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Summit: Retail kiosks to dominate industry for some time to come; U.S. surpasses Europe

Summit Research Associates Inc. released the fifth edition of its flagship "Kiosks and Internet Technology" report. The statistics show that retail accounts for 31 percent of kiosks worldwide and reveals that the slowdown period of 2002-2003 has ended with an upsurge in kiosk projects worldwide; most pronounced in North America.

June 20, 2004 by

Spurred by the digital photography and Quick Serve Restaurant sectors, retail kiosks are continuing their dominance. In fact, retail will likely remain the kingpin in the kiosk industry for some time to come.

That's among the key findings in the recently released fifth edition of the flagship "Kiosks and Internet Technology" report by Summit Research Associates Inc.

The more than 500-page report shows that retail accounts for 31 percent of kiosks worldwide and this sector will play a pivotal role in industry growth. Kiosks numbered 397,000 worldwide last year, a number that will skyrocket to 738,000 in 2007, according to Summit Research's estimates.

That forecast is based on interviews and surveys of 434 kiosk-related companies in 43 countries. It contains 35 charts and tables on the leading kiosk issues.

The report also examines the industry from perspectives such as the average number of users per day, average revenue per day, average length of time spent at the kiosk, leading design issues, leading types of peripherals use, most popular kiosk applications and lessons learned.

U.S. overcomes Europe in kiosk usage

The report shows that for the first time, the United States has eclipsed Europe in kiosk usage. "Europe has more of a self-service tradition than we do, but lately the United States has definitely come on strong," said Francie Mendelsohn, Summit's president.

Mendelsohn said electronic check-in services at airports and checkout machines at retail locations are among the driving forces behind the explosive U.S. kiosk growth.

The report calculates 94 users per kiosk per day in the U.S., compared to 39 users per kiosk daily in Europe. Average daily use worldwide is about 81.

Mendelsohn said airport-based kiosk growth appears to be flattening out, however. Airlines are turning to the Internet, offering passengers the ability to print out their boarding passes at home.

However, retail shows no signs of slackening off. "Retail will remain at the forefront of our industry for the foreseeable future," Mendelsohn said. "It's hard seeing retail getting knocked off of its perch."

A National Restaurant Association (NRA) survey has found that 70 percent of adults age 18-34 would use self-service machines to place their orders if given the chance. And 41 percent of QSR operators expect to pump more money into their budgets for technological advancements in 2004, the NRA reported.

Those figures don't surprise Mendelsohn--she pointed out that kiosks can enhance customer service while it reduces labor needs.

Another area of runaway growth, photo kiosks, has been precipitated in part by Kodak's purchase of Applied Science Fiction, a photo kiosk company.

"Customers will use these units if they're fast and easy," Mendelsohn said. "There's a lot of money to be made by photo shop owners if they can provide some value-added service."

The Summit Research report shows travel and tourism as the second largest kiosk segment, at 16 percent, followed by communications at 12 percent and entertainment at 11 percent. In the entertainment segment, ticketing and sporting event kiosks are coming on strong.

However, Mendelsohn casts doubt on the prospects for kiosks that help users download music to burn on CDs. Starbucks has launched such an initiative, but it competes with services such as Red Dot Net and Full Play Media--they allow music buffs to preview music before downloading it.

Mendelsohn sees some growth in the financial services sector where banks, for instance, permit customers to sign up for certain accounts or buy various kinds of financial instruments. Financial institutions view that service as value-added and a cost control on labor.

Health care sector weak, but HR is strong

Health care kiosk installment has been sluggish. Hospitals have found that kiosks placed in waiting rooms are underused. Families are probably too preoccupied to pay them much attention, Mendelsohn said.

At 8 percent of the entire market, human resource kiosks are coming on strong. They can be used to assist employees, for example, who want to change their benefits or change the number of dependents. In Wal-Mart's case, HR kiosks have helped streamline hiring.

"Wal-Mart has been very pleased with their kiosks," Mendelsohn said. "They tie them in with software they've developed to narrow down candidates for the available positions."

Fading on the industry radar screen are pay-per-use Internet access terminals, which only account for 5 percent to 10 percent of the industry. Once a promising growth area, these terminals have become overshadowed by web-enabled phones, PDAs and WiFi hotspots, Mendelsohn said.

"Part of it is that demand is not there, but also technological developments came along and decreased the need," she said.

Mendelsohn predicts a robust future for the kiosk industry.  It had been hard hit by a recession that led to scores of companies closing up shop from the summer of 2001 through the third quarter of 2003. "Some just couldn't hang on until times got better," she said.

Mendelsohn said many kiosk projects put on the back burner during bad economic times have been resurrected and are being rolled out. "Even companies that had tried kiosks that didn't work are now giving them another chance," she said.

Summit Research is now preparing a kiosk industry directory and a global statistics and trends report, both of which will be issued in the next month or so. These reports will be reformulated from the huge "Kiosks and Internet Technology" report for quick-reference use.