Magazine Article | March 1, 2001

Kiosks Provide New Selling Strategies

Source: Innovative Retail Technologies

It is clear that brick-and-mortar stores are here to stay. As retailers attempt to fit the Internet in their businesses, kiosks present a solution that provides the best of both the virtual and physical shopping worlds.

Integrated Solutions For Retailers, March 2001

For years people feared their lives would be replaced by robots. While I don't think humans are going to become an endangered species any time soon, the rise of self-service technology is certainly changing the way we live. From ATMs to movie ticket machines, self-service kiosks are eliminating lengthy lines and are enabling retail employees to focus efforts on customer service. Retailers now have the opportunity to cater to any kind of customer within the brick-and-mortar environment by Web-enabling touch screen kiosks within their stores. A kiosk provides information and additional purchasing options for consumers and encourages online shoppers to get out of the house and into the stores again. Francie Mendelsohn, president of Summit Research Associates, a consulting firm devoted to kiosk research, and Alex Richardson, president and CEO of Netkey, a kiosk software company, explain some of the necessary features needed for retailers to bring the Web into their stores.

How did retail kiosks begin? Where did the idea originate?

Francie Mendelsohn: It has been almost 20 years since kiosks came on the scene, but there wasn't a whole lot done with them early on, partly because the technology wasn't there to support them or they were too expensive. In the early 1980s a PC was very under powered compared to today. Kiosks have really picked up steam in the last year or two because retailers are seeing that they can use kiosks to get the best of both worlds - brick-and-mortar and Internet.

Alex Richardson: The Internet is all about turning the monitor around and giving people the answers to their questions at that moment. It is about unlocking the treasures that data centers have locked away for years. Today, kiosks are at retail stores, government offices, financial institutions, automatic tellers, and gas stations. I have always said that people are the best means to provide customer service. But who can afford to staff customer service today? The demand for self-service came from banks and government. In the retail area self-service came on the scene in the form of bridal registries because they deal with high margin items.

How are retailers using kiosks in their stores?

Francie Mendelsohn: Basically kiosks allow retailers to create stores with 'elastic walls.' Take for example, a small retailer that doesn't carry your shoe size. A kiosk allows customers to scan the product code from the box, indicate the desired size, quantity, color - as well as the shipping address and payment - and it's done. A benefit for being in the store, is that retailers can provide sample sizes or colors so people can touch and feel the merchandise. Another use for kiosks is customer access to product information. For example, a cellular phone company in the Czech Republic allows customers to browse the possible cellular phone packages to see which is the best plan for them. If a customer knows he will only use his cell phone 30 minutes a day the kiosk gives him program options and allows for comparisons. Once a customer educates himself, then he can seek out a sales person to get the details and make the purchase.

What advantage do kiosk systems provide for retailers?

Francie Mendelsohn: Kiosks provide up-to-the-minute information that is accurate, consistent, and very easily changed. Retailers can network kiosks together at various store locations to ease in price changes and corporate communications. If they are starting to offer new products or new models, it is a very easy way to get that information out. Kiosks can serve as an adjunct to the staff who doesn't take sick leave or quit in the middle of the holiday season. Retailers could even reduce the number of sales people within their stores.

Alex Richardson: A kiosk works 24 hours a day, 365 days a year without a coffee break. It allows a retail staff to provide customer service to customers, while the kiosk system answers the mundane questions and provides a lot of routine information. Borders bookstore uses kiosks to automate the book look-up program called Title Sleuth. The system can locate a book within a store, provide stock status, and facilitate ordering if it is not in the store. Retailers also can use the kiosks to communicate with employees by providing a password to access the corporate intranet. For example, employees can toggle to the intranet to read company news or change their health care benefits.

How can retailers best bring e-commerce into their stores?

Francie Mendelsohn: The single biggest mistake a retailer can make is to simply take their Web site and put it on a kiosk. The Web site presents too much information for a customer standing at a kiosk. Retailers should only present the information that the customer needs. The information presented in the store should be a sub-set of the Web site. Retailers shouldn't waste a lot of time with gratuitous video, a mission statement, or introduction. They want to know 'what is this kiosk going to do for me?'

Alex Richardson: The kiosk is much more like a point of sale (POS) device. Retailers have three seconds to tell that customer what problem the kiosk solves. The first thing I ask a retailer is if they have a dot-com that they want to incorporate into the store. Second, does it work to provide value-add or does it just blow kisses at the customer? Most retailers' brick-and-mortar strategies are light years ahead of their e-commerce strategies. Retailers really have to get their e-commerce strategy in order before deploying kiosks inside the store. That is the key to linking your in-store system with a customer's browsing experience.

What are some features retailers need to look for in a kiosk system?

Francie Mendelsohn: The kiosk should be a touch screen if you want to appeal to the biggest audience because they are non-threatening. A lot of people still see a keyboard and won't touch it, but it is a good idea to provide the option. A kiosk also has to be 99.9% up and running. If a customer comes to a dead kiosk once, they won't give it another chance. I heard of a retailer whose kiosks weren't working so they got rid of them. They didn't want to ruin their image by having dead technology in their stores. Retailers should not install cheap quality equipment. For example, one retailer installed lower quality printers to save cost, and they didn't even last a week. At a kiosk, printers are important because when dealing with e-commerce, people need a receipt. They also need to print coupons, directions, or product information. Another important feature is a credit card reader that can handle ATM and debit cards as well as credit.

Alex Richardson: Retailers don't realize that kiosks are icebergs of complexity. Key features include scalability, reliability, and ongoing support of hardware and software. The software needs to be tested and proven.

Should retailers be hesitant about implementing kiosks?

Francie Mendelsohn: Yes, retailers should start with a few stores, get the kinks out, and then start to implement on a widespread basis. Vendors need to show retailers that the kiosks will be monitored remotely so that if there is a problem, the vendor will know even before the retailer does. Bigger retailers have a tremendous interest in kiosks, but they need the assurance that the kiosk will work and that if it doesn't, someone will fix it the same day. One of the most glaring examples is a kiosk in a video store. The vendor only checked the status of their clients every day at 5 p.m. This meant that the earliest the company could dispatch a repair person would be the next morning. Clearly same-day repairs will cost more, but retailers need that option.

Alex Richardson: I think retailers are naturally hesitant when it comes to IT implementations. But by way of the Internet, customers have been trained on how to use interactive devices. The younger generations, especially, are expecting interactive technology to be available in the stores. Connectivity and hardware have also come down in price dramatically. Based on what we recommend, retailers aren't going to spend $20,000 on kiosks - it's more like $600.

How will kiosks be used in the future of retailing?

Francie Mendelsohn: They are going to become a big part of the whole retailing scene and the brick-and-mortar stores will be the beneficiaries. A year ago, people were saying that consumers would buy everything on the Web and stores would disappear, but now we know that's not true. Brick-and-mortar retailers are going to survive.

Alex Richardson: We believe that in the next five years you will see a massive inroad of self-service devices inside the store because retailers can see the return on investment (ROI) in three to six months. Retailers need a software platform that helps customers' transition from brick-and-mortar to clicks-and-mortar. Kiosk solutions should increase sales per square foot and reduce inventory requirements for retailers and manufacturers by connecting customers with the retailers' Web assets and other e-tailers.

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