October 2, 2001, 12:00 AM


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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.”


2001 Guide to Retail Kiosk Suppliers
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