CHECKING OUT KIOSKS

CHRIS O'LEARY

Like some early explorers, retailers are beginning to test the uncharted waters of interactive kiosk shopping.

In a bid to offer a wider range of customer services and products, from advanced frequent shopper and couponing programs to gourmet recipes generated from touch-screen terminals, a growing number of retailers are now experimenting with or considering using interactive kiosks in their stores.

Among the list of retailers and wholesalers now launching pilot tests or rolling out expanded kiosk programs are A&P, Montvale, N.J.; Cub Foods Stores, Stillwater, Minn.; Eagle Food Centers, Milan, Ill.; Giant Food, Landover, Md.; Grand Union Co., Wayne, N.J., and Roundy's, Pewaukee, Wis..

Inspired in part by the burgeoning use of these devices in other classes of trade, including membership warehouse clubs, retailers are looking to make interactive kiosks an essential sales and marketing tool in the supermarket.

The big question now is to what extent these systems can be leveraged to reap substantial benefits for food retailers -- and at what cost.

"I believe that the interactive kiosk will become widely used in supermarkets," said Ray Hamilton, vice president of information systems at Sutton Place Gourmet, Rockville, Md., which uses kiosks in three of its stores.

"Eventually I can imagine retailers putting a kiosk on every two or three endcaps," he added. "They are going to help sell product and lower costs."

But other retailers are much less certain about the long-term prospects and cost-benefit ratios of embracing leading-edge kiosk technology.

"Consumers think kiosks are neat and they enjoy playing with them once or twice. But often they become a kind of has-been [novelty]," said Steve Dittmer, retail systems director at Brodbeck Enterprises, Platteville, Wis.

"The money we'd have to put into kiosks [to roll out the system] would not be worth it just to let somebody play games for a while."

Despite such reservations, kiosks offer a number of potential benefits for those retailers ready to take the risk, industry observers said. Among them:

· Enhancing Frequent Shopper Programs: Retailers are linking kiosks to store data bases, thus allowing them to offer consumers a targeted list of product discounts and additional benefits.

· Supplementing Inventory: Retailers could use kiosks to increase the stockkeeping unit variety within the store without using up valuable shelf space.

· Providing Information: The interactive devices are capable of providing customers with a range of detailed product information that might not otherwise be easily available.

The most common use of kiosk systems to date may involve offering a single type of service or product, such as the ability to create customized greeting cards. But the devices increasingly are now being linked with frequent shopper programs and tied in with shopper data bases.

Indeed, using kiosks as part of an electronic marketing program, either to dispense coupons, offer frequent shopper promotions or make video-based announcements, may offer the greatest potential long-term benefits to retailers.

Electronic marketing is the main way kiosks can offer a return on investment, said Mark Dodge, director of information systems at Ron & Lloyd's, an independent based in New London, Wis.

"As long as we keep enhancing the systems' capabilities, kiosks will be around to stay," he said. "But if we think they are going to be simply a promotion regurgitator, as they often are now, without adding any more bells and whistles, they won't."

Ron & Lloyd's, which introduced a kiosk in one store earlier this year, hopes the devices eventually will become a main source of offering discounts for its frequent shopper program.

"We'll still need direct mailings, but they're expensive," Dodge said. Kiosks could emerge as one way to target specific customers without the expense of a direct mailing campaign, he said. "If you want to get to where [consumers] have to come in to see what you have going on, that seems to be working for us."

A&P, which began a kiosk program in two stores early this year, also is viewing the technology as a means to offer discounts targeted at specific consumers.

"The kiosk will be right at the entrance to the store," said Michael Rourke, senior vice president of communications and corporate affairs. "It can be programmed for individual customers; the screen will tell them all kinds of things that they are interested in that are discounted for the day."

"One of the best uses of a kiosk is to trade information with the customer," added Sutton Place's Hamilton. "It's not just a matter of pushing a button to get a coupon; it is also a way of telling the customer who we are."

Strategically placed kiosks could also play a key role in spurring category sales, Hamilton and other retailers said.

Sutton Place has installed a number of touch-screen kiosks that offer recipes in 10 product categories. The kiosks give consumers a list of merchandise needed to make the recipe and give a general location of each product.

"Based on the numbers I've seen, we have tremendous consumer participation," Hamilton said. The kiosk, which distributes large dollar value coupons as well, has seen solid growth in usage for the last three months, he added.

Such a recipe kiosk could cater to consumers with special dietary needs, said Claire D'Amour, vice president of corporate affairs at Big Y Foods, Springfield, Mass. "If I have a special diet, I may need to know what 20 things in the canned vegetable aisle I can eat," she said.

Dodge of Ron & Lloyd's said when the company eventually installs kiosks in its produce and grocery aisles, offering a sophisticated recipe system will be a must.

"We're putting together recipes that tell people where in the store they can find these items," Dodge said. "It will give them a good indicator: 'It's in the third aisle on the right-hand side, about halfway down.' "

Supermarkets could also use kiosks to reduce inventories and offer more special-order products, as is now becoming common in warehouse clubs and category-dominant retailers.

"Instead of having the international foods department, maybe those items could be ordered through a kiosk," said one industry observer.

Although the idea of offering additional items through a kiosk is enticing, the logistics of providing those products in a tightly controlled distribution system may present a problem, Big Y's D'Amour said.

"That would be a tricky one for us because we work primarily through a wholesaler. But we do get some [special orders] from people wanting odd stuff or products they've seen in other parts of the country, and we do try to honor some of those requests," she said.

Analysts said kiosks could prove especially valuable in enhancing customer service and store image by providing, for example, more detailed nutritional information than a typical store employee might be able to give.