Electronic Catalog: The Key to Kiosks

The goal of in-store kiosks seems simple enough: Provide customers with access to the company’s Website to offer a value-added service and an increased merchandise selection. And after a slow start, the idea is catching on.

Many companies now realize that kiosks don’t cannibalize their online, catalog, or retail businesses, says Steven Zrike, senior analyst of online retail at Cambridge, MA-based Forrester Research. Rather, they are the point of synergy among these often polarized divisions.

“It’s a step in the direction of achieving convergence between online and offline stores,” Zrike says. “Companies’ Web and offline businesses often offered different items and customer experiences. Kiosks help bring those together and give customers more access to the brand’s full product line.”

Since 1997, when kiosk pioneer Recreational Equipment Inc. (REI) launched its program, a number of multichannel companies — Staples, Barnes & Noble, and Kmart among them — have followed suit. Outdoor gear cataloger/retailer REI has at least two kiosks in each of its 60 stores, says spokesperson Jennifer Lind.

The kiosks enable the Sumner, WA-based company to offer broader product information. “We have 45,000 pages of informational copy on our kiosks, including links to how-to clinics, gear checklists, and tips on caring for gear,” Lind notes. Kiosk customers must pay for orders with a credit card at the terminal just as if they were shopping online from home, though they also can order at the register.

Better living through technology

Until recently, many companies didn’t have the infrastructure to make a kiosk operation worthwhile, Zrike says. “Before the Web, companies had to set up a separate infrastructure to be used only for the in-store kiosks,” he says. “Also, broadband technology, which allows for faster downloads, was not available, so companies had to have a server in every store just to run the kiosks — a costly option. Or in lieu of servers, the stores would have a dial-up connection for the kiosks, which was often slow and tiresome for consumers.”

But recent technological advances are spurring the popularity of in-store kiosks. According to a survey cited in “Mixing Bricks with Clicks,” a June 2000 Forrester Research report, while only 20% of respondents had kiosks in all of their stores, and 47% had kiosks in some of their stores, 80% expected to have kiosks in at least some of their stores by 2002.

Office supplies cataloger/retailer Staples already has kiosks in all of its stores. It launched its kiosk program in August 2000 with one kiosk in 20 of its stores. By the end of January, the company had completed a large-scale rollout of four kiosks in each of its 954 stores.

Vicki Hughart, spokesperson for Framingham, MA-based Staples, says the kiosks give in-store customers access to more than 45,000 SKUs and 100,000 downloadable software titles compared to the 7,500 SKUs in a typical store.

What’s more, Staples gives its customers the option of paying for kiosk purchases by credit card at the kiosk, much like a standard e-commerce transaction, or by taking a printout of the transaction to a store cashier. (The system is programmed to cancel any kiosk orders not logged in as paid by credit card at the kiosk or through a transaction at the register.)

Some marketers leave the kiosk browsing to the store employees. New York-based bookseller Barnes & Noble has only employee-operated kiosks in its stores. “Our kiosks are 20-ft.-long counters with three or four terminals,” says Gus Carlson, spokesperson for online arm BarnesandNoble.com. Since many of the company’s retail customers have not shopped online yet, staffed kiosks enable them to try it, “but in a friendly, familiar environment,” and with help, he adds. The company expects to have kiosks in all of its 600 stores by mid-2001.

As is the case with Staples, the kiosks enable Barnes and Noble to offer customers the “huge inventory” of BarnesandNoble.com, Carlson says. “Even our big stores have space limitations. But in our New Jersey warehouse, for example, we have more than 1 million titles in stock.” In addition to giving kiosk buyers the option of paying by cash, check, or credit card, Barnes & Noble allows customers to either pick up a kiosk order at the store or have it delivered to their office or home.

Dollars and cents

Troy, MI-based general merchandiser Kmart and its Bluelight.com online group rolled out their kiosk program in November 2000, with about three kiosks in each of Kmart’s 1,200 stores. While all 3,500 kiosks let customers pay for items as a regular Website transaction, the kiosks also feature a magnetic credit-card swipe, says Steve Chaffin, director of in-store marketing for Bluelight.com. Nonetheless, the transactions register as Web sales.

REI also allocates its kiosk transactions to the Website. As for what those transactions add up to, the companies shied away from citing specifics. But REI’s Lind says, “The aggregate sales of our kiosks equal the annual revenue of an average REI store.”

While a retail kiosk program could add to your revenue figures, it can be costly to set up a retail kiosk program. Carlson says that Barnes & Noble spent approximately $20 million to implement its kiosk program. And though both the stores and the Website share the benefits, “it was allocated as a store expense and not a BarnesandNoble.com expense,” he says.

Forrester’s Zrike says the cost of a kiosk program varies depending on your needs. Most kiosks are linked to a version of an existing Website, so the biggest expense is the kiosk itself, which typically cost about $2,000-$8,000 each.

One area you don’t want to scrimp on, though, is the sturdiness of the kiosks. Many companies want terminals that can withstand customer wear and tear, and that can easily and quickly be repaired. “A kiosk that is not working can be more frustrating to consumers than if it weren’t in the store at all,” Zrike says. Companies often pay an additional fee for the kiosk vendor’s IT repair services.

In the increasingly multichannel catalog/retail/Web environment, kiosks can provide synergy with your retail and Web channels — if not provide a whole new sales channel. As Zrike points out, “Giving customers more opportunities to access the full scope of your brand will encourage customers to buy more from you, and less from your competition.”

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