Kiosks and Multi-Channel Strategy

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By Eckhard Reimann, Managing Director ERCM
 
Kiosk systems represent one of the first interactive multi-media platforms. The German Multimedia Association (Bundesverband DigitaleWirtschaft e.V. / BVDW) defines this as all localised, digital and interactive out-of-home media – the defining characteristic being an intuitive,self-service oriented user interface for displaying multi-media information and/or handling electronic processes. These include multi-media based and interactive kiosk systems, self-service terminals, interactive, mobile and fixed presentations as well as interactive three-dimensional fitted installations.

The increasing presence and use of these interactive multi-media systems points to their significance in terms of multi-channel retailing, offering information and communication to everyone in the public domain. Nevertheless, the market for kiosk terminals was for many years referred to as the ‘Godot Market’: in other words, everyone was waiting for the market to take off properly, instead of progressing in fits and starts. Although the Internet has finally given it a new impetus, the kiosk sector did, of course, feel the effects of the general economic downturn and the burst of the dot.com bubble in particular. The upswing in Germany is still relatively modest in comparison to the international trend; the German kiosk market is still a heavily fragmented market in which fewer than 10 manufacturers of kiosks account for 90 % of the market and the other 80 or so companies are competing for the remaining 10 % of the market.
 
RFID: The Customer Comes First
 
Driven by ever-stronger competition in an increasingly global market environment, business enterprises are today forced to constantly search for new ways of winning customers. The traditional marketing tools such as price, choice and location, although still important, no longer offer sufficient differentiation from the competition. To this end, successful businesses are now turning to innovative ways of satisfying customers’ needs in order to focus on the customer’s purchasing experience, to increase sales in shops and to win over customers. Despite the fact that business enterprises are aware of the wide range of available options for improving their chances of competing for customers, only very few of these enterprises actually make use of them, according to the 2002 ‘Store of the Future’ survey carried out by the IBM Institute for Business Value and the National Retail Federation (NRF).
A small but growing group of innovative businesses are continually testing a variety of new technologies, such as the use of mobile devices or digital media in retail shops, all from the viewpoint of offering customers new ways of interacting with the business. The latest example of this in Germany is the METRO Group with its Extra Future Store in Rheinsberg and the RFID Innovation Centre in Neuss.
 
In the meantime, the unstoppable victory march of mobile technologies has also reached the kiosks. If they manage to overrun them, these technologies will, in the truest sense of the word, have the kiosks in their pocket. Or will both media replicate each other, not only by using directional radio to allow them to be updated more efficiently, but also, far more importantly, by communicating with mobile phones and PDAs?
 
One of the main differences at the moment relates to the question of ownership: wireless technology such as Bluetooth, infrared, laser and transponder technologies will allow users of mobile devices to use tools (such as Location Based Services) on their handheld, PDA, organizer or mobile phone to display the nearest ATM machine, the next wireless kiosk or the next petrol station.
 
Users will also be able to display and print out information, coupons and tickets sent to the mobile phone, PDA or organizer at the kiosk. The kiosk will remain important as long as it can store and clearly display significantly more information, can offer a larger, more user-friendly interface, can print out coupons and tickets and ultimately dispense money. On the one hand, the kiosk will increasingly take on the role of communication station and on the other, of a download/refueling station for mobile devices, ultimately acting as a multi-media training device for the average user on the street. The kiosk will also develop into an economical SMS station for the younger generation, for example in the form of a web payphone or an Internet terminal.
 
The use of RFID in combination with kiosk terminals will also become increasingly popular. RFID applications differ from each other in two main respects, namely product identification and the identification of the respective carrier. With regard to kiosks, this means that the user (the carrier of the RFID) can be identified by the kiosk (the product) if he/she is searching for relevant information and events.

Nowadays, many kiosk projects use magnetic swipe cards or barcodes to recognize and record customer activities and to credit users with bonus points. However, this necessitates physical interaction between the card and the respective device. In contrast, RFID tags do not require any physical contact with the kiosk or reading device. In the US, they are already in use at the Wild Rivers Waterpark in Irvine, and in the Museum of Technology in Vienna
 
The METRO Group will be the world’s first enterprise to implement RFID along its entire logistics process chain. Initial results from the Extra Future Store in Rheinberg have revealed an 11 to 18 % reduction in the proportion of goods lost and a significantly higher level of goods availability, resulting in a measurable increase in sales revenue. The first phase of the RFID rollout at METRO commenced in November 2004 and involved an initial group of 20 suppliers equipping their palettes and transport packaging with smart chips. This will gradually be expanded to include approximately 100 suppliers, 8 storage locations and 269 retail locations of the METRO Cash & Carry, Real and Kaufhof distribution channels. Over 30 different test systems have been installed in four separate areas covering an area of 1,300 m². Wal-Mart, Tesco, Target and Albertsons are all vigorously pressing ahead with the introduction of RFID, with Wal-Mart beginning its scheme, involving around 100 suppliers, in January 2005.
 
RFID chips now support customers in some ‘T-Punkt’ stores; if a customer picks up a mobile phone or PDA equipped with an RFID chip in one of their shops, the RFID reader built into the presentation table automatically triggers the specific product information stored in a database, which is then displayed on easy-to read kiosk terminals. The user can then use touch fields on the screen to move around and access specific further information as required. This new form of customer communication is designed to help reduce or completely eliminate waiting times for sales. Increasing use of kiosk terminals with RFID functions is now being made at events, in schools and airlines, for locating and tracking luggage and in libraries.
 
The advances in hardware and software technologies will also continue unchecked in the future. Whether at the point of sale, point of information, at home or in the office; users can rest assured that future technological developments will be increasingly oriented towards meeting the consumer’s needs.
In the meantime, it is an indisputable fact that, due to their visual presence, widespread distribution and innovative technology, self-service terminals represent an ideal interface between conventional and modern sales channels. However, in spite of its great strategic importance, the selfservice sales channel is, at present, seldom implemented to its maximum efficiency. At best, it is occasionally used to present advertising art relating to a product range, but without appealing to specific target groups. In this respect, recent studies have shown that more than half of customers polled at self-service terminals still feel the need to speak to a customer advisor immediately afterwards and would like to be able to use the terminal to request a callback from a human being. Increased customer expectations and demands are the most important driving forces behind multi-channel strategies, because customers expect to be able to choose for themselves the distribution channels they use to access information, make contact with a company or buy and exchange products. All this manifests itself in increasing demands for individuality, mobility and convenience. In terms of mobility, information requirements and consumer behaviour, the ‘touch points’ of the various channels must conform to the particular situation. I.e., they must be situated in places where customers have sufficient time, can experience the emotional environment and can communicate in a targeted manner. At all touch points, customers must be able to interrupt at any time the information and sales process that they have initiated and then reactivate it again at any other touch point.
 
In Germany, the E-Kiosk Working Group in the BVDW has established itself as an authoritative central contact, information and communication point for all important matters relating to kiosks. It incorporates joint representation of all the major players in the fields of technology, design, production, sales, software, application, content, development and consulting. Regular exchanges with relevant expert groups and working groups of the BVDW facilitate the coordination of topics such as e-business, mobile services, CRM, CMS, Multi-Channel Management and payment systems.
 
The cooperation and exchange of experiences with them, as well as with international partners and organisations (such as the Kiosks Org Association and the Euro Kiosks Network), is essential to enhance the expertise of all members of the E-Kiosk working group. For this reason, the publication of KIOSK EUROPE magazine, which, for the first time, takes into account all important matters relating to the European kiosk market, is to be welcomed.
 
A strategy paper on ‘Positioning and defining the communication measures of the E-Kiosk working group’ has recently been adopted by E-Kiosk. Kiosk solutions, and from 2004, interactive space installations, are now recognized as a separate category within the German Multimedia Awards. (http://deutschermultimedia-award.de).