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Retail kiosks: Breaking new ground

Retail kiosks have come a long way since being introduced in the 1980s, when they served as electronic gift registries. Now it seems that everyone is getting into the act, taking advantage of new technology to provide new services to customers.

April 15, 2002

When technology first made in-store kiosks possible, Florsheim stores walked to the front of the line, installing kiosks in stores 15 years ago. Florsheim, an innovator in the fashion industry, hailed its new kiosks as a great advance in customer service.

If a customer can't find the right size loafer or wingtips at a retail store, the Florsheim Express Shop kiosk links shoppers to an offsite supply source, which carries the company's entire inventory. Customers place orders through the kiosk, so that even when the item a customer wants isn't in the store, Florsheim still makes a sale.

Karen McKenzie, vice president of marketing for Florsheim, said investing in kiosks lowers a retailer's investment in inventory.

"Footwear's a natural for this because it is so difficult to make sure that your inventory in a given store includes every size, color and width and the patterns you would like to offer," McKenzie said. "The thought that someone could place the order and then in a couple of days receive the exact size, color, width and pattern they're looking for is phenomenal."

McKenzie said the kiosks provided Florsheim customers with a level of product knowledge they might not have gained otherwise. In the process, the company builds customer loyalty to the Florsheim brand and its retail partners who made the kiosks available.

What's inside?

In the early days of Express Shop, Florsheim's marketing and merchandising teams worked with IBM to design the kiosks and develop the unit's software.

In 1997, the Express Shop was updated to an Intel-based 133 MHZ PC, with 32 megabytes of RAM. The kiosk was equipped with a 17-inch-touchscreen, a magnetic card reader, a thermal receipt printer with barcode capability, DB2 for Windows NT 4.0 and a macromedia director. For the first time, product searches were possible by "customer footprint": the size of the shoe and width of the customer's foot along with the type of shoe and color they desire.

That year, Florshiem expanded its retail relationship with Sears -- an offsite outlet for its merchandise -- and deployed Express Shop kiosks in Sears stores. Today there are 315 installed in Sears stores nationally compared to less than 20 units inside Florsheim stores.

The location of the kiosks makes perfect sense, McKenzie said.

"In our own stores, the manager can order the shoes in the very same way and have the inventory directly shipped to the customer, so there was not as great a need in the Florsheim stores as there was in the Sears stores."

Florsheim is now updating the Express Shop kiosk as a browser-based unit linking customers to the Florsheim Web site. That project is still in the trial stages with a deployment date yet to be announced. In the meantime, Florsheim is posting its entire collection of more than 200 styles on e7th's wholesale online multi-vendor catalog. Based in New York, e7th provides secure supply chain solutions to the footwear and fashion industry.

"We wanted to upgrade the look and feel and functionality of the current kiosk program," McKenzie said. "People are so accustomed now to shopping on the Internet, we really wanted to extend that experience in kiosks as well."

Just the facts, sir

According to Frost & Sullivan, a Silicon Valley market research firm that studies the kiosk industry, 71,000 retail kiosks valued at $459 million were shipped worldwide in 1999. The United States led the way with 65 percent of the world market for retail kiosks, with Asia a distant second at 25 percent.

The U.S. dominance in the retail kiosk market is a credit to self-service technology, said Rufus Connell, an industry manager for Frost & Sullivan. The Internet has played a significant role as well.

"There was this big rush to the Web a couple of years ago. Pretty much all retailers spent a lot of money developing significant Web presences," Connell said. "Then it kind of gets to the stage of 'How do we deliver that to people who don't have a computer?' The kiosk is a natural answer."

Progression of the retail kiosk market

Connell said that in the beginning, kiosk design wasn't given a great deal of thought.

"They were looking at ways to automate some of the processes they already had. In some cases, people thought they could replace sales associates," Connell said. "In other cases, they thought they were just going to make them more efficient."

Nearly 30 percent of kiosks in retail were purely information kiosks in1999, Connell said. Frost & Sullivan expects the "pure point-of-information kiosk" to become a virtual dinosaur by 2006, primarily because more will be expected from them.

"It limits the reason to use the kiosk," Connell said. "A lot of the time now, purchasers are becoming more and more educated before they get to the store. Just providing pure information about the product often isn't enough to draw someone into using it."

The draw can be a kiosk that links the shopper to a retailer's Web site. But making that possible involves more than putting the Web site in a box. Most Web sites are not touch friendly, Connell said, so developers must include a mouse or another type of pointing device.

A Web site must also be an extension and not a duplication of services offered by the bricks-and-mortar retail outlet, an arrangement that eliminates competition between the store and the kiosk.

"Otherwise you'll end up with that age-old problem of the sales associate unplugging the thing," Connell said.

A fair pricing system with uniform national rates is another requirement for kiosks displaying Web content.

"You can't have your prices vary from region to region because if you send something out to the kiosk, [a customer] may get a different price than what they actually would in the store," Connell said.

Wal-marting Appliance Sales

Imagine a successful discount retailer getting into the appliance business for the first time, and using kiosks to stimulate sales and preserve floor space. Wal-Mart, the giant general merchandise retailer, has done just that.

In late September, Wal-Mart began test marketing in-store General Electric Large Appliance Centers. They included a 900- square-foot floor display at spacious Supercenter locations, with room for 40 washers, dryers, ranges and other products. Wal-mart installed a catalog kiosk for viewing an additional 150 GE appliances.

Customers can search for different colors, styles and prices on the kiosks. If the customer decides to buy an out-of-stock item, he simply prints a hard copy of his order and gives it to a clerk. Wal-mart records the order and sends it to GE, which usually ships the item within 48 hours.

"You have a trusted brand name like GE, you have 100 million customers a week coming through Wal-Mart stores and you have the technology with a kiosk to provide customers the opportunity to view and order a full line of GE products," said Rob Phillips, a corporate public relations representative at Wal-Mart headquarters in Bentonville, Ark."It really ads a whole new dimension of one-stop shopping for our customers."

Choosing GE was a no-brainer.

"We went with GE because of their brand recognition," Phillips said. "We feel they are a very trusted name in consumer products, particularly appliances and we like to think that we're a very trusted name in retailing. That makes a good marriage."

Convenience is the major advantage of in-store kiosks, Phillips said, but there are others.

"I think the newness of the technology is also something that's neat," he said. "Before, you would have to go into a very, very large appliance center to see 100 or 150 different displays. Here, you can get a good feel for them by seeing 40 or 45 displays on the floor. But then you can go to kiosks a couple of feet away and look at all kinds of variations on those major appliances."

The program is still in its infancy, but early indicators have Phillips optimistic. Wal-Mart plans to have as many as 100 stores taking part in the program by early 2001.