Self Service Expo Ushers in a Brave New Retail World

Jan. 14, 2008
Self serve kiosks will change the retail landscape.

Walking the Self Service & Kiosk Expo at New York City’s Jacob Javits Convention Center a few months ago was an exciting and energizing experience. When visiting an exhibit to learn more about new developments, my first question was, “How would that function if we built it into a vending machine?” Or, “Would that device be adaptable to be deployed in a vending machine?” Almost every time, the answer was, “Yes! We could adapt this to work with a vending machine.”

This is an important realization when you consider the current state of the vending industry. Vending as it is known today is not meeting the needs of consumers. Vending as it exists today was designed to meet the needs of the 1950s consumer.

Customers Demand Change

Other retail venues have changed over the years. For vending to remain relevant, it too must change. Vending and onsite foodservice are at risk of being considered old, slow and boring – especially by younger customers who are technologically savvy and looking for the latest and newest conveniences.

One thing I learned at the Self Service & Kiosk Expo is that the self service kiosk industry is a valuable partner for the vending industry in looking at new ways to make the customer experience more appealing.

The show floor displayed a broad array of technology being applied to kiosks, digital signage, point-of-sale systems, self check-out (and check-in), hand held devices, and much more. Some applications were kiosk ordering systems for restaurants. Others were for retail stores to deploy gift registries. Some produced merchant gift cards. Still others were entertainment applications, including video rentals.

We are encountering increasingly sophisticated kiosks deployed in a wide range of venues. Consumer acceptance of kiosks, instead of human interaction, is becoming a reality. The ability for a kiosk to connect to the Internet (at increasingly lower cost) is making it possible for many of these new technologies to reach the public in a cost efficient manner.

The next generation of applications is being developed. It will be here soon, whether you’re ready for it or not.

Consumers View Vending and Kiosks as the Same

Vending and kiosks are seen as different things in their respective channels of business. But the consumer, the customer facing the vending machine or kiosk, does not see the differences. Consumers do not segment what they use or what they’re doing.

A key factor in today’s self service market is transaction time. If the customer doesn’t have to stand in line to wait for service, they save time. And it works for the service provider, too. They save labor costs by not needing to deploy more staff to serve customers.

Shopping at vending machines is slower and far less exciting than shopping in other venues. Gen Y shoppers will go elsewhere. Attracting and keeping these younger shoppers will determine the future and success of vending and onsite foodservice.

Debit and credit cards are the preferred payment method for Gen Y shoppers. Cashless payment systems save time for customers and generate incremental sales (and profit) for retailers.

In the not-too-distant future, cell phones will be the payment method of choice. Are you ready for the future? Understanding your customers is the key.

Kiosks are being widely accepted by the public across many venues.

One exhibitor at the expo that has also exhibited at vending trade shows is Solara Technologies, an integrated systems developer and application service provider of Internet-based remote management services. Solara Technologies has integrated a touchscreen point-of-purchase terminal in vending machines and is already testing them in the field.

The Future of Vending is Off-site Control

Dorn Beattie, president of Solara Technologies, said, “The future (of vending) is about bi-directional control.” That refers to being able to change vending machine prices from your office as well as observing transaction data and machine access.

Another exhibitor, Dr. Sylvia Berens, co-founder of Apunix, talked about deployments for retail point-of-purchase, food and beverage self-ordering, hospitality, loyalty, travel and tourism and credit authorization. Berens said, “Apunix specializes in combining Linux (software applications) with solid state technology.”

Alex Richardson, managing director of Selling Machine Partners, described some of his work with Ralph Lauren on interactive storefront windows in the U.S. and elsewhere. The maker of Polo brand realized that the window shopping customer often wants to buy what is on display in the store window.

The interactive storefront window made that purchase possible – even after the store was closed. Richardson said, “Great retailers always understand their customers better than their competition.” This is a great quote – a point that should be the driving force for growing your business.

Richardson also said, “What you should do is watch your customers; it’s what a lot of marketers don’t do.”

Customers Choose Time Over Money

Clear Channel in Taxi Media is leading the initiative to deploy credit card acceptance and global positioning (GPS) systems in New York City taxis. The cost of deployment, at $3,000 per taxi, is being covered by NBC and Clear Channel Taxi Media – because the on-screen advertising will more than cover the investment. The system deploys functions with advertising, program content and credit card payment capability.

Tom Haymond, vice president and executive producer of Clear Channel Taxi Media, said, “Between having more money and having more time, people will always choose more time.” His research showed that paying by credit card allows taxi customers to pay more quickly – tipping was made much easier. The customer could simply select a percentage tip instead of calculating it mentally.

Here’s another example of where cards beat cash – and the retailer (a taxi in this case) makes more money because the tip is likely to be higher.

Key Issue: Customer Experience

New technology is not the only thing that self service system providers need.

V. Miller Newton, CEO of Netkey, another kiosk technology provider, said, “The customer experience is the new battleground.” You have to look at what you’re deploying and how well it will be accepted by your customer. If it’s not easy to learn and use, it might not have the desired impact – increasing sales, satisfying customers, and simplifying business operations.

The self serve kiosk industry is still fairly young and the players are still struggling to understand their customers. Many self service concepts that have been tested were not successful because they did not meet customers’ needs.

Kerry Bodine, principal analyst at Forrester Research, made this point during her keynote presentation at the expo. Bodine recommends that design teams think about and plan their work from the concept of personas – essentially live (albeit fictional) characterizations of the individuals who will be using the kiosk application. “Self service applications fail when they don’t support the users’ goals,” Bodine said.

As self service concepts emerge, there’s a good bet that some will find their way to the locations being served by vending operators. Can today’s vending operators afford not to be cognizant of this?

Only by observing our customers in the act of shopping will any of us – self serve kiosk deployers and vending operators alike – really learn what to do to improve and enhance the customer shopping experience. This is a rigorous research process – not something to be done casually.

This is the rationale for EthnoVend ’08, a retail ethnography study I am spearheading for vending, which I covered in the April 2007 Automatic Merchandiser.
Meanwhile, customers are changing.

Sarah Canepa Bang, CEO of Financial Services Center Cooperative, a service company for credit unions, said, “Gen Y’ers won’t stand in line at any bank or credit union.”

On-demand and Self Service Products Almost Everywhere

The current generation of stamp vending machines is already headed for the history books. Janet Webster of the U.S. Postal Service looked back at the Mailomat, the Post Office’s very first vending machine in 1939. The future will focus on Automated Postal Centers where a customer can do a transaction without a postal clerk.

The next generation of postal kiosks will not have an inventory of stamps. Instead, postage will be printed on demand. More and more of what would have been first class mail is traveling on the Internet as e-mail. The future is about packages. Webster described the view of the future as: “More choices. Better service. Easier access.”

Staco Switch displayed its “tactile-feedback” technology. When you touched the screen, a “ripple” responds to your touch. There is no need to press on the screen multiple times to be certain that what you touched was accepted.

Gift card dispensers from several exhibitors offered the option of customizing the printed design card front. (The magnetic stripe is on the back). Thus, the machine needs only one inventory of cards. A wide array of gift card alternatives (brands and/or designs) is now possible. While this is not a new capability, it is a cost-effective process, and the ability to customize the cards is a positive feature for increasingly fickle shoppers.

Kiosks Target Younger Consumers

Intava Corp., a manufacturer of touchscreen kiosks, presented its “drag and drop” (at a fingertip) touchscreens to work with its idXs ShopRobotic System. This is an example of some of the latest features Gen Y customers expect to find on their mobile devices and computers.

Nanonation, another kiosk manufacturer, presented an interactive shopping enhancement. Pick up a tethered item (secured so it won’t “walk out” of the store) and the kiosk screen will display video content about the item and its features.

There were lots of kiosk applications in the financial service arena. One that’s been around for a few years is 7-Eleven’s “vCom.” It’s an in-store kiosk designed to deliver financial services for 7-Eleven customers. One of the key target groups is the more than 30 million people in the U.S. who are “unbanked”; people who do not have a banking relationship but still need to conduct financial transactions.

My expectation is that we will see a blending of vending and kiosks in the future. Here is a way for a kiosk to deliver and sell merchandise. And vending machines could provide much more information about what is being sold – plus selling messages to drive more transactions at higher price points.

Customers Want Vending Kiosks

The potential marriage of vending and kiosk technologies might be just what the customer wants.

If you have not invested in the technology of the future, you’re part of the past. Waiting for route technicians to visit a machine is inefficient and ineffective. Operators need to know what is happening on a real-time basis and use dynamic routing to manage the business.