A Forrester Research report analyzes the early successes and failures of Apple’s mobile payments system.
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Researching, not buying
Store employees would not comment on the computers and only three customers were seen using the equipment during an hour-long visit to the store on a Saturday morning in May. Each said they were looking up product information, not placing web orders.
Another large nationwide retailer, Kohl's, also plans to roll out kiosks to all of its 1,059 stores beginning in the fall. This follows a test in 2009 of the machines, which enable customers to order out-of-stock items, often with free shipping. Kohl's declines to provide details.
Kiosks replaced desktop computers in late 2008 at Indigo Books & Music stores, as the Canadian retailer aimed to make it easier for consumers to pre-order merchandise, order out-of-stock items and search for in-store stock. The $5,000 kiosks include touch screens, printers and bar code scanners, and reside on circular countertops painted a bright white. "We wanted to keep it simple yet powerful," says Sumit Oberai, Indigo's chief information officer.
Changing the design helped. Traffic to the kiosks increased 150% compared with traffic to the old workstations, which consumers often mistook for staff machines, Oberai says. Each Indigo store has between six and 22 kiosks, depending on store size.
The kiosks also help strengthen consumer relationships with Indigo. Consumers can access the retailer's "irewards" loyalty program at the machines, earning in-store discounts.
Meanwhile, a lighting retailer in Florida is experimenting with simple workstations. Capitol Lighting, which operates the 1800lighting.com web site, has installed in a new, smaller store in Stuart four workstations on which customers, aided by a salesperson, can view stock not available in the store.
Such in-store browsing previously involved cracking open up to eight catalogs, says Eric Leberfield, the retailer's chief marketing officer and vice president. "We want to give people the chance to shop however they want to shop," he says. "They can start in the store, build a shopping cart, show the husband or wife, and then complete the sale at home."
He estimates that about 10% of shoppers build shopping carts in the store and complete the sale online. More often, a shopper will show the shopping cart to a spouse at home and then return to the store to complete the sale. He says about 50% of his customers research lighting products online before visiting Capitol stores.
He compares a salesperson helping a shopper at a workstation to a salesperson walking that shopper down the aisles. In the case of the Stuart store, which opened in September and is about half the size of the company's other stores, there is enough floor space for about 1,500 items, compared with 500,000 items available through the web site. "Generally a lighting purchase isn't an impulse purchase," Leberfield says. "It's not usually something done in one sitting. It requires some thought and some advice from a trusted advisor."
Leberfield says the web directly accounts for about 15% of sales, but adds that shoppers come in every day to stores with pictures or product descriptions printed from the web site. He cannot say how many sales are driven directly by the workstations, but the investment cost only a few thousand dollars.
The possibility of more sales isn't the only benefit. There also are savings from having fewer employees and a smaller store. "You can afford to be the best place possible without being killed by inordinately high rent," he says, estimating that the workstations will cut 25% from the store's overhead.
Capitol Lighting could add fancier kiosks to its store if the Stuart workstation experiment turns out well, Leberfield says. But the company would have to figure how kiosks, which will cost more than basic workstations, would justify that investment by doing more than the existing technology.
Wet Seal Inc., which sells clothing for young women through its web sites and 500 retail stores, also has had second thoughts about kiosks. Last year the chain deployed kiosks in 10 stores as a test. The machines, some located near fitting rooms, enable shoppers to compare clothing or ensembles to some 30,000 combinations archived by the retailer and available through Wet Seal's web site.
While the kiosks will remain, the retailer has stopped adding machines. That's because Wet Seal prefers to devote its attention to an app for the iPhone, which launched in October. Similar to the kiosks, the app enables shoppers to view, purchase and share thousands of outfits created by Wet Seal customers. "Mobile in many cases will replace what kiosks can do," says Jon Kubo, Wet Seal's chief information officer, "and cost less by orders of magnitude."
Still, the kiosk effort was no waste, as it gave Wet Seal valuable data and experience in product tagging, filtering and aggregation that were used to develop the app, due for a major marketing push later this year. For instance, consumer use of the kiosk gave the retailer a better understanding of the words and phrases shoppers use when searching for clothes, leading to a feature on the iPhone app that enables shoppers to search for clothes by pressing such buttons as "going out," "school," "work" and "casual," Kubo says.
Mara Devitt, a partner in retail consulting firm McMillan Doolittle, says mobile apps might turn out to be a longer-term strategy for retailers trying to bridge shopping channels. "So much is going to mobile devices now," she says, "it could make most kiosks irrelevant."