|| The Perspective
Tuesday, 30 January 2007
Over the past 18 months the vending kiosk has become a hit. Unlike its information-terminal cousins, these kiosks combine a user interface with robotics to deliver physical products. Let’s take a look at two such systems.
First on my list is the Zoom Shop from San Francisco-based Zoom Systems. Last October the company raised an additional $35 million to fund its push to automated retail leadership. If you have yet to see a Zoom Shop, you’re in for a treat. These things look like a snack vending machine on steroids. But instead of Doritos and gum, these kiosks move high-end products via a touchscreen interface and the swipe of a credit card, with a portion of the revenues going to the location owner.
As part of my research for this column I checked out a Zoom Shop located in a nearby Macy’s department store. Macy’s, which you may not think of as a tech-forward retail environment, has received a boost from the Zoom Shop. The ideally situated vending kiosk, tall in stature and wide in product, offered various gizmos, including iPods and related accessories. What a great way for the retailer to be associated with the hottest electronics without having to invest in a specialized gadget department.
Now, purchasing something like a $300 iPod from a vending machine might take a little getting used to, but the success of Zoom Shop tells us that consumers just might be ready for high-end, sophisticated vending. It is estimated that as many as 300 Zoom Shops are installed. It’s like retail-in-a-box technology and a new take on the old and proven vending machine business model — though I doubt you’ll see objects larger than what can fit in your hand anytime soon.
Second on my list is redbox, a renter of DVD’s through its network of about 1,800 automated vending kiosks. The company started testing the terminals in Denver back in 2004. I was fortunate to have the pursuant wide-scale deployment to McDonald’s restaurants happen in my backyard here in Minneapolis. I’ve since seen redbox show up in locations such as grocery stores.
The touchscreen user interface provides a selection of current or popular movie titles. With the swipe of a credit card, the machine dispenses the DVD of your choosing, which can be returned to any redbox location after viewing. Each kiosk holds more than 500 DVDs. The company also released an online rental program that works with the kiosks.
redbox’s business model, although simple, has turned the movie rental industry on its head. Most of us were used to renting at Blockbuster, Hollywood Video or even the neighborhood mom-and-pop video rental store for about $4.25, and others had dabbled with subscriptions to Netflix for $19.95 a month. redbox’s pricing changed everything. Now, at the redbox terminal, you can rent movies for $1 per night.
If you ask really nicely, I can hook you up with a copy of a study I sponsored on redbox kiosks. Sixty-six percent of users stated price as their primary reason for choosing redbox, with convenience coming in at 36 percent. An impulse to rent or selection had almost no noticeable impact, which tells me that users found value combined with accessibility as a major purchasing factor.
Though redbox cannibalizes sales from traditional movie rental stores, it stands on its own in terms of price over income. From Dec. 2005 to Nov. 2006 more than 15 million DVDs were rented from more than 800 redbox-equipped McDonald’s stores. Further, redbox-equipped McDonald’s locations sold 5 percent more food and drink than non-equipped locations.
Vending kiosks are taking off. Whether the product is $300 or $1 per night, these kiosks have proven their ability to succeed. Expect to see vending kiosks used in new and increasingly creative ways in the near future.
Wednesday, 24 January 2007
Those who didn’t go to the National Retail Federation show last week in New York missed a great moment for the self-service industry. Whereas at last year’s show self-service and customer-facing technology were asides to POS and back-end technology, this year they were everywhere.
The crowning achievement of the show was the X07 concept store’s Social Retailing application, built by IconNicholson. It not only uses high technology, it uses it to solve a problem, making it one of the best and most interesting self-service applications built to-date.
Digital signage was so pervasive, both from companies selling it and companies using it in their booths to sell other products and services, that it obviously has pervaded the retail industry and will become a ubiquitous merchandising tool very soon.
One of the best applications at the show didn’t get much press at all. Freedom Shopping’s RFID-enabled unmanned store solution, which I was shocked to learn is already active in the field, is one of those applications that really does do what a lot of companies say they could be doing. For example, we often hear hopeful things like “with our payment solution, you could even do biometric payment” and “with our RFID solution, you could automatically charge for goods when the person walks out of the store with them.” Well, Freedom Shopping is doing it. Twenty-one percent of their unmanned stores’ sales are actually fresh foods, which might seem hard to manage in a self-service operation. And they’re doing it for a price that I’ll just characterize as ridiculously cheap for what they’re selling.
As is often the case at tradeshows, it was great to see friends doing well. Netkey and Eurotouch both played key roles in the X07 store. Nanonation, a company that lives at the intersection of space-aged and practical, had their usual suite of forward-thinking interactive solutions. Slabb had a rebranded booth that was a little less like a kiosk-maker and a little more like a Gucci store. And a group of self-service companies, who aren’t yet discussing the details publicly, are involved in Circuit City’s 50-store live-assisted kiosk project.
Thursday, 18 January 2007
In part one of last week’s message, I touched on the Association’s Web site and newsletter, member visits, strategic partnerships, marketing and leads. Here is the second half of the report detailing our activities from 2006 and providing a glimpse at the year ahead.
The Association is being recognized as a source of authority. Last May, I had the opportunity to moderate a session on self-service at the National Restaurant Show and was interviewed for Marketwatch Radio. Editor Bryan Harris was recently interviewed for a segment to be aired on CNBC’s program, “On the Money.” A new magazine called Airport Innovation has called on me to provide thought leadership in its inaugural issue this year. We will continue to be a media resource and seek out additional opportunities to gain exposure for the Association.
Professional deployer program
In September we reached an agreement with KioskCom whereby its Professional Society, comprised of 65 individuals engaged in the deployment of self-service, would merge into the SSKA. This merger has given us a launching pad from which to expand our professional deployer category of membership. Since the SSKA’s inception in 2001, we have been successful in recruiting vendors to join, but have not had a significant number of deployers as members. We hope to change all that with the programs and benefits we have created or will have in place soon.
During 2006, membership increased 46 percent, largely as a result of the merger. However, in vendor membership alone, we grew a healthy 14 percent.
Digital signage has been receiving a lot of attention and we are discussing the ways digital signage and self-service intersect — obviously when the technology is interactive — and perhaps complementing self-service in other ways. The Association is interested in welcoming and embracing companies in this arena and is looking at creating a Digital Signage Council and a special section within this Web site for news, information and a list of companies all in one place.
Elections and awards
Each year, half the seats on the Association’s Advisory Board are open for election and each board member elected serves a two-year term. In 2006, seven members were elected to the board and Alex Richardson of Selling Machine Partners was elected by the board for a one-year term as president. Board nominations are currently being accepted and elections will be held in February. The new board will be announced in March and officers will be appointed at the board’s first meeting in April.
Also each year, the Association inducts one or more individuals into its Hall of Fame. Last year, we inducted Doug Peter of St. Clair during The Self-Service & Kiosk Show in San Antonio. Our next induction will take place at one of the KioskCom shows this year.
The Association has a number of committees furthering our mission. I’ve mentioned Marketing and Membership, but the others include Best Practices, Research & Statistics and Standards.
The Best Practices Committee, headed by David Oles of Pixel Magic, is working to identify areas where best practices are needed and develop frameworks for these documents to be written, perhaps by an individual or a team of experts.
The Research & Statistics Committee, chaired by Miller Newton of Netkey, has set as its goal to provide timely, pertinent information and quality research to SSKA members, media and staff. The objective is to promote the industry, validate trends, enhance our image and support member needs. The first phase of the committee’s work has been to develop and publish an FAQ, list of research company reports/links, and executive summaries and/or highlighted stats from these reports. Phase two will be to develop a complete resource library and phase three will be to establish a process for a continual update of the library.
The Standards Committee, led by Ed McGunn of Corporate Safe Specialists, has helped establish an allied association agreement with the Petroleum Convenience Alliance for Technology Standards (PCATS) to work with us on developing and adopting standards for use in the self-service and kiosk industry.
As you can see, much work has been accomplished and much work remains to be done. I want to take this opportunity to encourage you to get involved in the Association to improve your business and our industry. It’s going to be a great year!
Tuesday, 09 January 2007
Now that 2006 has ended and everyone is diving into the New Year with new plans and resolutions, I thought it might be a good time to take a moment and look back at the accomplishments of 2006 and give you a preview of our plans for 2007. As President Bush prepares his State of the Union address, you can think of this as the “State of the Association.”
Website and e-newsletter
In February, we re-launched our home website, SelfService.org. The new look and feel made navigation easier and more inviting. We continue to update our website every business day and in 2006 our site averaged more than 14,000 unique visitors per month. In the last quarter of 2006, we averaged more than 17,000 unique visitors per month. With over 4,000 subscribers, we ramped up our newsletter last March from monthly to weekly. In August, we posted the free publication, “Ten Steps to Better Kiosk ROI.”
Part of our website’s success has been topping the search rankings. On Google, SelfService.org enjoys the number-one spot with key terms “kiosks,” “selfservice” and “kiosk association.”
Shortly after I joined the organization last February, SSKA Chairman Dick Good charged Editor Bryan Harris and me with taking one week a month to visit member companies in the field. We’ve met with 68 companies (48 members and 20 prospective members), logging thousands of miles both in the air and on the ground. The purpose of these meetings has been to learn, meet, recruit, and write about what we saw and heard. Combined with the trade shows I’ve attended, I couldn’t ask for a better education and we met some terrific people along the way.
Strategic partnerships have been of key importance in raising the profile of the Association, which in turn raises the profile of our members and our industry. In 2006, we partnered with the following associations and trade shows:
- ATM Industry Association (ATMIA)
- KioskCom Europe
- Petroleum Convenience Alliance for Technology Standards (PCATS)
- Photo Marketing Association (PMA)
- Retail Systems
- Strategy Institute (digital signage conferences)
- Texas Petroleum Marketers and Convenience Store Association (TPCA)
- Texas Retailers Association
In 2007, we will continue to partner with many of the groups listed above plus:
- Digital Signage 2007
- RFID World
We are also in talks with other organizations and should have more to announce soon.
Our Marketing Committee, led by Alex Richardson, developed a public awareness campaign called “The Best Service is Self-Service.” Highlighting well-known brands who have implemented self-service technologies, such as Behr Paint, BMW, the City of New Orleans and Mazda, the promotion has been featured online, in print, via email and at trade shows. This campaign is far from over, as we have more snapshots in the works.
Leads generated from our request for proposal (RFP) and request for information (RFI) engines are very important to many of our vendor members. In 2006, we delivered nearly 200 leads to our members. In October, I contacted several companies who had used our referral process to see how it was working. One California bank was “looking for a full service ‘teller’ type ATM/kiosk.” The bank’s representative said he “had several quality calls” and that his questions “were answered quickly by all.”
A New Jersey consulting firm was “looking a mall-based wayfinding directory solution.” After members responded to their request, the firm said, “We are moving in the right direction.” Finally, a major Las Vegas casino was “looking into a multifunctional kiosk solution and possible CUSS compliant vendors.” The response from members helped her find some viable options.
These are just some samplings to give you an idea of the effectiveness of the program. We will continue to do what we can to generate as many quality leads for members while providing a great service to the public. For example, we may modify the forms from time to time to ensure an efficient and effective process.
Next week, I’ll address increased visibility, membership growth, elections and awards, committee activity and the professional deployer program in part two of my State of the Association.
Tuesday, 02 January 2007
The rise of online shopping to the mainstream puts pressure on retailers to master multichannel retailing. Supporting consumer interactions across channels like catalog, call center, Web and bricks-and-mortar may seem like a no-brainer at this point, but not all firms have responded well to this challenge.
Although Forrester has been writing about multichannel retailing for the past five years, we continue to receive many of the same questions from e-commerce executives, VPs and chief marketing officers: What are other retailers doing, and how are they doing it? To answer these questions we spoke with retailers that have taken multichannel strides over the past few years and to North American consumers to discover the state of multichannel retailing.
We found that consumers increasingly shop across channels. Using the Internet in the purchase process is no longer just for the technologically elite — in fact, 88 percent of all online consumers use the Internet to research products. Researching online and buying offline, however, is a more complex activity, but such cross-channel shopping rapidly is becoming a typical behavior. More than half of online consumers engage in it.
While there were some improvements in 2006 by leading retailers, firms continue to play catch-up to consumer demands, implementing one-off features like buy online/pickup in-store without the foundation of a holistic multichannel strategy. But we’ve gotten to the point where multichannel retailing cannot be ignored. For the past few years, retailers have had the luxury of choosing how multichannel they want to be, but they’re about to lose this privilege. While multichannel consistency and service have been nice-to-have capabilities, consumer adoption of technology — specifically the Internet — will turn this into a requirement over the next two years.
Of all the multichannel retailing competencies, retailers have made the most progress in supporting the multichannel buying process — helping consumers find products. This has been an easy place for retailers to start since it is the most visible area and it provides the most tangible benefits. But lost opportunities continue. Almost half of cross-channel consumers buy from a different retailer than the one they researched. These defections represent a significant opportunity for retailers to retain customers as they cross channels.
Retailers have begun to tackle this problem by building self-service Web applications that bridge the channels. To help prevent consumers from switching retailers as they switch channels, Circuit City, Lowe’s and IKEA have deployed configuration applications that let consumers do the research at home, but then access their work in-store via kiosks.
This approach allows consumers to research at their own pace, have easy access to their work once in the store, and get help from a sales associate to confirm and augment their selections. Circuit City offers a home theater configurator, and both Lowe’s and IKEA offer kitchen configurators. IKEA allows consumers to download the application and design their kitchen offline and then upload it back to the IKEA servers when they are ready to come into the store.
This control over the purchase process is something that the Internet has taught consumers, and as cross-channel shopping approaches mainstream, retailers should look to kiosks and self-service applications to bridge the channel gap and help meet consumer demands.
Tamara Mendelsohn is an analyst on Forrester’s Consumer Markets team. For more information please contact [email protected]forrester.com.