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Kiosk impact being felt in retail

Kiosks have made ripples in the retail market pond for nearly 20 years, but the industry's new interest in Web-enabled kiosks is reaching tidal wave proportions.

April 15, 2002

Kiosks have made ripples in the retail market pond for nearly 20 years, but the industry's new interest in Web-enabled kiosks is reaching tidal wave proportions.

Wired through Internet connections to Web sites of their host stores, today's kiosks have changed dramatically from their origins as gift registry machines. Interest in new retail kiosk installations is growing rapidly, according to a recently released industry report.

Retail is the fastest-growing market sector of the kiosk industry, according to the October 2000 report by Summit Research Associates Inc., a Rockville, Md.-based kiosk consulting firm. In the first installment of a new series, "Kiosk Industry Sector Report - Retail," Summit surveyed 100 retailers with existing kiosk projects or deployments on the way.

Of the 100 retailers surveyed:

• 28 percent said kiosks have had a "measurable -- and positive -- impact" on sales.

• 13 percent said the average amount of the purchase made by each customer was greater on the kiosk than on the store's Web site. Some said it was too early in their kiosk deployments to say if there was a difference in purchase amounts, while others made no differentiation.

The report's author, Summit founder and president Francie Mendelsohn, said the impact of kiosks on retail is difficult to measure in dollars and cents.

"What that doesn't tell you, and frankly the retailer doesn't care, is how many of these people went to the Web site first, did their homework and then went to the store," she said. "From the retailers' perspective, it doesn't matter because the end result is good for them, they're getting the sale."

Other results:

"Some are not sharing numbers, which frankly is (the same as) sharing numbers. It's telling me they're not that great at this point," she said.

Impact unknown....so far

It is still too early in the game to say whether Web-enabled kiosks will have a dramatic impact on the retail industry, Mendelsohn said. Retailers have shown interest in installing them, but few are willing to say if they are profitable.

"There's no question that most of the retailers, if not actively putting a kiosk in place, they sure as heck are thinking about it," she said. "In a lot of cases, people said come back to us. It's too early, or we just started and we don't have any track record. So we'll go and ask the folks again."

Another study

Forrester Research Inc. is asking a few questions of its own.

The verdict may be out on how much revenue is being generated by retail kiosks, but Forrester's numbers offer insight on the rise in the use of kiosks in retail.

Forrester, a Cambridge, Mass.-based technology research firm, asked 30 brick-and-mortar retailers that also sell merchandise online about their plans for adding kiosks by 2002. Eighty percent of them said they planned to add kiosks in most of their stores. The June 2000 report, "Mixing Bricks with Clicks," found that one-third of those surveyed planned to install Web-enabled cash registers.

"They've already invested in online storefronts," said Seema Williams, primary author of the report. "They think a kiosk is a great way to bring that investment to the store environment."

Not only had the majority of retailers interviewed by Forrester determined that kiosks were right for their business, 83 percent said having more than one method of selling their product -- "multiple channels" -- was a way of increasing sales.

Futuristic expectations

Williams predicted the future of retail would feature more electronic tools to help customers shop and a "much richer, more service-oriented experience."

"Things that you used to need help on now all of a sudden become easier with help from a kiosk," Williams said. "You get personalized coupons or you end up with staff members who can use their voice-held device to tell you whether or not the product you want to buy is in stock online and can be delivered to your home. All those kinds of tools we simply don't have today will slowly show up in stores."

With the introduction of electronic shopping aids, shoppers will become more comfortable with technology, Williams said. "They'll have more experience using Web-based technologies by the time they come into stores in a couple of years. It will be easier to get consumers to use something like a Web-based kiosk."

A kiosk by any other name

Not everyone is comfortable with the "K" word.

"I think when most people hear the word kiosk, they think of what has been done in the past," said Mike Wranovics, vice president of marketing for San Francisco-based Streetspace. "We've really tried to create something completely different."

Streetspace's primary product, the Web Station, is an Internet access terminal designed to have a "sleek, other-worldly look" according to the company's Web site. Ultimately, the company plans to install thousands of Web Stations providing the public with free Internet access. Streetspace tested the concept for a year, beginning in October 1999, in Berkeley, Calif.

"Our main focus has been on lifestyle quick serves," said Wranovics, who said the company's goal was to create a ubiquitous presence of Internet access.

Tower Records and Hollywood Video were involved in the pilot run, but Wranovics said that most of the installations were small retailers such as independent coffee houses and bookstores.

Since then, Streetspace has successfully installed a pilot in San Francisco's Pacific Bell Park and has deployed its sleek, small footprint units in three Bay Area McDonald's. The McDonald's Web Stations, installed in November, include 16 features, from job listings and food facts to a virtual suggestion box.

"The key is that people use these things. We focused on making sure that takes place," Wranovics said. "We're adding the right content, we designed the Web Station so that it's very attractive. We made it free. We make sure that it's supported by POP (point of purchase) and other marketing efforts."

He said the terminals have proved themselves in the tests.

"The bottom line is, this is a total waste of your time and energy unless people actually see it as a value and something they want to come back to on a regular basis," Wranovics added. "That's something we were able to prove at Pac Bell Park, and I'm sure we'll be able to prove it McDonald's as well."

More on the way

Like Summit's Mendelsohn, Wranovics believes it's too early to gauge the effect Web-enabled kiosks are having on retail. As e-commerce grows in popularity and consumers become accustomed to using public terminals, more retailers will turn to kiosks. That way, they can offer more of their inventory to customers, not just the items on the sales floor.

The availability of Web-based applications, such as e-mail, is a big part of the success of Streetspace's Web Station. More and more Internet users are considering such services a necessity rather than a luxury.

Wranovics says Streetspace has made a positive impact in the retail market, and he sees a bright future.

"In the places where our Web Stations have gone, it's added to the experience," Wranovics said. "Some of the retailers that hosted Streetspace kiosk pilots saw an increase in sales. They've had people walk in the door specifically to use the Web Station, but then stay around and shop."

Although the potential profitability of retail kiosks is still unknown, that mystery has done little to deter interest. Rather than use valuable shelf space, retailers may choose to stock such rare items in a warehouse, and ship them to customers who order in the store.

"The big advantage is you can buy things that are not in the store," Mendelsohn said. "You might want a book on left-handed wrenches. How many people are going to ask for that?"