Retail

Pandemic: Does long-term boom require short-term bust?

Self-service providers interviewed generally agree the pandemic has raised awareness of the need for new ways to boost customer interaction, but the immediate question on many minds, however, is when the pandemic-induced setbacks will ameliorate.

Image courtesy of iStock.

January 6, 2021 by Elliot Maras — Editor, Kiosk Marketplace & Vending Times

Has the coronavirus pandemic unleashed a growth era for self-service as many industry experts claim?

If so, have the quarantines enacted in many states in response to the "second coronavirus surge" put business on hold for the foreseeable future?

Does long-term boom require a short-term bust?

Self-service providers generally agree the pandemic has raised awareness of the need for new ways to boost customer interaction, as noted by a panel of experts during the recent Self-Service Innovation Summit. The biggest question on many people's minds, however, is when the pandemic-induced setbacks will ameliorate.

Negative impact lingers

No one can doubt that many self-service providers are sharing in the pain that has engulfed much of the economy.

"I am not optimistic about 2021," Greg Breland, president of Gulf Coast Canteen, a micro market and vending operation based in Mobile, Alabama, told this website when asked about 2021. Following the March, 2020 setback, Breland's business recovered to between 75% and 80% of pre-COVID by June, but it has not fully rebounded. One bright spot has been distribution centers for retail food suppliers — a sector that has prospered during the pandemic.

"Most of our losses are in white collar micro markets, call center micro markets and schools," Breland said. "I do not see any of those coming back anytime soon."

Retail businesses, which account for the largest share of self-service customers, went into lockdown in several states when the pandemic struck last spring. Business recovered to varying degrees as lockdowns lifted, even though those deemed "essential" remained open during the lockdowns. Now the onset of winter has delivered a "second surge" of COVID infections, causing some states to reinstate lockdowns.

New markets emerge

Two self-service markets emerged in response to the pandemic: personal protective equipment and temperature screening, which offset some of the losses for self-service equipment providers. PPE machines offer a convenient way to provide masks, gloves and sanitizers to visitors and employees.

Swyft Inc., a provider of retail automation and robotics, deployed unattended automated stores selling PPE in subways and other locations in 2020. Mike Kiser, former CEO of Swyft who now serves as president of Sandstar, which makes automated retail solutions powered by artificial intelligence, said PPE sales increased by 1,000% in 2020 and he expects similar growth in 2021.

"The pandemic is a two-edged sword," said Kiser. "COVID-19 slowed it (business) down for purchases, but interest level is still greater because of the pandemic."

Service providers which expanded into the PPE sector, however, reported mixed results.

Best Office Coffee Service, based in Miami, Florida, set sales records selling PPE products in May and June, said Albert Gonzalez, area supervisor and sales manager, and even sold product to other operators.

However, Mathew Marsh, CEO of Los Angeles-based First Class Vending & Break Rooms, one of the nation's largest convenience services operations, said customers in December were no longer buying from the PPE machines as they are now pervasive.

But temperature screening kiosks are showing more staying power, as they allow businesses and organizations to protect visitors and employees. A random survey by KioskMarketplace indicated that both equipment and service providers view temperature health screening as a promising growth opportunity.

"We saw a good year in 2020 and we're excited to see what 2021 has to offer," said Melissa Harward, marketing coordinator at Meridian, a kiosk manufacturer that introduced a check-in and temperature verification kiosk in March.

Some customers did shut down operations in response to the pandemic, but this varied by geography, Harward added. Her company is focused on schools and businesses, and expects sales growth to continue in these verticals in 2021.

Utilities and government use expands

The pandemic has not dampened government investment in self-service applications, and, in some cases, has encouraged it.

Utilities and municipalities continue to find kiosks a safe way to allow customers to pay their bills, said Elizabeth Ress, marketing manager at CityBase, a provider of government and utility technology. The payment kiosks make it possible for staff to manage payments remotely and makes tracking payments easier.

One utility, Alabama Power, recently enabled customers in Montgomery and Mobile, Alabama, to pay both electricity and water bills in person at a secure, self-service kiosk, Ress said. The utility added water and sewer payment applications to 11 kiosks in four payment centers that span the greater Mobile metro area. One-stop payment kiosks from CityBase enable government agencies and utility providers to provide customers the ability to pay bills for multiple utilities in a single visit, creating efficiencies for customers on the go.

Suppliers more optimistic

Equipment and software suppliers are generally more optimistic than service providers about 2021.

Raimon Chikhani, senior director partner alliances at Elo, a provider of interactive solutions, believes the pandemic has forced customers to explore long-term solutions.

"It's given us a great opportunity to educate customers on how to strategize and select versatile solutions capable of adapting to changing needs such as a wellness check kiosk," Chikhani said.

While some market verticals have taken a hit during the pandemic, Chikhani sees the health care sector, manufacturers and many big name retailers doing great. In addition, specialty retailers and restaurant brands are recognizing the need for contactless self-service solutions like pickup lockers as they support growing mobile order demand.

Lindsay Ojeda, director of marketing at Maysteel Industries LLC, a kiosk hardware manufacturer, is also optimistic about 2021, as she sees more segments for kiosks being created than ever as consumers are showing greater preference for self checkout.

"I think there are going to be some big innovations coming out," she said. "Everything around IOS and cloud is going to be big."

5G promises new growth

Meanwhile, 5G wireless continues to expand, offering improved cellular connectivity that is expected to support the expansion of IoT devices.

OptConnect, a provider of managed wireless solutions for unattended retail equipment, has come close to meeting its growth goals for 2020 despite the pandemic and is expecting record growth in 2021, thanks in large part to the benefits of 5G cellular networks.

While cellular carriers are mainly touting the benefits of 5G for consumers, 5G is also part of the "long term evolution" that enables the expansion of IoT applications with a more reliable connection and the ability to connect in more distant and secluded locations.

These benefits have been especially helpful for self-service IoT applications, according to Chris Baird, OptConnect's president. The company's 4G/5G modem, called mylo, as well as its smart embedded modem, called ema, that slides into an mPCIe slot on a kiosk or similar device, have been its most successful products in 2020.

"They (providers of IoT applications) are very interested in being able to deploy maybe in a basement where they couldn't before because of poor signal strength, or maybe deep inside of a factory, or maybe in a part of town that just doesn't have enough coverage," said Steve Garrett, OptConnect's chief product officer. "You can't have things stop working just because the network slows down because of the football game down the street. You can't have parking meters turn off just because there's a parade. With the advancements in 5G technology, these issues are no longer a problem."

For example, bitcoin ATMs have been a strong growth market for the company, thanks in large measure to LTE technology. "There is significant growth in that market," Baird said.

Another growth area has been "smart safes" or "cash-in-transit" services. These are safes in convenience stores and quick serve restaurants connected to the internet. A clerk dumps bills into a safe that sorts and counts them and deposits the funds directly into the customer's bank account, bypassing the need to transport the cash to the bank.

"There is a lot less risk for the store owner or the restaurant owner," Garrett said. "Our customer would be the customer that is providing the smart safe equipment and the smart safe service."

Meanwhile, the sunsetting of 3G cellular networks this year and in early 2022 will continue to support the expansion of IoT self-service devices, said Kevin Dalton, OptConnect's chief experience officer. Many cellular carriers plan to stop supporting 3G service by the end of 2021 or early 2022, in order to make frequencies available for 5G cellular. This means anyone using 3G equipment will have to upgrade to 4G or 5G in order to keep equipment connected to the internet as carriers phase out 3G.

For an update on how the coronavirus pandemic has affected kiosks, click here.