Magazine Article | November 16, 2006

Kiosks: Multi-Application Retail Machines

Source: Innovative Retail Technologies

Caribou Coffee proves the promised application flexibility of modern kiosk solutions.

Integrated Solutions For Retailers, December 2006

Steve Bolduc, senior manager of POS and technical support at Caribou Coffee, says ingenuity and resourcefulness drive tech buying decisions there. Only a few years ago, kiosk vendors were overpromising and underdelivering. Peddlers of mildly glorified PCs plagued the retail industry. Hyped as a means of empowering consumers with self-service technology, most kiosks did little more than frustrate customers and keep store systems support personnel busy with expensive fixes. Their instability led many store managers to keep a roll of Scotch tape and an “out of order” sign on hand at all times. 

Fortunately, kiosk technology has matured dramatically over the past few years, to the point that all the major retail hardware providers are now developing and selling kiosks. At the core of the kiosk’s comeback is a move toward machines that enable the deployment of multiple applications through a single form factor. Today’s kiosks are to the retailer what the SUV has become to the American family. Research firm Frost & Sullivan expects the kiosk market, which generated sales of $492 million in 2001, to reach $775 million by 2008.

Caribou Coffee is a 420+ store specialty coffee retailer that ranks second in its category only to the venerable Starbucks brand. The rapidly growing retailer (after a fall 2005 IPO [initial public offering], Caribou Coffee posted year-over-year Q3 revenue gains of 17% in 2006) offers a classic case study on the kiosk’s evolution to a multi-application retail tool.

Speed Of Service Drives Kiosk Deployment

For the past 12 years, Steve Bolduc has had a hand in the hardware purchase decisions at Caribou Coffee. Originally brought on board as a consultant, today Bolduc is the senior manager of POS and technical support there. “We’re a specialty retailer with a small-store footprint,” explains Bolduc. “We don’t have space for multiple pieces of hardware to run each application we deploy, so multifunctional kiosks are a good fit for us,” he says. Caribou Coffee began a systematic rollout of IBM Anyplace kiosks in the spring of 2006, with enterprise-wide deployment expected by 2008.

The initial driver for the kiosk purchase was barista (coffee server) performance. “We were running IBM 4695-211 units [integrated base/touch screen machines] for order preparation display,” says Bolduc. “These units had been at our POS stations previously, but when we upgraded to the IBM SurePOS 500 series for POS hardware, we moved them to the order preparation area to extend their life cycle.”

In the order preparation area, the 4695s displayed order information transmitted by the POS system to aid baristas in order management and preparation. But the unit’s 10.1-inch display limited the number of active orders the retailer was able to display to eight. During the busy holiday season, when lines pile up 20 or more customers deep at Caribou Coffee, it becomes increasingly challenging for the company to achieve its goal of serving customers their drinks in less than 2 minutes. Limiting to eight the number of orders that can be prepared at once hindered the baristas’ ability to meet this challenge. In a seemingly timely turn of events, Bolduc says the 4695-211 units it used for order prep became increasingly difficult to source through its VAR (value-added reseller), RDS (Retail Data Systems). At the same time, IBM released its Anyplace Kiosk Terminal, a multifunctional terminal designed for applications in many vertical markets. Caribou Coffee became the first to deploy the unit in a retail setting, replacing its 4695-211 units in close to 100 stores with the Anyplace kiosk. The terminal immediately benefited the retailer’s speed-of-service goal by providing a larger 15-inch screen, allowing the display of 10 orders at once. “The brighter, bigger screen is easier for our baristas to read,” says Bolduc. “As a result, not only has order speed improved, but order accuracy has, as well.”

In addition to the advantage the monitors give baristas, store managers are empowered by the combination of the bigger screen and the ticket management system in the POSitouch software Caribou Coffee uses. “Managers can see progress on our initiative to serve orders in less than 2 minutes by watching the screen,” explains Bolduc. “As orders get older, the tickets on the screen change color, allowing management by exception.”

Deep-Fried Processors: Just Add Coffee

While speed of service is important to Caribou Coffee, protecting a significant hardware investment in a harsh environment is priority number one. Sticky syrups and steamy lattes abound in a coffee shop kitchen, and they inevitably end up spilled on floors and counters on a daily basis. Bolduc was first impressed by the Anyplace kiosk’s performance in harsh environments when the vendor demonstrated the unit’s performance under duress – which came in the form of a steady stream of water – at a retail technology trade show. “Simply put, we need hardware in our stores that will continue to run even if a glass of cold milk or a cup of hot tea is dumped on it,” he says. Both the SurePOS 500 POS units and the Anyplace Kiosk Terminals feature sealed housings and chipset hard drives, lending to their durability. They’re also backed by a standard one-year warranty that includes an on-site maintenance agreement.

 Multiple Applications, One Device: A Recipe For Increased Return

Caribou Coffee proved its ingenuity and resourcefulness when it repurposed its POS terminals, redeploying them as order prep displays. It’s doing so again by taking advantage of the multi-application nature of the Anyplace Kiosk Terminals it’s deploying. While the initial justification for the purchase came in the form of increased order speed and accuracy, Caribou Coffee is already deploying new applications on the terminals, modifying the hardware as necessary to accommodate them.

Capitalizing on the kiosk’s small form factor (its processor and optional peripherals such as scanners and MSRs [mag-stripe readers] are all built into the flat-panel unit), the chain is deploying the kiosk as its back office processing solution for smaller stores with no room for the chain’s standard IBM ThinkCenter 8104 E3U sit-down back office stations. “Because the kiosk features an all-in-one processor, we can use the same technology for the office environment, too,” says Bolduc.

Now, the retailer is beta testing a deployment of its Unicru recruiting and human resources software on the kiosk. The fast-growing retailer is in constant recruiting mode as it deals with industry-standard employee turnover and rapid store growth. Deployed on the kiosk, Unicru’s online application processing software minimizes or eliminates the amount of intervention required by the store manager when a job seeker enters the store. On the back end, the Unicru system enables further efficiencies by evaluating candidate qualifications and identifying the most likely store a recruit might be a fit to work at based on experience, age, openings, and the candidate’s address.

On the customer-facing side of the business, Caribou Coffee is enabling Caribou Coffee Card registration, balance access, and transaction history information through the kiosks in some stores. The card is a Givex stored value/loyalty/gift card that’s accepted same-as-cash at any Caribou Coffee store.

Additionally, the unit’s mobility has proven beneficial for sales at off-site special events. “We frequently sponsor road races, marathons, etc. that take us off-site. In those cases, we equip the IBM Anyplace Kiosk Terminal with a remote terminal server with wireless access points, allowing mobility,” Bolduc says.

Do More Hardware And Systems Speed Up Service?

Anecdotes abound in the retail industry – especially in those verticals where speed of service is imperative – about technology slowing the process down. Check and electronic payment card approvals, tight inventory controls at the POS, and loyalty programs are among those systems blamed for hindering speed of service. But Caribou Coffee’s focus on speed has led it to make discriminating systems choices, one of which it’s piloting now in conjunction with the deployment of its IBM Anyplace Kiosk Terminals. The retailer is looking at implementing thermal label printers in its order preparation area to help ensure order accuracy. “We want to try to ‘cup,’” says Bolduc. Cupping is the process in specialty beverage retailing whereby associates label the cup with its intended contents, the customer’s name, and/or an order number prior to its delivery to the preparation table.

“Labeling the cups in this fashion would not only benefit our prep staff, it would build customer satisfaction by ensuring them that they’ve received the correct beverage prior to taking a sip or walking away,” says Bolduc. Mistakes at this stage in the transaction create a domino effect that severely compounds the problem. Readers familiar with specialty beverage franchises might have seen this done by hand with magic marker. Bolduc’s not satisfied with that approach, due to the potential for human error. “It’s difficult to write and read quickly written handwriting on a rounded surface like a cup,” he explains. While the label printer would surely eliminate the accuracy issue, the question remains whether or not it would allow Caribou Coffee to improve on – or at least, maintain – its commitment to speed of service.

“Before we’ll commit to a rollout, we’ll test the printer’s speed, stability, and label-changing speed and ease, and thoroughly evaluate its impact on speed of service,” says Bolduc. “Then we’ll look at how it affects the logistics of other operations. Does cupping work at both the drive-thru and the store counter? Does it work at the cold beverage station as well? This is a long and laborious process. Only once it’s deemed feasible will we implement a rollout schedule,” he says.

In mere months, Caribou Coffee has discovered and deployed several efficiency-enabling systems on its newly rolled-out kiosks. If a niche specialty retailer can do this much with a multi-application machine, how much could you do with it?