Article

From Ski Shops to Hair Salons

The kiosk is going POP, or to the Point of Purchase, in all sorts of retail environments, thanks mainly to advances in phone lines and Internet connectivity. Today's pioneering applications in ski shops and hair salons could be commonplace tomorrow.

April 10, 2002 by

Phone lines and Internet connectivity have established the foundation for networked interactive devices at the point of purchase. The marketplace is already seeing the results, with offerings from IBM, LiveWire International and MaxStudio.com.

Each of those offerings has its own spin, whether it's hardware, marketing communications or e-commerce at the POP.

LiveWire International, of York, Pa.,is capitalizing on the need for information at the POP. LiveWire emerged from efforts by its parent company, Wallbridge D&M, to market snowboards. It has turned expertise gained in establishing a network of kiosks in ski shops across the United States into a business plan based on the marketing communications exposure it can provide sporting goods manufacturers and ski resorts via this network.

Wallbridge D&M was trying to find a single vendor to develop a kiosk solution that included software, hardware and networking services.

"Some companies claimed they provided a whole solution, but it was like calling a cable TV provider and telling them to run the cable to the home, and I'll call whoever I need to connect it, and oh, I'll need to buy the connectors, tell me where to buy the connectors," said Craig Souser, principal of LiveWire.

When it couldn't find the mix of systems development and networking services it was looking for, Wallbridge built the system in-house. Then the company spun off a new company, LiveWire International, whose mission is to promote destination travel and market sporting goods using an established network of more than 50 LiveWire POP Kiosks. LiveWire is also bundling software, development and network services required to support this goal.

Souser said that skiers were driving to his stores to see current snow conditions printed on poor-quality fax papers. "Part of the reason is they like coming into the ski shop anyway," he said. "They'd ask, `Has anyone been up to our local mountain? What's it really like?' And then they leave. They didn't buy anything, but they'd look for information, brochures, about where they can go on destination travel this winter. So we thought here was an opportunity to provide this with our kiosk."

At ski shops with the Livewirekiosk, customers can browse public service information to learn about resorts and ski conditions. Ski safety information, avalanche awareness, hydration techniques, proper use of waxes on skis and snowboards, etc. are also available.

Using the LiveWire network, winter sporting goods manufacturers can place multimedia marketing communications with updateable, interactive media at the POP, using customer-activated devices that display rich graphics, products-in-use video, games and other features. And these companies don't have to reinvent the wheel to do this. They provide product information via LiveWire in stores, without building and servicing the kiosks and network system themselves.

Souser said winter sports equipment manufacturers who want to develop an in-store kiosk could place information on the LiveWire network, instead of building and placing the kiosk. Since POP kiosk networks aren't a sporting goods manufacturer's core business, using the LiveWire system provides manufacturers an easy way to get multimedia presentations on their products in stores.

"Big companies want something where they can share the cost (of kiosk systems)," Souser said. "One manufacturer told me that with one company's information on a kiosk along with others, it's more objective to the consumer because there are multiple brands there. The kiosk is more likely to engage the consumer if it comes across as informational rather than a single company's proprietary advertisement."

IBM's system

IBM is introducing its SurePOS 700 Series system, featuring Web technologies that allow access to customer data such as inventory order status and shipping information, whether from in-store, online sites, or catalogs. This new IBM hardware gives sales staff real time access to critical product information, using the Internet.

"The Internet," said Jim Green, vice president of marketing, IBM retail industry, "deployed through kiosks, point-of-sale systems, and pervasive computing devices-- is making stores more like showrooms providing virtual line extensions. The Internet is having a great impact on the retail sales floor. Internet savvy consumers are often more knowledgeable about a retailers' products than the store employees are. So retailers are turning to the Internet to provide information-starved employees with more data."

MaxStudio's kiosk strategy

Phone lines, network connectivity and the Internet are enabling MaxStudio.com to adopt an e-commerce model and extend it to the POP. Headquartered in Pasadena, Calif., MaxStudio.comis implementing a three-tiered marketing approach. In addition to selling through its traditional bricks and mortar boutiques, the company has implemented an e-commerceWeb site and currently is beta testing its networked e-shop kiosk in the heavily trafficked Allen Edwards Hair Salon in Studio City, Calif.

Since 1979 MaxStudio has sold women's fashions through its company stores, and in in-store and licensed boutiques in chains including Bloomingdales, Dayton Hudson, Macy's and Marshall Fields. A 1999 name change to MaxStudio.com accompanied plans to expand traditional marketing via the Internet and through new in-store locations with MaxStudio.com e-shop kiosks. With development of its Internet site, the company departed from traditional bricks-and-mortar marketing. Extending this online approach, MaxStudio.com has begun deploying its e-shop kiosks. The company plans to place kiosks in non-competing venues like hair salons where offerings complement MaxStudio.com products. Rollouts to hotel lobbies and airports are planned.

Jennifer Fader, a MaxStudio.com spokesperson, the kiosks are a convenience for customers. "Basically you can be at the airport one day, order the jacket you forgot and have it sent out to your hotel."

E-tailer Kozmo.com is using a similar cross-selling model. It places branded video return boxes at Starbucks coffee shops in Los Angeles, New York and other cities. Customers may rent videos online, and return them to the Kozmo.com return box inside the coffee shop.

Business Model for the POP Network

Cheap, powerful microprocessors have been driving adoption of digital information systems. From Alan Greenspan's perspective, this technology and the productivity it's brought is a large part of the spectacular end of the millennium economic boom we've seen.

With Inventory Management and other digital manufacturing and marketing Information Systems in place, distribution of analog, hard copy of data to retailers and consumers stops making cost effective sense. With information encoded and stored in digital databases, interactive windows on this information become critical components of company business plans.

Networked devices systems make it possible to have interactive, customer-activated kiosks at the POP that are a cost effective means of bringing this information, unmediated, directly to consumers. With business data in digital format, costs, resources and complexity of traditional methods of bringing product and other marketing information to the POP make them less attractive than networked interactive devices at the point of purchase.

IBM POS 700 equipment can bring cost efficiencies by providing a real-time window on digital information about a retailer's offerings. LiveWire networks enable display of multimedia information at the POP with a single update at the host server. For MaxStudio.com, the mission of the e-shop POP Kiosk networks is to increase sales without increasing costs for staff, real estate and inventory. E-shop enables the company to expand its presence without having to build new stores and fill them with product.

Leon Max, the founder and chairman of Max Studio.com, said the kiosk have strong appeal to his customers.

"We know women who spend time in hair salons are also buying this high-end line of clothing; why not locate these (e-shop Kiosks) in a place where they are anyway?" he said. "So the people in the waiting area of the hair salon have something more to do than look at a magazine and the hair salon is happy because they're getting a percentage of the gross sales."

With a credit card swipe customers can order directly from the MaxStudio.com e-commerce site. Locating small footprint e-shop Kiosks outside traditional bricks and mortar stores in non-competing venues can increase sales without need for additional real estate and inventory. Chris Bechtel, former Studio.com director of marketing, said "the value of the kiosk, we think, is that it can hold 3,000 to 4,000 square feet worth of inventory, sale merchandise inside the kiosk that's not available in the store." Additionally, pull-through that e-shop Kiosks create between these venues and online sales is central to the new business model."

LiveWire International is basing its business model on the need to bring high value marketing information to the POP. Staff training is a major concern in high-turnover areas like ski shops. Single changes at the host server in the LiveWire network let companies place consistent, current product information at the POP.

LiveWire's Souser added another advantage. "Working in a ski shop's cool, cool until it snows! So now they have a tool that both the staff and the consumer can use to help them learn about products. Product information, staff training and sales clinics are all possible on the LiveWire network. Training programs can be downloaded to kiosks for staff to view during down times during the workday. We can also do live videoconferencing training and motivational events."

A convincing business case for building and maintaining one or even a few sneaker-netted kiosks was not cost-effective based on a few kiosks. But a whole system spreads the cost, and the expense can begin to make sense, especially with the advent of digital information systems. Or, in the words of Bill Gates, when a "digital infrastructure" is created, real time interface with a company's information systems becomes possible.

Technical aspects

Today's faster CPUs, more robust and dependable hardware, and administrative software make cost-efficient, networked POP kiosks a possibility.

"Certainly the technology is advancing in terms of touchscreen reliability," said LiveWire's Souser, whose experience in industrial automation required "bulletproof and robust" systems.

"The PC's are a lot more reliable and affordable and portable. So the hardware side of this is getting better," Souser said.

"We have to use higher-end components, not the cheapest stuff you can buy, because it has to work. I own a company that makes robotics equipment. We do systems, so I'm used to attacking things as an overall, turnkey system."

In addition to the more dependable hardware, proprietary system maintenance software like LiveWire's "aLive" lets administrators monitor units individually. Every 10 seconds each kiosk on the LiveWire network calls back to the host server. A dark screen can be brought back up when a remote fix is all that's needed; site maintenance can be called in if that's required.

A credit card reader on the MaxStudio.com e-shop unit allows consumers to purchase items at the kiosk. As soon as an order is placed, encrypted data is e-mailed to MaxStudio.com where the credit card is authenticated and the request processed. Nightly downloads from the MaxStudio.com host server enable update of the inventory database in e-shop kiosks.

"Each (e-shop Kiosk) will be its own mini Web server, mirroring the main Web site on the host," Bechtel said. "The backend, point of sale system that runs the retail stores is the same backend that runs the e-commerce division."

MaxStudio.com is currently testing DSL connections for the e-shop kiosks. A fast, broadband connection will enable download of the large graphics files required for e-shop. Although DSL is not widely available in homes at this time, experience with the technology has additional value to MaxStudio.com.

"People who might not be early adopters of online technology will get to use the kiosk at these locations," MaxStudio's Fader said. "With opportunity to experience e-shop and broadband, customers will want to have the same experience from home as the DSL service here."

Due to logistical concerns of its ski shop network locations, LiveWire Kiosk connections are almost exclusively dial-up. Souser said the solution is higher bandwidth, which is just not available yet in some areas. Although Web cam images of resort ski slopes use an online connection, large bandwidth files like video should be resident on the system HD where they can be updated via the LiveWire network after store hours, he said.

Although in the past poor hardware and standalone systems have made it difficult to justify the expense of kiosks, the Internet and networked kiosks can now bring a company's marketing information directly into the store. Networked, customer-activated hardware that brings the Internet to the POP is beginning to give these systems the utility and business justification of cash registers and ATMs.