By Andrea McKenna Findlay
Web-based kiosks, once considered a waste of space and development money, are emerging as one of the hottest trends of the year. “As retailers continue to implement click-and-mortar strategies, kiosks are becoming more important,” says Scott Hardy, managing director at KPMG Consulting Inc., who notes that nearly every major retailer is planning for kiosks. From finding product information to accessing out-of-stock items via a retailer’s web site, retail kiosks are becoming more popular with consumers and all types of retailers from discount stores to bookstores.
It wasn’t always that way. Several years ago when retailers tried to deploy advertising kiosks in stores, the strategy didn’t turn out well. Consumers, unfamiliar with the technology and apprehensive about learning, just weren’t ready. And most people thought that clicks were for home and bricks were for the shopping center.
But with broad acceptance of web-based shopping and the development of multi-channel retail strategies that seek to deliver goods and information to consumers exactly where and when they want them, kiosks have carved a niche as the bridge between the real and virtual worlds. “We wouldn’t have seen this level of activity without the click-and-mortar model,” Hardy says. “With 65% of consumers shopping online, that’s the impetus to get everyone on board with kiosks. That will help bridge the experience.”
Although kiosks are considered an integral part of multi-channel retailing it is too early to tell in most cases if their presence increases sales directly. Most retailers expect enhancing the shopping experience and giving customers another access point to shop or place an order will eventually mean more sales. Since consumers are becoming more accustomed to buying a variety of merchandise via the Internet, kiosks no longer are limited by what they can sell. Some early programs sold only large-ticket or hard-to-stock items such as tool sheds or major appliances. While this is still a good way to sell these items, kiosks are generally more acceptable now for selling any type of item. And a variety of retailers, from apparel stores to general merchandisers, are doing just that.
Dryers via kiosks
Major retailers taking the kiosk route include Kmart Corp., Wal-Mart Stores Inc., Circuit City Stores Inc., Borders Music and Books, J.C. Penney Co. Inc. and The Hudson’s Bay Co., Canada’s largest retailer. Earlier this year, Hudson’s Bay tested custom IBM web-enabled kiosks to see if it could sell items it has not carried before. Its Zellers discount store chain used kiosks to sell large appliances. Hudson’s Bay says the test shows there are no barriers in customers’ minds to buying appliances from the mass market store. “The next phase is to roll these out to all Zellers,” says David Alves, general manager merchandising and marketing for hbc.com and Hudson’s Bay’s loyalty programs.
Meanwhile, consumer electronics retailer Circuit City is adding kiosks to its new retail store design to allow customers to research products on the web.
To help Borders bookstore customers find titles and in-stock status for books, CDs and movies, the retailer is installing 1,000 kiosks this year with Broomfield, Colo.-based Kiosk Information Systems. In addition to search options, the kiosks, called Title Sleuths, give product recommendations, new releases and store event information. Employees will be able to use the kiosks to customize information for their particular location. Searches will start with the kiosk store’s inventory and gives users the option to order an item from the main fulfillment center. After printing out the order, they can bring it to the information desk to put in their special order. Customers can pick up the item at the store.
Testing a web link
Borders is testing an e-commerce application at about a half dozen stores in which customers can swipe their credit cards to order and pay for items. The orders go via the web to the main fulfillment center, which delivers the items to the customer’s home.
The kiosks also will help customers locate an item in the store and even print out a map of the location. Karla Guarino, director of sales and marketing at Kiosk Information Systems, says Borders sees the kiosks as a labor-saving device.
Since introducing Title Sleuths, Borders has had about 1 million searches per week. Borders says it is installing the kiosks to help customers get more information and help at their stores. “Most of our customers are web users and the kiosks can give them the satisfaction of getting products themselves,” says a spokesperson.
Book, movie and music stores are a good fit for kiosks in particular because of the nature of shopping at those stores, says Guarino. Others in the category are finding kiosks useful. In Canada, Chapters Inc. bookstores worked with Info Touch Technologies Corp. to deploy 300 terminals in 77 Chapters stores. Of 5,200 Chapters customers who use the store kiosks, 37% visit Chapters specifically to use the kiosks and 80% said they would visit the store again to use the kiosk. Chapters considers the kiosk deployment successful and the revenue potential significant.
3,500 new touchpoints
Large discount stores also are beginning to adopt a kiosk strategy. Kmart Corp.’s initial foray into kiosks included a PC-type workstation that consumers used to order non-stocked goods such as swimming pools and tool sheds. In January, in combination with its BlueLight.com web site, the company started rolling out one of the country’s largest retail kiosk fleets. More than 3,500 BlueLight.com online shopping kiosks are located in 1,100 Kmart stores and the online/offline company plans to expand the kiosk program to all 2,106 stores, says Steve Chaffin, director of in-store marketing for BlueLight.com.
Following BlueLight.com’s “sticky bricks” philosophy of seamlessly integrating the web and standard retail shopping channels, the company’s self service kiosks allow customers to order out-of-stock items from the web site, research products and have larger items such as televisions shipped directly to their homes. “The kiosk is an incredibly powerful tool,” Chaffin says. “What they do for BlueLight and Kmart is make the overall experience in the store better by providing information and better selection. From the web perspective, the kiosk gives BlueLight.com 3,500 new touchpoints to the consumer and it’s there when the consumer is ready to shop.”
Chaffin also notes that the kiosk can serve as a store operational tool as well as a customer service point of access. “We are working on integrating our warehouse and store operations systems with the kiosks,” he says. “We could issue product rain checks on the kiosk once that is done. In terms of keeping items in stock, we could even use the kiosks to sell smaller electronic items such as MP3 players instead of keeping them in the stores.” Those products, he says, would be fulfilled through BlueLight.com.
The largest U.S. retailer, Wal-Mart, also is deploying kiosks. The discount chain store will have 3,000 NCR kiosks deployed in every Wal-Mart store and Supercenter by the end of May. The kiosks, called Automated Customer Service Machines, will be near the jewelry department of each store where customers can use them for personalized gift registry. Shoppers will be able to create bridal, baby and birthday registries by scanning items they want with a handheld bar code scanner that they will check out at a Wal-Mart counter. KPMG’s Hardy say consumers already are motivated to use gift registries via kiosk because they are used to looking up product information online.
The retailer developed the registry kiosk software with NCR Corp.’s Human Factors Engineers, a department that determines which technical configurations consumers respond best to, such as ease of use of a keyboard and screen, among other details. Wal-Mart officials would not comment on plans for the kiosks or the cost, although they expect the kiosks to enhance customer service.
Yin and yang of kiosks
NCR also is touting a dual-use POS-terminal/kiosk for department stores. During off-peak times, when use of the POS terminal is lower, the device could be configured in such a way that customers could use it as a kiosk. The display could face the customer and the keyboard, which is usually on the clerk’s side of the counter, could be moved to the customer side. The store could also add easily removable wraps around the device. “A department store has 200 terminals for Christmas shopping, but they have a low percentage of utilization the rest of the year. This is a way to leverage an asset,” says Tracy Flynn, vice president of product and solution marketing for NCR.
While some retailers just now are jumping on the kiosk bandwagon, some early adopters have known the benefits of kiosks for some time. REI stores have been using kiosks to expand their breadth of product selections for consumers, especially in its smaller stores. REI has 45,000 pages of content online to help customers find information about products and activities. With 65 stores, a worldwide catalog business, as well as three web sites, REI has a real-time inventory warehouse system.
REI began implementing in-store kiosks in 1997 and finished its rollout in 1998. REI now has 115 kiosks in 60 stores, which REI says generate sales equal to the average sales for a 25,000-square-foot store. In 1999, REI began upgrading its kiosks to increase their speed and stability. REI now is integrating Fujitsu’s POS Internet enabling system that will allow kiosk users to access real-time inventory information as well as allow cashiers to order online from their checkout terminals, two functions that analysts say will be the status quo for kiosks.
Analysts say the price of kiosk installations can vary significantly from hundreds to thousands of dollars each depending on the extent of the infrastructure. Prices can go up if a kiosk application is wrapped around a browser and web site versus using proprietary development software. And the network under which the kiosk operates can be costly if a retailer has to install a T1 or other high-bandwidth connection to link to the web.
Training bridge builders
While kiosks can provide a bridge between retail channels, getting store customers to use the kiosks for more functions is the challenge for retailers going forward, Hardy says. Training employees to use the kiosks is an important element that several retailers are incorporating.
“Consumers also need to see sales associates using the kiosks,” because that will help them realize it can be a useful shopping tool, Hardy says. “Making it worth the customer’s time to use the kiosk also is an important factor to consider.” Some retailers may consider using greeter kiosks that can entice shoppers to stop at the kiosk upon entering a store to download personalized coupons or get daily specials. “From the retailer perspective, if you’ve got the consumer in your store, the kiosk can be a great way to get information about what they’re looking for,” Hardy says.
Nelson Gomez, web kiosk business leader at NCR, says more than 80% of retailers will use kiosks within the next two years. He notes that future applications for kiosks in retail stores, besides tying kiosk software into a store’s inventory and POS systems which will allow store shoppers to order an item, may very well include allowing consumers to check if services such as prescriptions, photos or car repairs are ready. l
andrea@verticalwebmedia.com
Chapters’ kiosk users
— 57% male; 43% female
— 90% have Internet access at home or work
— 50% have used the kiosks to make online purchases
— 63% had never used an Internet kiosk before
— 37% visit Chapters specifically to use the kiosks
— 80% will visit the store again to use the kiosk
Source: Chapters Inc.
