibits a grocery retail store or a retail drug establishment from providing a self-service checkout option for customers unless specified conditions are satisfied, including having no more than two self-service checkout stations monitored by any one employee and requiring the employee to be relieved of all other duties.
Larger grocery retail stores that have self-checkout technology would have to hire additional, dedicated cashiers to cover these stations.
An economic analysis of SB 1446, conducted by Encina Advisors, LLC on behalf of the California Foundation for Commerce and Education, estimates that approximately 10,200 additional cashiers could be needed statewide to comply with the mandate. This could result in at least $497.1 million in additional costs falling upon grocery retailers annually.
Limits Choice
SB 1446 will limit the number and type of items that can be purchased at self-checkout—a requirement that will be difficult to enforce and will only frustrate customers.
Grocers and pharmacies currently staff and operate self-checkout lanes in a manner that reflects the clientele of that location. There’s no one-size-fits-all approach, the CalChamber pointed out to legislators in a recent letter.
Further, SB 1446’s restrictions regarding which items can go through self-checkout lanes will vary store to store, increasing customer frustration and subjecting stores to thousands of dollars in penalties.
Curbs Investment, Innovation
SB 1446 inserts burdensome regulations on retailers that are already reevaluating how to best use self-checkout technologies, with some moving to new forms of technology to help deter theft and make the workplace safer.
“While it is important to consider the potential effects of new technologies on employees and consumers, overly burdensome regulations, such as those proposed in this bill, may stifle business growth, innovation, and competitiveness in an increasingly digital economy,” the CalChamber said.
Grocers and pharmacies are developing and beginning to deploy numerous technologies meant to enhance the customer and employees experience at the store.
“Often these technologies play a critical role in achieving policy priorities we have here in California, such as improving energy efficiency, reducing food waste, and preventing retail theft. Grocery stores and pharmacies in California would fall behind those in other states when it comes to innovation,” the CalChamber warned.
SB 1446 is scheduled to be considered in the Assembly Privacy and Consumer Protection Committee on Tuesday, July 2, 2024.