Make it a BlueLight special

The big three retailers are taking dramatically different approaches to getting their feet wet with in-store kiosks, with Kmart's BlueLight.commaking the biggest splash.

Kmart has taken a leap from the proverbial high dive, while Wal-martseems willing to stick a toe in the water. Targethas yet to put on its swimsuit.

Aquatic analogies aside, Kmart has taken the lead in incorporating kiosks in the retail shopping experience among the big three. Kmart's BlueLight.com, a new company formed in 1999, has some 3,500 kiosks in stores, and plans are underway to install three kiosks in each of Kmart's 2,100 outlets by the end of the year. In all, Kmart expects to install 10,000 kiosks.

BlueLight.com is a San Francisco-based company owned in part by Kmart, along with SOFTBANK Venture Capital and Martha Stewart Living. Launched in 1999, BlueLight.com has spent $142 million thus far, with $55 million of that total coming from Kmart. On Feb. 14, BlueLight chief executive officer Mark Goldstein warned that if the company doesn't reach an operational breakeven point by the fourth quarter, "it's just not going to happen," he said, referring to the possibility of BlueLight undergoing an Initial Public Offering (IPO).

Goldstein said the target is $100 million in sales.

"That's our magic number," says BlueLight media relations representative Dave Karraker. "That will put us on the path of profitability."

Karraker said that as a private company backed by a strong investor group, survival is not an issue.

"The good thing is that we're not a public company at this point. We don't have to answer to Wall Street on when we have to be profitable. We put this kind of mandate on ourselves. If it doesn't happen, we're not going away."

Public offering or not, Kmart believes the in-store kiosks will help improve its image as a forward-thinking firm.

"This is a leading effort for us," Karraker says. "It's something that Kmart has embraced much more quickly than any of our competitors. Obviously, we're the only ones that have it. So, I think a lot of people may be taking the wait and see view. We're not content to do that. We want to move forward and come out with these innovative programs and help Kmart regain the market share it enjoyed back in the `70's."

Karreker said Kmart has high expectations for the kiosks.

"Basically, you have to look at the goal of the company," Karraker says. "Selling stuff online is one bucket. But you've also got to realize that we are also a marketing vehicle for Kmart. We're a vehicle to drive traffic into stores."

Wal-mart shopping

While Kmart has stepped to the forefront, Wal-Mart is moving forward at a more tepid pace. In a deal announced Feb. 6, Wal-mart and NCR Corp. will deploy 3,000 kiosks in Wal-mart's nationwide. All domestic Wal-Marts and Supercenters are scheduled to have a kiosk, known internally as Automated Customer Service Machines (ACSM), by the end of May. The ACSM will serve as a gift registry, and be located near jewelry departments.

Select Wal-Mart stores also began a test program with General Electric last August. In that ongoing trial, customers can purchase major home appliances at a kiosk.

"If you decide you want one, you press a few buttons, it prints out an order form and you take it over to the cash register," says Wal-Mart public relations rep Rob Phillips. "They scan it in and you've got your appliance ordered."

The order is then sent to GE, which ships the purchased item to the customer.

Off Target

Target, on the other hand, has yet to announce a kiosk plan. The company isn't sharing whatever plans it may have to boost in-store technology. A Target spokesperson, who wouldn't identify herself, declined to comment for this story, citing a store policy that prohibits interviews with trade publications.

The company did install 1,800 touchscreen gift registry monitors, designed by Elo TouchSystems, in stores last year.

 Watch for the BlueLight

The kiosk industry is clearly keeping an eye on BlueLight, to see if the largest-yet kiosk deployment succeeds.

"How (BlueLight) affects the kiosk industry is obvious," Karraker said. "If we're a smashing success with this, (the industry is) going to be doing gangbusters business."

In other words, as BlueLight goes, so will the rest of the retail industry.

"I think a lot of folks are looking at us," Karraker added. "(They) are looking at this very closely to see how BlueLight and Kmart will utilize this. Is it more than just a customer service tool? Are they going to actually be able to offer some innovative programs at the kiosks and really establish the value?"

Determining the value isn't easy, especially since measuring in-store sales influenced by the kiosk is difficult. BlueLight statistics indicate that it acconts for less than five percent of Kmart's sales. That may not sound like much, but Karraker says much more isn't expected.

"Nobody's put a line in the sand to state how much we should be contributing," he says. "Basically, we're looking to do two things with the company at the kiosk: A) sell stuff online; and B) drive traffic into Kmart stores and influence purchases."

While customers like the kiosks, the machines are not yet serving as a draw.

"I don't know that you could put a direct correlation on the fact that somebody came into Kmart just to shop on the kiosk, unless they didn't have an Internet connection at home and wanted to check it out," says Karraker. "It's more of a customer service tool and a sales tool in the store than it is something that would drive traffic to the store. What we want to do is make them start thinking about not just shopping at the store, but shopping online. And the kiosk will be a key component in influencing them to shop online and to shop at BlueLight."