Self-Serve Kiosks Address A Changing Consumer

Did you know you can buy a $199 ipod® from a glassfront machine using a credit card? You might not be in the market for an ipod, but lots of teenagers are, and they are tomorrow's work force. If they're comfortable making a $199 purchase from a glassfront machine, what does that say about their level of trust with automated payment technology?

As technology creates new possibilities — remote machine monitoring, electronic security, Internet-fed audio-visual content, cashless payment, computerized touch screens — it brings opportunities for a much wider range of products and price points.

Traditional retailers and consumer product manufacturers alike have been following these developments and investing in new automatic retail concepts. Retailers for many types of consumer products are finding that automated, self-serve kiosks allow them to serve more customers faster with fewer salespeople. Supermarkets in particular are investing aggressively in self-service checkout and providing in-store kiosks where consumers can look up product and ingredient information.

Self-serve kiosks that allow consumers to conduct a variety of transactions — including credit purchases, getting cash, accessing the Internet, enrolling in loyalty programs, and more — are becoming more pervasive. As self-serve kiosks advance and offer more payment options, many are integrating some of the hardware and software used in vending machines.

And as brick and mortar retailers are finding use for technology developed in the vending industry — such as bill validators, currency acceptors and telemetry-based remote machine monitoring — the vending industry has begun incorporating some concepts developed in other retail channels to offer new customer conveniences.

Case in point is the Freedom Shopping kiosk that utilizes radio frequency technology to allow a consumer to make a credit or debit purchase in an enclosed space by waving an RFID tag over a reader. (See article on page 62.)

Technologies create new retail formats

Retailers and consumer product manufacturers alike are exploring new business models that utilize new technologies to give customers access to more convenient retail formats. Key technologies driving this are:

• contactless credit cards, which have multiplied exponentially in the last year;
• wireless telemetry networks, which are becoming more reliable and also multiplying exponentially;
• RFID product tagging, which is becoming more affordable, quickly.

While technology evolves, new concepts emerge on the retail landscape. The rapid growth in DVD rental machines and Ipod dispensers are two of the more widely publicized developments.

The potential investment from retailers and product manufacturers will grow even more once successful delivery models are developed. How long this will take remains uncertain at the present time.

Some projects have been under development for several years and face uncertain futures.

The DVD rental machines are an offshoot of an early attempt to bring large brick and mortar-based, glassfront vending machines to the U.S. These fully automatic convenience stores built into the location have existed in Europe for decades. The concept was introduced to the U.S. by Philadelphia, Pa., area entrepreneur, Hettie Herzog.

Herzog's system, Shop 2000, is a self-contained glassfront merchandiser that has up to 200 different SKU facings of varying shapes, sizes and temperature requirements. The 150-square-foot machine accepts cash, credit and debit cards, and is monitored in real time via a computer modem.

Redbox predecessor: Built-in glassfront vending machine

The Shop 2000 was tested as a free-standing unit with fuel pumps in York, Pa., in 2000, and in some McDonald's restaurants in the Greater Washington, D.C. area. The York, Pa., test lasted six months, while the McDonald's test ended as a result of a change in corporate management.