News

Self-Service 2006: A look ahead

Experts and insiders predict the year ahead for the industry.

December 19, 2005

This article expanded from a story originally published in Kiosk magazine, Nov/Dec 2005.

What's the last issue of the year without a look ahead? We don't know, and we're not bold enough to find out. Hence, over the next few pages, you can put down your crystal globe and Magic 8 Ball and let our panel of gurus forecast the next 12 months. If they're right, send us your letters of praise. If they're wrong, our lawyers tell us we're not liable. Whew!

Digital signage gets brighter
Brad Gleeson, COO, ActiveLight

The digital signage industry really came alive over the past 12 months, with major acquisitions and large network rollouts beginning to take shape. While there is a long way to

go before digital signage becomes part of the conventional media budget and retail store design, I believe we have reached the tipping point, and the industry will begin to grow by leaps and bounds in the year to come.

Digital Signage breaks down into two areas - advertising- supported networks in public locations, and brand/merchandising-supported networks in self-contained locations.

I expect we'll see a flurry of activity in the advertising networks as more large media companies enter the market, as Clear Channel, Viacom, Liberty Media and Gannett have this year. This change will accelerate the land-grab for prime advertising locations and get more media buyers and planners involved in this industry.

On the merchandising side, retailers and CPG (consumer packaged goods) companies and their brand managers will continue the march for digital signage into the branded retail environment. The Kroger supermarket chain project along with the purchase of PRN Corp., a leading company in the out-of-home video advertising networks, by Thomson signals strong investment in this area.

Focusing on ROI
Sylvia J. Berens, Ph.D., vice-president, Apunix

For 2006, expect fewer pilots, larger rollouts and new kiosk initiatives as deployers recognize increasing value to the customers and increasing ROI. More emphasis will be placed on total cost of ownership as the market explores various financing options,

including renting the solution.

Self-service solutions will be most prevalent in the retail space. Standard benefits of such solutions will continue to be a factor: attracting customers and keeping them coming back, increasing sales within the same store footprint and mitigating the high costs of labor turnover. But largely untapped is the potential for changing customer buying behaviors using self- service technology. The market also will begin to merge business intelligence, decisioning technologies and analytics with self-service solutions.

The number of units deployed will rise significantly as self-service solutions solve real customer problems. Increasing competition for the customer's wallet, a need to streamline operations in a soft economy and increased labor costs mean that self-service devices will become more of a necessity than a luxury.

The itch for niche markets will be scratched
Julian Bowron, president, The Feature Factory

Kiosk prices will continue to drop, largely due to two factors: component prices are becoming cheaper, and there is increasing competition, particularly from South East Asia.

To keep business, you have to be good. A lot of mid-market production operations will move to Asia, causing middle-of-the-road operations and low- end operations in North America to lose profits. Niche products will continue to do well. I foresee a return to the niche market, similar to the popularity of niche machines when the kiosk industry was just beginning. North America will continue to emphasize the knowledge economy, benefiting niche markets. But even those markets shouldn't get too comfortable; increasingly, as their technical schools produce top-grade talent, Asia is assuming more of the product design market.

Music will be growth to the ears
Bruce Rasa, marketing manager, kiosk systems, Retail Store Solutions Division, IBM Corp.

The consumer is driving the direction of self-service solutions today. Much more sophisticated in the use of technology, consumers are looking for self-service opportunities that are fast, easy and fun to use in all aspects of everyday life - from retail to travel, banking to entertainment and health clubs.

Our IBM Anyplace Kiosk is a great example of self-service technology that is taking off today: An ultra-compact, flexible and durable unit that can be easily deployed in multiples, these kiosks are being used to handle a variety of applications in more segments than ever before.

One of the hottest trends today is music- related kiosk solutions, whether it's music preview, CD burning or digital download. We see these applications becoming mainstream, expanding far beyond the conventional entertainment retailers. In fact, it's happening right now.

Cash-acceptance will help lead among transactional kiosks
Andrew Osborne, global marketing Manager, retail, MEI

In 2006, any technology that drives consumers to use self-service will be popular, with the focus being on solutions that are simple to use, eye-catching and non- threatening in their appearance. Systems with the smallest footprints that also offer payment versatility likely will dominate the self- service landscape, enabling deployers to accept all forms of payment (credit, debit, cash) to maximize profit potential. Cash acceptance is importance because owing to its ubiquity, it provides a strong common denominator among device users.

Aggressive growth in Europe, other regions
Mike Webster, vice president and general manager, self-service, NCR Corporation

NCR believes demand for self-service will increase generally across all the markets it serves, from hospitality and travel to grocery and general retail to financial services and more. Adoption in Europe will be very aggressive, and we will see new footprints in other regions as well. Near-term deployment growth will be strongest in self-checkout for the home improvement and other non-food sectors, with

increasing interest in hotel self- check-in and food service order-and-pay solutions.

Consumer demand, of course, is at the root of the self-service phenomenon. Although demographic differences among end- users are noticeable for specific applications or in specific venues, as we look across the broad spectrum of self-service, the technology has near-universal appeal. In today's "self- everything" era, gender, age, ethnicity, economic strata and other factors are less important than whether consumers are being served when, where and how they want to be served.

Thus, self-service will continue to grow as the technology provides greater convenience and ease of use, offers new and useful applications and delivers more functionality. Examples include improved multimedia-enhanced user interfaces, expanded use of biometrics and RFID for greater security and transaction speed, and continued integration of convenience- enhancing functions such as stored-value cards and check acceptors.

Don't forget employee-facing self-service applications
V. Miller Newton, CEO, Netkey

In 2006, businesses overall will expand their commitment and investment in self- service to increase revenues, reduce costs and improve interactions with customers and employees.

By industry, retail continues to lead in the enablement of self-service, as merchandisers look to capture the revenue benefits of multichannel synchronization and delivering product information at the point of purchase, while at the same time automating routine transactions to reduce costs.

Cross industry, extending human resources services and information to unconnected workers in factories and distribution centers using kiosks is a growing application. It's another case of being able to automate manual and routine processes, which in turn increases employee satisfaction and lowers the cost of delivering HR services.

Complexity will lead to higher costs; QSR will be big growth area
Peter Kaszycki, president, Pro-Tech

I believe firmly that kiosk prices will rise as we move into the new year. The rationale is that kiosks are becoming more mission-critical, and excessive downtime is no longer accepted.

Industry sectors that adopt the technology are putting faith in receiving reliable, durable machines that operate with limited downtime and provide the input/ output features that consumers want and owners need. Accordingly, kiosks will be built with scanners, Web cams, proximity sensors, power management, UPS systems, speakers for voiceovers and more reliable computer/display components.

In addition:
• Remote monitoring via the Internet will become the standard
• To better enable on-site service, hardware design will become more modular
• Hardware and soft ware providers will work more closely together to provide a fully integrated solution to the end-user

Kiosks have become more complex simply because they are now required to do more than in the past, and they are becoming a true member of the team, not something that sits on the sideline. No longer are they stuck in the corner for the occasional customer to use, they are on the front line as the preferred way for the customer to do self-ordering, self-ticketing and self-service.

Retail gets a boom
Doug Peter, president, St. Clair Interactive

The most-in-demand technologies will be those associated with customer self-service across all verticals, especially retail. When it comes to deployers, look for leadership from IT integrators. Among components, I expect touchscreen devices with payment and loyalty capabilities to be big, with digital entertainment being a big factor.

Hardware prices should fall, but branded enclosures and soft ware will rise. Greater emphasis will be placed on strategic approaches rather than point solutions.

2006: Year of the Shrug?
Glen Fosella, vice president, sales and marketing, Source Technologies

We believe - and hope - that 2006 will be the "year of the shrug." By that, we mean consumers will no longer be surprised when they see a self-service device. They accept them, and even expect them, to turn up in new places in their daily lives.

With ubiquitous applications such as airline check-in and retail check-out, consumers are coming to understand the value of kiosks. They are becoming comfortable using them, helping to speed adoption and making it easier to sell and deploy self-service in new ways. This is accelerating the industry overall.

The downside is that consumer expectations are going up as well. One can almost hear them say, "It should work like turning on a faucet. If I need to stop and think about what button to push, it is your fault. And if you haven't figured out where, when and how I want self-service, there must be something wrong with you."

These expectations will be hard to meet, but for players who can do so, 2006 should be a banner year.

Photo, self-checkout in for another good year
Bill Gerba, president, WireSpring Technologies

The new year will be marked by strong growth from a number of areas in the self-service industry. Photo kiosks appear to have global demographic appeal, so it's likely that they will continue to be aggressively deployed through 2006. I'd also expect them to be one of the most heavily used kiosk applications, although that's more from personal observation than any kind of quantitative analysis. It is also likely that the growth we've seen in self-checkout over the past 18 months will continue through 2006, driven by strong ROI and generally positive experiences by consumers.

Consequently, I'd expect these two applications to get the most use, and probably by the same demographics as before. Perhaps the overall age range will widen a bit, but there is little reason to think that the digital divide has shrunk during the course of `05. Airport check- in kiosks will also continue to see strong use (and by a very loyal customer base), though their rate of deployment may start to slow down as the market (in the United States at least) reaches saturation. I also believe that new financial applications will continue to drive sales and usage of financial services kiosks, which will be another high growth area in coming years.

Improved security, convenience will speed adoption
Ronald L. Bowers, SVP business development, Frank Mayer & Associates Inc.

Look for continuing development of self-service consumer applications allowing consumers to expedite their retail shopping experiences while giving them positive brand recognition and loyalty through convenience, i.e. cellular payments, ring tone downloads, debit card refills, utility payments, real-time ticket ordering, multisolution payment, special virtual-inventory ordering-centers and loyalty programs.

The fastest growth demographic is the 15 to 35 age group: They have consistently been users of this technology, but lately I have seen brand marketers reach out to them with strategy that merges technology with their buying habits. Next group up is the Boomers. They have come along more slowly but have shown interest in the convenience and greater selection that the technology offers.

For brand marketers, 2005 was a watershed year for acceptance and use of the retail kiosk merchandising solution. I see dramatic growth through expanded use of self-service kiosk marketing solutions in 2006 and beyond.

The supermarket and convenience store industries have the biggest potential for growth in 2006-2009. These channels are extremely sensitive to costs associated with labor and customer service. Several successful pilots in these channels show consumers will embrace solutions if they are branded and executed as part of a total marketing strategy. The key to success is to go beyond the technology of the kiosk and to leverage branded and retail merchandising with it. Done with a well executed strategy, the success is exponential; if not, it is another technology boondoggle.

Biometric security measures, in addition to being very user-friendly, will let consumers feel very confident about their kiosk-based transactions. Convenience and security will help dramatically increase consumer use, leading retailers to embrace even more self-service solutions.

Reliability, efficiency will mean more growth
Heinz Horstmann, CEO, SiteKiosk

More and more companies understand the value of self-service kiosks. Reliability of automated transactions at the kiosk, a high level of customized pre-sale information to prospective consumers and the lower cost of operations contribute to a better interaction with the consumer. Kiosks are ideal for making transactions more efficient. More consumers appreciate the convenience, consistency and self-control of automated transactions over face-to-face transactions with sales people, and, for many consumers, self-service kiosks are a welcome alternative to long lines or inexperienced sales people.
The number of tech-savvy consumers will increase in 2006, which will contribute to the growth of self-service technology. There will be a substantial increase in the number of kiosk deployments next year, particularly in the retail industry.

The opportunity exists for a well planned roll-up
Gordon Short, MetalFX

The self-service applications that will be most in demand in 2006 will be bill payment and informational. These seem to be where we get the most requests for quotes and deployments. Each will be scrutinized to ensure appropriate ROI is obtainable.

For kiosk prices to fall, consolidation and standardization must occur. The direction is logical, but the market remains rather fragmented with minimal if any movement in this direction. There remains great opportunity for a well planned roll-up.

The biggest change will be more proliferation of deployments in both the bill payment area and informational kiosk area.

Open-loop debit is on the cusp
Charles J. Caserta, president, Livewire International Inc.

This year was a break-out year for the self-service industry. Many early adopter products such as photo and bill payment have matured and gained acceptance, and we have seen usage in these areas steadily grow. I continue to see steady growth for this segment. I do not believe the "hockey stick" has happened for this industry. Still, there are more players in these areas, and I do not see one run-away deployer. It is a broad market and continues to get broader.

I do believe self-service debit, gift and open-loop debit will be the next big growth area for the self-service industry. Many open-loop issuers are dabbling in prototypes and betas, and it's just a matter of time until we begin seeing large rollouts. Security and privacy hurdles are being overcome, which will lead to explosive growth.

I also believe kiosk hardware and component prices will continue to fall slightly as cross-over companies continue to enter the market, especially on the component side. And we are beginning to see an influx of overseas manufacturers, especially from the off-premise ATM industry.

Self-service: Coming to a highway near you
Debbie Bowman, COO, TPI

State, regional and local tourism convention and visitor bureaus always will be interested in promoting their products. But our company is experiencing an increase in demand from retailers who do business along interstate corridors and other heavily trafficked areas (i.e., pay-at-the-pump gas stations with retail operations) to provide a tourism service while minimizing the impact on personnel and at the same time driving people into their stores,.

The costs of self-service are definitely going down. We are a kiosk integrator solution provider, working with multiple vendors to create custom solutions for our customers. We have found that as the industry has matured and consolidated, our choices of vendors provide better quality at a much more competitive price. So we are experiencing an increase in quality and a decrease in costs. We are benefiting from economies of scale. As the boutique operations merge into larger suppliers, the price point is dropping for the purchaser.