KIOSKS' NEW DYNAMIC

JOHN KAROLEFSKI

Kiosks are on the comeback trail.

After years of spotty performance by earlier models, new electronic hardware has captured the attention of retailers looking for ways to add pizzazz to their in-store marketing. Tests of new kiosks are under way, while other hardware rolls out across the country. Some vendors plan enhancements that tie into card-based, frequent shopper programs.

"We keep our options open," said Mona Golub, spokeswoman for Price Chopper Supermarkets, Schenectady, N.Y., perhaps speaking for retailers who are evaluating the new kiosks on the market. "Times change very quickly, and we need to respond to consumers' needs for information. If a kiosk is appropriate, we'll look at the options. If not, we'll move on."

Donald Larsen, assistant professor of marketing at Western Michigan University, agreed with the need to provide useful information at the point of purchase. But he added that kiosks have to provide better performance than years ago.

"There was a whole host of companies that appeared, then disappeared," he said. "There were technology problems and fears about using the technology.

"That's less of a barrier today, but consumers have higher expectations," he said.

"They're more familiar with what technology can do for them. So they're going to expect the kiosk to be customized to the store, add a lot of value, give them information, and make their lives simpler. It would be neat to have a kiosk in-store, but also be able to do the same stuff on the Web." That's exactly what one of the new models in stores can do. Dubbed "Endless Aisle," the customized, online kiosk program enables shoppers to order products not available in the supermarket, or do the same at home from the store's Web site. Either way, products are shipped via Federal Express.

Penn Traffic Co., Syracuse, N.Y., is testing the kiosk in six of its P&C supermarkets. Clemens Family Markets, Kulpsville, Pa., operator of 20 supermarkets, will launch the service on its site this month and plans to place kiosks in select stores shortly afterwards. In addition, the service is available only on the Web site for Lowes Foods, Winston-Salem, N.C., an operator of 102 grocery stores in North Carolina and Virginia. The vendor is NeXpansion, founded in 1996 as Netgrocer.com.

"Consumers have changed and are much more sophisticated," said Marc Jampole, spokesman for Penn Traffic. "We have more natural foods, organics, ethnic cuisine and international foods. But there are just some things that no supermarket ever carries. That's what's available through [the kiosk]. They are specialty, hard-to-find items such as papaya Jello and grits with cheese.

"Kiosks are much more attractive now in an Internet world," he continued. "People are used to navigating the Internet, which makes the kiosk user-friendly."

Another program that continues to expand in supermarkets is the Healthnotes touchscreen kiosk that provides health and lifestyle information. There are 6,500 installations in the United States, including about 2,000 in supermarkets. For example, Wild Oats has one kiosk in each of its 100-plus stores.

Perhaps the biggest kiosk success in supermarkets in recent years has been Coinstar, Bellevue, Wash. The machine counts shoppers' accumulated coins and gives shoppers a voucher that can be exchanged in the store for cash or groceries.

There are 8,900 installations in supermarkets around the country.

While this kiosk lacks sophisticated software, an Internet connection or a tie-in to the point-of-sale system, the kiosk is effective because it provides a useful and welcome service, observers said. Perhaps that's the key to the success of any kiosk.

That certainly was the case years ago with the predecessors of electronic kiosks. Various service kiosks fulfilled shoppers' needs and enhanced the shopping experience. For example, the kiosks for Bucks County Coffee in McCaffrey's Markets, Yardley, Penn., a four-store operator in upscale areas of New Jersey and Pennsylvania, are still successful after more than a decade. "They are distinctive and give the shopper a reason to come into the store," said Jim McCaffrey, president.

What are the components of an effective kiosk program in supermarkets? Vendors and retailers agreed that kiosks must be in the right location -- that is, be accessible and noticeable. Functions must be quick and easy to use. Most importantly, there must be a reason for the kiosks to be in the store. Here's a closer look at these components:

Location

Food stores have always had the traffic for kiosks to succeed, but proper location has been an issue in the past in some stores. With retailers looking for any edge in their competitive business nowadays, experts said giving kiosks a prominent position in the traffic flow takes on greater importance.

'A kiosk needs to be placed in an area where it's going to reach the customers who would enjoy what it has to offer," observed Golub of Price Chopper.

The kiosks at P&C supermarkets are located by the customer service desk near the front of the store, according to Jampole of Penn Traffic.

"You have to look at the shopping patterns on the heavily shopped days and try to judge how many kiosks you need," said Barry Kotek, managing partner of Retail Systems Consulting, Naples, Fla. "Part of that is the functionality of the kiosks and what you want them to do."

Quick and Easy

Although some kiosks are sophisticated and have Internet access, experts said they still must be efficient units to earn floor space.

"Shoppers are busier now," said Larsen of Western Michigan University. "You've got to deliver fast and convenient information and solve their problems, or it won't work."

He added that too many shoppers in the store could pose a problem because only one person can use a kiosk at a time. "Shoppers may be too rushed to stand on line," he said.

Worthwhile Purpose

Kiosk watchers said that the hardware would fail if it duplicated what shoppers can already do in the supermarket. Plus, the hardware must be suited to the demographics of the store.

"They need to provide a service that is not otherwise available, or provide it at a more efficient rate," stressed Greg Kahn, president of Kahn Research, Huntersville, N.C. "Those are the kiosks that work. A good example is a photo enlargement kiosk. However, if the service does not need a kiosk, there is no need for the customer to waste his or her time, the retailers to waste the floor space, or the company to waste the money."

A customized kiosk designed with the "total customer experience" must complement in-store inventory and service, explained Lou Carbone, president of Experience Engineering, Minneapolis. "Retailers must know their clientele. If the typical customer is a college-educated professional with a higher income, an in-store kiosk might offer gourmet recipes, entertaining tips and a recommended wine selection -- all of which can be printed out and taken home."

According to executives familiar with the history of kiosks in supermarkets, several installations failed because they had business models that relied on brand advertising or incremental trade funding. That's not the case with the new generation of kiosks. In fact, retailers must pay Healthnotes a fee to provide the software in their stores. The vendor plans enhancements, including a tie-in to a retailer's frequent shopper program. According to Kotek of RSC, retailers with frequent shopper programs could tie some kiosks to the POS system and target shoppers with customized promotions. If successful, such an arrangement would catapult kiosks to a higher level of performance.

"Today, with some of the new technologies on analytics, retailers can determine the promotion sensitivity by category for individual shoppers," he said. "The analytics are far superior to what we were doing years ago. The newer stuff can basically take and grow category sales and category gross profit by targeting. If you can do that, it changes the dynamics of the kiosk."