Article

New research shows potential of self-service

IHL's study reviews the shipments, installed base, transaction volume and major trends among self-service kiosks in North America.

December 9, 2003

The annual dollar value of transactions through self-service kiosk technologies will approach $1 trillion annually in North America by 2007, according to a new study from Franklin, Tenn.-based IHL Consulting Group.

"Self-service technologies are pervading all aspects of our lives in North America today," said Greg Buzek, president of IHL Consulting, noting mainstream uses for kiosks.

IHL's "Self-Service Kiosks in North America" study reviews the shipments, installed base, transaction volume and major trends among self-service kiosks.

Buzek said consumers are accepting such technology as self-checkout systems at the supermarket, ticketing kiosks for transportation and entertainment, and even kiosks in fast-food and quick-service restaurants.

But not every benefit is for the customer. He added that the growth rate is dramatically accelerating in the retail, transportation and government sectors as a way to lower transaction costs for businesses.

According to the study, there will be more than $155 billion in transactions conducted at self-service kiosks in North America this year.

Focus of report

The report studies only kiosk systems where payment is accepted, and is limited to self-checkout systems, ticketing kiosks, check-in kiosks (where upgrades can be purchased), and deli and food ordering kiosks. Buzek said his study excludes pay-at-the-pump and Internet-access kiosks because it is difficult to get a handle on the size of those markets.

IHL specializes in business consulting, market analysis and business planning for retailers and information technology companies focused on the retail industry. This report marks the first time the company is branching out beyond retail.

Buzek said the study of secondary research was conducted by IHL for Visa USA. "They asked us to look at what the store, airport and hotel of the future will look like. They wanted to know what the leading technologies are."

He said his company has watched self-checkout in the retail environment for the past three years. "We were watching custom kiosks in 1999, before they were generally available," he said.

"We released this report because the kiosk industry was begging for it. They want something to wrap their arms around," said Buzek.

Defining terms

The biggest challenge for his firm was determining definitions, particularly "ticketing kiosks" versus "check-in kiosks." He noted airline check-in kiosks are very different from kiosks with which users can buy movie tickets, parking tickets or bus tickets.

"When you're talking about the airlines, you can purchase upgrades or headphones from a check-in kiosk, but you can't purchase tickets. The lines begin to blur," he said. "But I think there will be a convergence in that area. Travelers will be able to put in a frequent flyer card or credit card and buy a ticket."

Where is the greatest potential for self-service? The fast-food marketplace, Buzek said. "Those restaurants are struggling with throughput and order accuracy." He explained that customers could place their own orders and pay, and keep employees in order fulfillment. "That would be especially good since English is not the native language of so many workers in the restaurant industry."

Buzek said that in conversations with NCR Corp., he learned that customer orders increase in size when customers have the option of using a self-checkout systems, and that orders grow even bigger when customers are able to use their credit cards.

Buzek said Visa has an interest in helping the self-service industry develop standards for payments. He used pay-at-the-pump as an example. "Back in '92 and '93 that was new technology. There weren't a lot of standards, so there was a great deal of credit card fraud."

He said people who stole cards went right to the pumps because no one challenged them. "When the retailers, credit card people and authorization experts got together and exchanged best practices, the fraud rate dropped significantly."

[Editor's note: Info Touch Technologies became Tio Networks in April 2006.]