“Most retailers have call centers and many other ways through which their customers can access them” says Robert Ventresca, director of marketing of Branford, Conn.-based Netkey Inc., a provider of kiosk software and solutions. “Kiosks are another channel for doing that, but a very specialized one that gives marketers the opportunity to leverage investment they’ve already made in a lot of other technologies.”
Take Seattle-based Recreational Equipment Inc., for instance. It bought into kiosks early on, installing its first one in a store in 1996. Today, it operates 160 web-enabled kiosks in 160 REI stores across the country. In aggregate, the sales from the kiosks will equal the sales of on average 25,000-square-foot store “on a fairly regular basis,” says Brad Brown, Seattle-based REI’s vice president of information services.
“It was a great way to leverage something we already had,” adds an REI spokeswoman. “The purchase of outdoor gear is information-intensive, and we looked for a long time at how we could get product information to our store employees to share with customers. The cost, until we had REI.com, was fairly prohibitive. But with REI.com in place, we had a resource.”
Indeed, “Now that they have the content and infrastructure in place, they can shift what’s been aggregated on the web into the store environment fairly simply,” says Heather Dougherty, digital commerce analyst with Jupiter Media Metrix, New York. But while web assets such as product images and content can make the leap, retailers who simply plunk their web sites into store kiosks without making adjustments for the store environment may not gain much, for the online home shopper behaves differently at a web-enabled store kiosk.
ADD at the kiosk
“Web browsers are well named for what they do,” says Doug Peter, president of Toronto-based St. Clair Interactive, a provider of technology and solutions to support self-service at kiosks and other media, such as digital T.V. “But that’s not what happens at a kiosk.” The average store kiosk session lasts less than 3 minutes, and the store shopper’s average attention to any piece of information viewed at a kiosk is only about 9 seconds, Peter says. “The presentation at the kiosk has to be much more visual, with fewer choices, offering immediate communication of what the user can do. It’s got to be fast and on demand, with no waiting.”
Jupiter estimates that kiosks will generate sales of $6.5 billion in goods and services by 2006, and influence an additional $77 billion in offline sales. And vendors of kiosk hardware, software, services and peripherals are gearing up to meet the growing demand. Netkey, for example, estimates that its inquiries from retailers and from systems integrators that assemble kiosks for retail have grown about 200% over the past 18 to 24 months. Richard Banzaca, sales and marketing director at Milford, Conn.-based Practical Automation, a provider of printers for kiosks in retail and other industries, says retail has added significantly to the demand for his company’s product. “Retail may be the single biggest segment of the kiosk marketplace at some point,” he says.
Where’s the ROI?
But kiosks aren’t only about increasing sales. Some retailers are now pushing kiosk functionality far beyond its earlier limits, finding new ways to make this new medium pay off. At Staples.com, for instance, kiosk users can compare product specs on kiosk screens, determine availability from off-site inventory of products they don’t find in the store, purchase at the kiosk and pay online or at store cash register with receipt printed at the kiosk. But the kiosks also are helping in inventory management and employee communications. They’re even being used for brand building.
While importing web content to store kiosk screens to provide pre-selected product information or promotional deals has become, relatively speaking, a piece of cake, integrating the kiosk with other systems such as inventory systems can present a huge systems integration issue, Dougherty says. But as multi-channel merchants broaden their metrics for what constitutes ROI, kiosks at every level of functionality are getting more attention from retailers. They’re leveraging expanded kiosk functionality not only to boost sales in-store, but also to acquire online customers, forecast and manage inventory needs, even to experiment with smaller—read less costly—store formats in some cases.
“Starting from the back end and making sure all the systems are integrated into the kiosks can be expensive,” says Dougherty. “But in that case you can’t really allocate all of that cost to a kiosk strategy. Because not only will it be helpful in the store, but also to shoppers looking online. And it will make a more efficient inventory system for the retailer in the long run.”
But not without overcoming some challenges first. As with many business initiatives, the path from concept to execution is strewn with potential pitfalls. The finished kiosk product presented to shoppers in-store may be an amalgam of hardware, software and components assembled from a variety of different vendors and OEM suppliers. And unless they work together seamlessly, reliability issues that dogged kiosks’ earlier days remains a problem, says Joe Trobert, president of Sparta, N. J.-based Instruments & Equipment Co.
A long-time distributor of components such as printer mechanisms and controller boards to OEMs, Instruments & Equipment entered the kiosk marketplace some 18 months ago. It’s now a primary distributor of NCR interactive kiosks used in several industries including retail, as well as a provider of solutions and kiosk elements ranging from components to finished systems. “Retailers and others can make a mistake when they take on too much of the job themselves and step outside their core expertise,” says Trobert. Case in point: a book seller client came to Instruments & Equipment for a revamp of its kiosks after incorrectly coded software instructed kiosk printers to cut paper in the wrong place, resulting in a paper pile-up on the floor and eventually, Trobert says, a lawsuit from a customer who slipped on the paper. To ensure that all systems and parts work in concert, the company delivers soup to nuts solutions—or as much of that as a client wishes to buy—that can oversee the kiosk design, implementation and operation end to end, including remote management of the kiosks.
Sales and more at Staples
Framingham, Mass.-based Staples Inc. has linked its dot-com channel’s inventory management system to web-enabled kiosks it’s established in its approximately 1,000 stores. Staples completed its kiosk installation late last year, and since January, says J.B. Lyon, vice president of Staples Direct, the kiosks have been responsible for “hundreds of millions” of dollars in sales. While Staples has yet to dig deeper into the numbers, it believes that a fair amount of those sales are incremental versus transfers from other channels.
“Our primary objective was to provide what customers are looking for at any time,” says Lyon. “Say a customer wanted 100 folding chairs and we only had 50 in the store. The kiosks let the customer have the other 50 delivered the next day.”
In addition to giving store customers access to bigger quantities, the web-enabled kiosks give them access to more variety. The stores generally carry about 7,000 SKUs while the kiosks hook shoppers up with the Staples.com inventory of more than 45,000 SKUs. And besides importing web content and inventory data into the store, kiosks offer interactive customization services that allow shoppers to configure their own computer systems for purchase, for example, or design and order their own business cards. While those services are available on the web site as well, viewing and trying out product samples in-store gives some customers even more confidence in their purchase decisions, Lyon points out.
Kiosk use patterns also are helping Staples store managers optimize promotions and inventory, Lyon adds. “For example, we see a lot of furniture sales go through the kiosks for delivery, because people don’t necessarily want to have to carry furniture home,” he says. “You can learn from that how much of furniture sales are for delivery, and you can make inventory decisions to stock less of it in the stores.”
One of the kiosks’ biggest contributions to ROI has been a surprise: it’s proving to be one of the most effective ways to update store associates on fast changing product information. “When we designed the kiosks it was very oriented toward the customer,” says Lyon. “With new iterations, we’re designing it for two customers: the shopper and the store associate.”
Making stores sticky
Retailers are finding that kiosks don’t only capture more sales by offering store shoppers the ability to order online, they’re also capable of nudging shoppers toward store purchases. “A lot of the Home Depot stores, for instance, are huge,” observes Dougherty. “Shoppers only have so much time in the day, so they don’t want to have to wander the aisles continuously. It’s great to find the product through the kiosk, particularly if you’re in a large store.”
Or one with an especially large product selection. Borders’ stores don’t occupy the real estate of a big box store, but because their inventory of books and CDs take up less room per unit than dishwashers or boom boxes, Borders packs a lot of product into a smaller space. That can turn finding titles into a hunt. And that’s one reason Borders launched its in-store Title Sleuth kiosks. The kiosks, powered by Netkey software, indicate in-stock and offsite inventory to tell shoppers where a particular title is in the store, or if not in stock, how long it would take to arrive if ordered for delivery to the store.
While store shoppers can’t yet order and pay online for home delivery at the kiosks, that’s a feature planned for the kiosks in the future. With uses of its 3,000 store kiosks now numbering about 6 million per week, Borders says the 18-month-old program already has a positive impact on store sales, though the company hasn’t disclosed numbers. The kiosks have helped embellish Borders’ brand, too: almost 75% of its customers view the kiosks as a feature that differentiates Borders from other bookstores, according to the company.
It’s London-based BP’s belief that web-enabled kiosks can pull their own weight—and deliver on ROI—in tiny stores, too. Retailers’ Internet presence is expanding into gas stations as BP rolls out web-enabled kiosks in convenience stores attached to its U.S. service stations. College Station, Texas-based NetNearU is providing software, the user interface, and the remote back-end management system for the kiosks, which have grown to 126 worldwide in six months. Initially tested in the U. K., the kiosks are just now being deployed by BP in the U.S.
At the kiosks, BP customers can shop online, get local information, maps, and even check e-mail. “Just about any web site you can go to at home, you can go to at the kiosks, though there are some filtering devices,” says Cody Catalena, chief technology officer of NetNearU. While the kiosks give shoppers access to web merchants, their other objective is to make BP convenience stores “sticky,” as customers who walk into the store to use the kiosks also may decide to purchase magazines, sunglasses or potato chips once inside. “The kiosks get the stores more foot traffic and make for more satisfied customers,” says Catalena. “The average person who walks into a convenience store spends a certain amount of money. If you can bring that number of people up, you have a higher chance of selling more product.”
The cost of self-service
While the chance to use existing web assets in a new way is driving retailers’ growing interest in store kiosks, they’re not for every retailer—at least, not yet. “Labor-saving is the main thrust of the marketing that systems integrators do for kiosks,” says Practical Automation’s Banzaca. “A secondary one is self-service and the convenience that they offer to customers.” While those concepts represent good business practices for retailers of any type, they’ve been packaged differently at different kinds of merchants.
But that, too may be on its way to changing. Merchants of luxury goods have traditionally prided themselves on personal service, figuring that self-service isn’t what its customers are looking for. Upscale luggage merchant Louis Vuitton, however, has put kiosks in its stores. Intended for product information support, they’re designed to be used by the store associate and shopper together. They’re not equipped to do transactions and accept payment, but some customers have tried, a big surprise to Louis Vuitton, says Peter of St. Clair Interactive, whose software powers the kiosks.
As consumers are increasingly accustomed to self-service at banks, ATMs, ticket vendors and in other settings, self service is becoming a fact of life everywhere, he adds. “The percentage of people who would rather not talk to a store associate is increasing every year,” Peter says. About 30% of consumers prefer self-service in any setting, up from about 21% a decade ago, according to St. Clair’s own data.
Though having existing web content and infrastructure means retailers who want to add kiosks don’t have to build out the whole project from scratch, deploying them in a store requires customization, hardware and software and for some, peripherals such as printers, phone equipment or card-swiping apparatus. That’s all at additional cost, which is multiplied by the size of the kiosk initiative and the number of installed units.
Scaling costs
Retailers with kiosk systems in place are generally mum on the subject of how much they’ve invested in them, and estimating costs is like aiming for a moving target. Kiosk systems involve a tremendous number of variables that factor into costs, such as what equipment and infrastructure are already in place, the level of functionality kiosks offer to shoppers, and the unit costs of any associated peripherals. And those decisions are in turn driven by retailers’ unique priorities and business objectives for the kiosks
“It depends on what you want to do,” says Dougherty. “If you’re Williams-Sonoma and you want to capitalize on your wedding registry, you may decide to add a printer to your kiosks. You may want to put in a credit card swiper, or a touch screen. Those are nominal costs, but it’s going to add up if you put them in 500 stores. These costs are to scale.”
Netkey provides kiosk solutions ranging from software to complete kiosk systems, making its charges similarly variable, but a look at its software pricing structure gives some idea of what retailers looking at kiosk projects can expect to spend. The software that powers the kiosks, residing in each unit, costs from $400 to $500 per kiosk. The back-end software that allows retailers to manage and update kiosk contents and operations remotely costs about $40,000 to $50,000 per server license, allowing retailers to operate several kiosks off software licensed to each server. The remote management capacity also is offered as a hosted solution, for which the vendor charges a monthly usage fee that varies with the type and volume of content they send to the kiosks.
Those costs can add up when deployed across hundreds of kiosks, but Matthew Nemerson, vice president of strategy at Netkey, cites the return in terms of labor-savings, incremental sales, reduced cost of sales, and more. “A lot of companies are trying to establish themselves from a branding position as technology leaders. Having a well-designed kiosk interface that allows web technology to appear in the store does reinforce that. There are branding implications with kiosks, especially when retailers are competing on a commodity basis and trying to position themselves with a certain demographic or in a certain market,” he says.
As the newest wrinkle in multi-channel marketing, web-enabled kiosks are putting the back-end technology focused on retail employees directly in front of store customers. “Customer-facing technology is the next piece,” says Ventresca. “When we look at our pipeline, projecting it out to next year, it’s clear that major kiosk deployments are going to be in retail environments.”
mary@verticalwebmedia.com
In
the early days of e-retail, site owners and operators talked about monetizing
their asset—code for generating sales from consumers who flocked to sites for
deals, data, and a host of other reasons. Today, that term has taken on a different
shade of meaning as multi-channel merchants recognize they’re sitting on another
bought and paid for property that they can re-deploy in a new channel. That
asset is the content they’ve already developed for their web sites and the new
channel is in-store kiosks. 
