KIOSKS CATCH ON

DAN ALAIMO

After years of hype and failure, kiosks are finding a home in supermarkets.

Kiosk devices have been long touted as solutions to a multitude of customer needs and incremental sales. Trouble is, consumers didn't see them the same way. As a result, retailers built up a healthy skepticism toward this interactive technology. This continued even as kiosks in the guise of ATMs and coin-counting machines slowly, but steadily became commonplace in their stores.

But just as customers have become more comfortable with self-service in other aspects of their lives -- ATMs, pay-at-the-pump gas and self-checkout at the front end of the store -- other kiosk applications are suddenly blossoming at the point-of-purchase. From deli-ordering kiosks to health information to event ticketing to recipes to loyalty programs and now even for purchasing mutual funds, many retailers are now taking a second look at what kiosk technology can do for their customers and their stores.

"I think we're on the edge of a greater expansion of kiosks at retail, although I don't think it is a solution for all departments or all stores," said Bill Homa, senior vice president and chief information officer, Hannaford Bros., Scarborough, Maine, an operating company of Delhaize America, Salisbury, N.C., that has over 100 stores in the Northeast.

Hannaford has "a few" kiosks, he said, and has developed a strategy to maintain consistency for the kiosks in its stores, as well as for related content on the Internet. "Kiosks are here enough that you need a strategy to manage them. For certain applications, like deli ordering, Healthnotes and even employee self-service, I think they have a great future," Homa said.

Mollie Stone's Markets, Mill Valley, Calif., is an upscale, seven-store independent in the San Francisco Bay Area that is making increasing use of kiosks, said David Bennett, co-owner. "For Mollie Stone's, kiosks keep us current, or on the leading edge in our marketplace." Among the kiosks this retailer is using are Xpress Deli kiosks from InterMedia, Owings Mills, Md., Healthnotes, Portland, Ore., and Tickets.com, Concord, Calif.

"However, I don't think we can just sit back and let the kiosk take over; we need to drive the program. But I think kiosks will play a big part in the future of Mollie Stone's," he said.

Pat Iasillo, director of customer relationship marketing at Remke Supermarkets, Covington, Ky., another seven-store independent, disagrees. "We've looked into kiosks and the problem we have with them is just getting people to use them. I've always felt that it took too much time and training, and if you ask the customer to do any more than come and do what they are already doing, your success rate is going to go way down," he said.

One of the more intriguing tests of kiosk technology is now going on at 100 supermarkets of Winn-Dixie Stores, Jacksonville, Fla., where a bank is selling mutual funds through the machines. Marketplace Bank, Orlando, a division of the Canadian Imperial Bank of Commerce, is targeting new investors, setting the minimum investment at $100. Four index funds and one money market fund are managed by Whatifi Financial, Boston.

"We think that any banking service that is available would be a convenience to our customers and would add value to our stores," said Mickey Clerc, spokesman for Winn-Dixie, which has some 1,000 stores in 14 states.

Marketing experts contacted by SN were split on whether mutual fund kiosks in supermarkets will be viable. "People's financial information is very personal and to submit that information at a kiosk seems to be a little bit of a stretch to me," said Steven Skinner, partner in the retail practice, Accenture, Chicago. "So I am not as on board with that."

But Ken Wyker, president, Wyker Marketing, Charlotte, N.C., a former Food Lion executive, sees the fund kiosks serving a customer base unfamiliar with investments. "If it is a case of a customer that doesn't know where to go to get a mutual fund, if they don't have a contact in the financial industry or a banker they feel comfortable going to, the kiosk can help them get over that. They can get the information they need and go ahead and get the mutual fund," he said.

Overall, the use of kiosks in supermarkets is starting to develop, but not very fast, Wyker noted. "I think kiosks are still waiting for the killer app," that is, a popular application that will draw large numbers of people to use the machines.

Another challenge to kiosks in the grocery environment is keeping their content fresh for customers who visit once a week or more often, he said. "That kiosk has to have value every week, otherwise the customer goes back to it in a week or two, and if it has the same offer as the week before, that customer loses interest," he said.

One way to do that is by personalizing the information on the kiosks, Wyker said. "Retailers have an opportunity to leverage their loyalty data and provide shopping suggestions or a mini-ad for the customer at a kiosk that provides added value and gives the customer a reason to visit," he said. "Kiosks will provide the low-cost, high-reach interface that retailers will need to move into customer-specific promotions and pricing."

Kiosks are getting "a second wind" in the grocery business, said Glen Hausfater, managing partner, Partners in Loyalty Marketing, Chicago. "They are being used for recipes, related products and ordering when you walk into the store. There is still a fair amount of emphasis on using them as a coupon dispenser," he said.

In other retail sectors, there is even more kiosk activity, including such things as self-ordering and looking up part numbers. "As you see those other sectors develop applications, they are going to flow back into grocery," Hausfater said.

Pharmacy is an area in the store where kiosks could benefit customers, said Greg Buzek, president, IHL Consulting Group, Boynton Beach, Fla. "There is a tremendous opportunity to provide a value-added service providing pharmacy history, either for individuals or families, along with how much the customer spent on prescriptions for tax purposes," he said.

The consultants contacted by SN agreed that the deli-ordering kiosk was an idea whose time has come. "That's a great opportunity. That's a great place for it," Buzek said.

"It's brilliant. It is an automation that makes the customer's life easier," Wyker added.

"I see kiosks being used in targeted situations," Buzek said. "I don't see kiosks for the sake of just having kiosks, and I do not see kiosks for the sake of loyalty alone," he said. Another variation on the deli-ordering kiosk is sending a customer person out with a wireless ordering unit to take the deli orders of people entering the store, noted Rob Rubin, research director, Forrester Research, Cambridge, Mass. "Customer service is a big issue for people who are time-starved," he said.