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Want better ROI?

September 2, 2004

The integration of technology into convenience stores continues at a fast pace, according to the NACS 2004 State of the Industry report. And self-service technology is leading the pack. A study by IHL Consulting Group predicts that kiosk transactions will approach $1 trillion by 2007.

For a C-store operator to justify an investment in self-service, the operator should clearly understand the expected return. Some operators plunge in just hoping that customers like the technology. Most, however, expect a tangible return measured in dollars and cents. Indeed, failure to generate sufficient revenue is a common slayer of kiosk projects.

"I see all kinds of opportunity to serve C-store traffic and to increase that traffic in and out of the convenience store," said Doug Peter, CEO of St. Clair Interactive. "But the problem with a lot of C-store projects is that they're not designed to maximize ROI."

C-stores attract a wide range of consumers who come in for small transactions such as buying cigarettes, snacks and beverages. The challenge for the C-store owner is to capture more of the customer's disposable income.

Just as a C-store couldn't stay in business if it sold only Marlboros or Snickers, a one-trick kiosk probably isn't going to line anyone's pockets with green. Peter believes that, in a C-store setting, multi-use units have the greatest potential for positive ROI. These kiosks not only offer more products and services, they also provide convenience while increasing value.

"The single application kiosk may or may not have a positive return on investment in a C-store setting," said Peter. "Kiosks are a significant investment. The way to make that really pay off is for the kiosk to have multiple revenue streams."

St. Clair collaborated with Kiosk Information Systems to design and deploy SNAPTRAX, a multi-application unit that provides user services such as Internet access, digital music downloading, CD-burning, e-mail, and cell phone services.

"By combining popular features into one unit, the return on investment for these machines far exceeds the first generation public Internet terminals and single-purpose transaction kiosks being deployed today," said KIS president Rick Malone.

ATMs in kiosks: A killer combo?

If multiple features improve kiosks' ROI, what about adding ATM functionality too? Couldn't C-stores get even more out of their floor space by combining the two machines?  Some in the industry think so, but not all do.

"I have my doubts," said Peter, concerning the convergence of kiosks and ATMs. "My feeling is that cash machines and non-cash machines don't mix very well. They come from two different computing IT ideologies."

According to Peter, ATM architecture is a unique beast that doesn't lend itself well to multiple transactions.

"The ATM is a very focused architecture," Peter said. "My prejudice is that the cash and non-cash machines can exist happily side by side (in the store), but not in the same box."