Kiosks have had their share of challenges and even failures in supermarkets. Now a new generation of information and self-service kiosks has surfaced to improve usage and effectiveness.
Maturing technology has enabled many retailers to employ a new and improved crop of programs aimed at building customer loyalty, increasing product sales and boosting cross-sell opportunities.
"There's an exciting future for kiosks," said Dennis McCoy, kiosk project manager, Lunds and Byerly's, two banners under Lund Food Holdings, Edina, Minn. Lund operates a variety of different kiosks, including two health information, one bakery-cake viewing, two deli ordering and 20 Sony digital photo processing.
Following are some kiosk programs now being utilized by supermarkets.
EXPLORE PHOTO KIOSKS
Digital photo-processing kiosks are one of the fastest-growing sectors of the kiosk industry, said Francie Mendelsohn, president, Summit Research Associates, Rockville, Md., a kiosk-consulting firm.
The reason for this is the popularity of digital cameras. Consumer digital photography is currently a $1 billion business. This year, more digital cameras will be sold than film cameras.
Yet, just 4% of the 2 billion digital pictures taken are printed. Why? Printing digital pictures is time-consuming and expensive. A printer ink cartridge alone costs about $40.
But that doesn't mean that digital-camera users don't want physical pictures. They may enjoy being able to e-mail pictures to friends and relatives, but most still want pictures to display and hand out.
"Physical pictures are not going away," Mendelsohn said.
This creates opportunity for digital photo kiosks, which give consumers an easy and affordable way to print their pictures. Many applications even allow users to add text, designs, dates and borders to their photos. The average cost is 42 cents a print.
Digital photo-processing stations are the most heavily used kiosks at Lunds and Byerly's, said McCoy. Some locations sell as many as 1,000 prints a week.
Lunds and Byerly's places its photo kiosks in two locations: either in the front end or at the customer-service counter. Along with location, key to the survival of the digital photo kiosk is how it operates. Lunds and Byerly's photo kiosks are more than 99% operational, according to McCoy. To achieve this, the stores keep backup units on hand. Within one hour, they can have a backup unit up and running.
GATHER CUSTOMER DATA
Along with digital photo-processing units, health and nutrition kiosks also have potential in supermarkets. This is because of the wealth of information they provide, according to Mendelsohn of Summit Research.
"These kiosks provide all types of information about diseases and preventative medicine," she said.
One of the advantages of these kiosks is that they provide retailers with valuable customer data. For instance, Healthnotes, Portland, Ore., a provider of health and lifestyle information kiosks, offers software that tracks customer use, and reports back to the retailer specific consumer and product interest. Retailers can use this information to determine whether a large consumer base wants information on, say, menopause, heart disease or diabetes.
"Demographics will start to show store by store," said Kip Goodland, vice president of corporate sales, Healthnotes, which currently has 3,500 kiosks in supermarkets.
Retailers can then make necessary merchandising and marketing decisions, like whether to carry a certain product, and where in the store or aisle a product should be merchandised. He cited a Portland, Ore., retailer as an example of how the software can lead to microtargeting. The retailer, which Goodland declined to name, used data from the Healthnotes kiosks to determine customer interests in two stores located less than two miles apart.
Although the stores were initially merchandised the same, analysis of the Healthnotes data revealed that the stores' demographics were vastly different. One was catering to people in their 50s, while the other had a younger customer base.
Healthnotes kiosks are doing well at Lunds and Byerly's, according to McCoy. The retailer carries seven units, all of which are located in the retailer's "Living Wise" whole-health sections. Each is used 50 to 75 times a week on average.
Ukrop's Super Markets, Richmond, Va., currently has 12 Healthnotes kiosks in its stores. The units are placed in one of two areas: the pharmacy or natural/organic departments.
The retailer is so pleased with their performance that it plans to include the kiosks in all new store openings, according to John Beckner, director of pharmacy and health services. Two such installations are planned for later this year.
"The kiosks validate our focus on diabetes," Beckner said.
Healthnotes is aggressively pursuing kiosk networks, which enable the retailer to react more quickly to shopper needs.
Currently, less than 10% of Healthnotes kiosk programs are networked. Yet more retailers are beginning to move in that direction. H.E. Butt Grocery Co. and Wild Oats are among them.
Lunds and Byerly's is also getting involved in networking. Four of its Healthnotes kiosks are networked, as are the deli-ordering, recipe and bakery units.
"This enables us to monitor usage and performance off-site," said McCoy.
ROI ISN'T EVERYTHING
Shoppers at Lunds and Byerly's have a variety of kiosks at their disposal in each store. In the deli, they can use a kiosk to place their order. They can then continue shopping and pick up their deli order at a later time.
The purpose of this kiosk is to provide a service to customers short on time. The highest usage is on Fridays and Saturdays.
Lunds and Byerly's shoppers can also use recipe kiosks that provide access to 22,000 recipes. Currently, the stores have four units in place, two of which are located in the their "culinary" sections -- front-end departments devoted to culinary offerings from food to utensils. The other two are in different areas of the store. A fifth unit may be tested in the meat/seafood department in the near future.
McCoy concedes that most of these kiosks don't provide a measurable return on investment. That's OK for Lunds and Byerly's, which views its kiosks as an extension of its brand.
"We believe [kiosks] enhance the customer shopping experience," said McCoy. Other retailers also view kiosks as a way to improve customer service. In New York, Price Chopper Supermarkets, Schenectady, is in the process of installing RiteOrder self-service kiosks from Adusa, Lombard, Ill., a provider of solutions to the logistics, retail and supply chain industries.
RiteOrder is a suite of integrated self-service applications that includes deli ordering, wine, beer and spirits information, and a product locator. The Price Chopper units will operate with IBM hardware.
While some kiosks have failed in supermarkets, aggressive promotion can improve chances of survival, said Juan C. Perez, vice president of business development, Adusa. Signage is one of the ways to do so. Large signs with bold lettering placed both at and near the unit help draw attention to the kiosk, as do promotional buttons that store associates can wear. Adusa even works with retailers to train store associates to greet customers as they enter the store and tell them about the kiosk.
"Greeters can show customers where the kiosk is and how to use it," Perez said.
Not all kiosks succeed. NeXpansion, a provider of customized e-commerce, fulfillment and hard-to-find merchandising expertise, tested its "Endless Aisle" technology in in-store kiosks last year at Stop & Shop Supermarket Co., Quincy, Mass., and at Penn Traffic Co., Syracuse, N.Y. It simultaneously tested an "Endless Aisle" technology program on both retailers' Web sites.
The results showed that usage of the in-store kiosks was substantially lower than the Web sites. The kiosks have been removed from stores at both retailers.
