Article

Retail kiosk potential - Part One

In the first of a two-part series, leading kiosk industry consultant Francie Mendelsohn discusses how retailers are utilizing kiosks. Despite the economic downturn, Mendelsohn sees potential in this sector of the market.

February 18, 2002

A well-respected technology expert and consultant to the kiosk industry, Francie Mendelsohn heads Summit Research Associates Inc. She has worked as a programmer, systems analyst, computer specialist and project manager. She is a frequent speaker at conferences and seminars throughout North America, including KioskCom, COMDEX, ComNet, FOSE and IDC briefings.

Kiosks have not been immune to the downturn in the world economy. Fortunately, retail kiosks are the one industry segment that is poised to enjoy the most success - both immediate and long term. Virtually every major retailer - and some not so large - are in the planning or deployment stage of a major in-store kiosk project. There are two equally important rationales for this turn of events:

-- The kiosks are used as a way to introduce the retailer's Web site to the customer. The philosophy is simple; the store is telling the customer:"We know you cannot always physically come into the store to shop with us, but we still want you to shop with us-no matter where you happen to be. Here is our Web site, see how easy it is to find what you're looking for, observe how quickly you can determine if the item is in stock, and see how painless - and yes, enjoyable - it is to order it with delivery to a location of your choosing."

-- The kiosks are vehicles used to provide product to the customer. A small-square-footage store now has an unlimited inventory. Disappointed customers no longer have to leave the store with their shopping mission unaccomplished because that store did not have the merchandise in stock. Instead they will use the kiosk to order the products in the desired size, color, and quantity and have them shipped directly to their home.

What aspects of customer behavior are most likely to offer a challenge to the chances for success in this industry sector? This two-part article will discuss the leading issues and will provide some answers. The first part will examine how customers use kiosks in a variety of settings. Part two will focus on customer-loyalty programs and the dynamic between employers, employees, and the kiosk.

Malls - Kiosks in malls have traditionally been used as store locators. An unusual example is the Metropolitan Washington Council of Governments's Commuter Connections kiosks. They are deployed are shopping malls to allow customers to sign up for car pools, van pools, or ride sharing. The store locator information is an add-on feature to a kiosk with a different purpose. In most cases, the main purpose of the kiosk is to provide a quick way for shoppers to locate the desired stores. These kiosks should contain a "You Are Here" pointer on a map so the customer can orient himself and thus find his intended destination. The usage of these kiosks is quick and dirty; shoppers find the store they are looking for and are on their way.

Retail stores - In retail stores, consumers often will use a kiosk if store personnel lead them to it. Bridal registries have been in use almost as long as the granddaddy of retail kiosks, the Florsheim shoe kiosks. The registries are easy to use and are often simply there; conveniently located in the china and crystal section of the store. Store personnel sometimes usher people over to the units but often the customer finds it on his own. Clearly, the easier the kiosk is to use, the longer the customer will stay and use it. Bridal registries are intended to offer quick results - provide the list of registered gifts and allow the customer to print out the list. No more no less.

Stores including Kmart, Recreation Equipment Inc. and Staples have started to place Web-based retailing kiosks in their stores. Previously, the kiosks contained a subset of the retailer's Web site. Increasingly, the kiosks are simply the retailer's Web site minus the commands (File, Edit, View, Favorites, Tools and Help) located at the top of the screen. Often the exterior signage provides how-to-use instructions. In some cases, the customer scans the UPC code using the kiosk's attached barcode reader to identify the product(s) and the current price. Wal-Mart takes advantage of this technology in their gift registry kiosks located in thousands of their stores. An interesting - and unintended - side benefit is that sales personnel use the scanners for a quick and up-to-the-minute price check.

Location is critical in retail establishments. Some stores place their kiosks in customer service areas; this is not recommended, primarily if it is the only kiosk the store installs. Only people who already have business there - to discuss a financial issue, pay bills, put money down toward a layaway purchase, etc. - will venture into that area. The bulk of the customer base, in the store to do normal shopping or browsing, will therefore be unlikely to see or use the kiosk. If a store is going to place several units throughout the premises, then this is not so critical. But if only one is going to be initially deployed, much thought must be given to its location. Effective signage and employee "referrals" will help lead customers to the kiosks.

Airports - Everyone wants to put kiosks in airports, reasoning that the business traveler - Web-savvy and with disposable income and/or an expense account - will be willing to use kiosks in airports. They frequently have time to kill and welcome the opportunity for high-speed Internet access to their e-mail, stocks, news, sports, and general Web surfing. By a wide margin, our research has shown that the leading application is e-mail. After all, the main reason most business people travel with a notebook PC is to remain in touch with their office and to check their mail. They are certainly not lugging their theft-magnet notebook so they can write the next "Gone With the Wind."

Users in airports like to have a place to sit down. Depending upon the amount of layover time they have, they usually spend an average of 15 minutes at these units. Some are configurations like Laptop Lane™ that offer a private "little office." These centers, complete with full-size PC, high-speed connection, phone, fax, and printer, are so comfortable, offer so much privacy, are so reasonably-priced, and are so easy to use, that customers will spend as much time as their schedules permit using their office away from the office.

Convention Centers - Usage patterns at convention centers are similar to those at airports, although the length of time of an average session is somewhat shorter. People at convention centers literally do not have a plane leaving in a few minutes. As a result, they can be a little more relaxed - and less harassed - in their sessions. They may use a system simply to check a few e-mail messages. They have the luxury of being able to return to access the Net later the same day; often from the very same kiosk.

For a variety of reasons, convention centers have had fewer pay-to-use kiosks installed than might have been expected. In the convention hall itself, there are often free-to-use systems set up just for the duration of the particular conference. San Francisco-based friendlyway Inc. has developed the friendlyway Internet Station™ a product for precisely this type of kiosk service. In many cities, deployers of kiosks have been somewhat reluctant to make convention centers a top location priority. The reason is that the convention center is not a 52-week ongoing enterprise. Many weeks - sometimes a month or two - may pass between conferences or conventions. It is not cost-effective, therefore, to install costly kiosks if the usage is such a hit-and-miss scenario and if a steady revenue stream cannot be guaranteed.

Measuring success

Success rate statistics have not yet been officially collected. However, vendors report that the number of kiosk users per day has been increasing in recent months. The main reason is that the imbedded Web site has been dramatically improved, allowing for faster and more accurate searching.

Furthermore, the systems have been vastly overhauled, redesigned, upgraded and generally improved. People are finding the kiosk experience much easier and intuitive and, as a result, are now better able to locate the desired goods and order them online.