Box on the Rocks

 
 
By eweek  |  Posted 2001-01-15
 
 
 

In the back of the Sephora store in Montgomery Mall in Bethesda, Md., stands a kiosk. The plain, white machine clashes with the European beauty supply stores dramatic black décor — which may be why its shoved to the rear, and turned sideways. It draws on the power of the Internet, but offers only marginally useful information and a nonworking printer.

"This kiosk is like an orphan in a store that screams high fashion," says Francie Mendelsohn, a consultant at Summit Research Associates who issued a recent report on retail computer terminals.

Sephora isnt alone. Four years after Web-enabled kiosks made their debut, few retailers have figured out how to use them effectively. And the kiosk industry itself remains fragmented, leaving many retailers practically screaming for help to integrate the seemingly promising technology into their businesses.

The result: Many kiosks today are akin to a fifth wheel, offering a new tool that often gets in the way more than it helps.

"A number of people are saying weve got this great idea for kiosks, but when you ask them, they really dont know," Mendelsohn said in a speech at a kiosk conference in Toronto in December 2000. "Theres a tremendous amount of activity, but a lot of it is hype."

First Impressions

Merchants have been experimenting with web kiosks since 1996.

Forrester Research estimates there are as many as 15,000 Internet-powered kiosks around the world. Roughly 100 companies use or are planning to use them in retail settings, including giants such as The Athletes Foot, Borders, Costco Wholesale, Eastman Kodak, Gaiam, General Nutrition Centers and Sears, Roebuck and Co.

By 2002, 80 percent of all major retailers plan to install kiosks, according to Forrester.

Kiosks typically link to the companys Web site, but not the wider >> Internet, and may have custom-built features.

Retailers have used them as a way to add huge assortments of products without adding shelf space; provide gift registries and credit applications; speed up customer service; let customers research products and do price comparisons; and even give sales associates a new way to close sales — the ultimate aim of all retailers.

But retailers stumbled into many pitfalls as they rolled out the new devices — from technological compatibility problems to poor management and apathetic staff to seemingly good ideas that flopped.

In one case, Hallmark ended up throwing out what had looked like a promising idea: letting customers create their own greeting cards on kiosks. It turned out that people preferred to buy stock greetings rather than design their own.

Another early adopter, Best Buy, had so much trouble keeping its original kiosks running that it pulled them out and bought brand new ones.

"When youre buying kiosks at $5,000 or $10,000 a pop, thats a pretty hefty investment," says Joe Schmidt, vice president at Knowledge Strategies Group, a New York consultant that sells kiosk software to clients such as Bloomingdales.

Kiosks may look like they can stand on their own, but many times they need just as much help from sales staff as customers do.

First, however, retailers need to figure out what they want their kiosks to do.

Looking for Merchandising Answers

There are plenty of merchandising questions.

Retailers need to decide whether they want kiosks to be self-service or they want sales associates to use them to help customers. They have to decide what real estate the boxes deserve on the store floor, what content and additional merchandise they will display, how that ties into the stores merchandising philosophy and whether the kiosks will serve the entire store or just specific departments.

And, of course, theres the question of cost.

Questions such as these are the sticklers for some retailers, which are secretive about their plans.

"Its not a technical issue. Its more a question of what do we want it to show, and where does it fit," says one retail official at a well-known fashion store who asked not to be named.

Merchandising questions sometimes resolve themselves, as retailers such as Bloomingdales, RadioShack and Service Merchandise have shown with their kiosk programs.

Service Merchandise and RadioShack have installed Web-enabled kiosks to provide customers and sales staff with a quick and easy way to look up products, including stock that isnt inside a particular store.

Bloomingdales has set up three "eOsks" that not only display and sell catalog selections, but also promote the brand by featuring fashion trends and e-mail postcards.

Who Manages Them?

For many retailers, its the technical questions that prove most daunting. In addition to integrating kiosks into their merchandising, retailers have to integrate the boxes into their information technology (IT) infrastructure.

"Kiosks are run by either the dot-com group or the MIS [management information systems] group, which is always a little comical to me, to think that either of the technical guys would be in charge of figuring these things out," Schmidt says.

The IT department managers have different agendas than the merchandisers, and are more likely to oppose kiosk projects, according to kiosk backers and IT officials working in retail.

"You cant slap a PC in a store on a dial-up line and call it a kiosk," says David Seifert, vice president of e-commerce at Service Merchandise, which has kiosks inside all of its 225 stores. "Store organizations are not as PC-literate as you would expect. The people responsible for information technology for stores are not Web people. Its really foreign to them to put these things in their stores."

Multiple Capabilities Confuse Retailers

Kiosks are a kind of infrastructure that involves many parts of a retail operation, according to Noah Shopsowitz, major accounts manager at King Products, a Toronto company that builds Web-enabled kiosks.

For example, retailers see the value in tying kiosks to store inventory records, so a customer can find out swiftly whether a product is available or needs to be ordered. At the same time, it can collect marketing information through handling credit-card applications, or perform customer services such as order-tracking. Kiosks can run their own multimedia presentations to promote the store, inform customers and extend the stores branding.

"Theres so many who need to take ownership, they cant decide. Its very different for this technology to land, so were involved in so much consulting," Shopsowitz says.

One problem particular to kiosks is content. With the capability of carrying the Internet, sound and video, kiosks can run programming about store events or seasonal promotions, Shopsowitz says. "Thats a big question for retailers" that dont see themselves in the media business.

But for the most part, retailers continue to see kiosks as Web-in-a-box.

Its a lazy attitude, Schmidt charges. "Expecting people to stand there and surf the [retailers] Web site when surrounded by the same merchandise doesnt make sense," he says. "Putting a Web site on a kiosk is not a customer solution at all — just a business decision. Its the easiest thing to do."

Finding someone to help make those decisions, however, can be as confusing as the machines themselves. Its a fragmented industry. Retailers buy the "enclosures," or boxes, from one vendor, software from another and possibly have a third one maintain the kiosks.

Big manufacturers such as Compaq Computer push the business, but they usually only sell the boxes; they typically dont integrate retail applications into the boxes. IBM, NCR and Siemens do some work here, but retailers push other suppliers to stretch their operations.

Firm Ideas

Slowly, however, some retailers have found what they think is firm ground for installing kiosks, using them for customer service, marketing, branding and sales.

A year ago, Bloomingdales built upon its 4-year-old bridal business kiosks and set up three Web kiosks in stores in Chicago, Los Angeles and New York. Recently, the department store chain installed its second-generation programming in those kiosks. The company sees the kiosks as a way of extending Bloomingdales brand, while letting customers help themselves.

"The time-pressed nature of the consumer, for me, was driving the decision," says Susan Harvey, senior vice president and managing director at Bloomingdales.com.

As a high-end department store interested in promoting the latest fashion trends, Bloomingdales also found it easier to answer the content question.

"We have unique editorial content produced in our stores," Harvey says. "If Isabella Rosellini is promoting makeup, we can do a live chat from Tysons Corner [in the Washington, D.C., area]. If we have a key vendor or a magazine editor, a celebrity, we want the ability to communicate that to our customers."

Bloomingdales kiosks also allow customers to e-mail postcards to friends and relatives, and attach digital photos of children with Santa Claus taken at the store. Besides being popular with customers, the kiosk also collects e-mail addresses for the companys marketing data base.

The kiosks also provide store maps and assist sales associates, and can be customized to their locations. Harvey says Bloomingdales avoids impractical special effects, discarding Flash and QuickTime graphics in favor of zoom viewing that gives customers a closer look at clothing fabric.

The Unknown Factor

In the future, kiosks will need to do more than ever. "Will the customer accept a multipurpose appliance? This will be the bridal registry, the ATM [automated teller machine], the everything," Harvey says.

Others take a much more reserved view. At Sears, officials believe kiosks will raise sales by helping customers and staff, but they admit they dont know how this will happen.

"There is a belief that there will be a sales lift from these devices. We are in process of measuring that now," says Bernie Bartelli, vice president of store systems at Sears.

Sears plans to measure response times as customers experience them, as well as track where customers and associates are going on the kiosks.

The value lies in other things that usually dont stick out when people think of what they can do with kiosks, Bartelli says. "There are lots of soft benefits here. Those are harder to justify," he says.

Salespeople use kiosks to pull rebates off the Web site for customers. Customers can also use kiosks to research products, Bartelli says.

Despite kiosks potential benefits and capabilities, most retailers remain unsure how to use them. The versatility that the Internet can bring to a box only seems to heighten the industrys confusion about what to do with kiosks.

"They really dont know," Summits Mendelsohn says.

Analysts believe retailers need to think of how the kiosk truly serves customers, rather than plant a screen inside the store and call it multichannel retailing.

"They need to be part of an overall retail positioning strategy that is consumer-focused; they cant be some ancillary technology stuck on the side that a retailer tries to build an ROI [return on investment] or operational model around," says Chris Kiminas, a consultant at Retail Planning Associates who was quoted in a report by Fairchild Executive Technology back in March 2000.

In other words, it has to be relevant. According to Schmidt: " Useful is absolutely the keyword. How does this kiosk fit with the rest of my offering? The power is in the hands of consumers today. We have to provide them with what they want."

Rocket Fuel