Retailers deploy thousands of Net kiosks

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By Stacy Collett

(IDG) -- Shopping for an above-ground swimming pool this summer? Don't expect to find a wide selection at the cramped Kmart store in Herndon, Va. Instead, shoppers can go to one of two desktop kiosks -- the ones below bright BlueLight.com signs -- and check out a variety of pools that can be shipped in three to seven days.

For Kmart Corp., the Web-connected kiosks are an effort to "save the sale," allowing customers to buy merchandise not available at stores.

This isn't new territory for Kmart. The Troy, Mich.-based discount retailer has been flirting with kiosk programs since the early 1990s, but with little success.

The problem then was that maintaining a large kiosk network was expensive. "You had to hire a ton of people for maintenance, and a lot of the technology was shaky," recalled Dave Karraker, a spokesman for BlueLight.com LLC, a Kmart unit that handles Internet and kiosk sales. What's more, customers saw little need for kiosks at the time, he added.

Those systems, built on each store's LAN, would often crash, and when products or a kiosk feature needed updating, technicians would have to visit each store to make the changes.

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But now, Kmart has placed its bets on Web-based kiosks that mimic its BlueLight.com Web site. Some 3,500 kiosks occupy 1,100 U.S. stores. The new kiosks eliminate many IT department headaches by updating products and information simultaneously in all of the stores.

So far, the kiosks are paying off big. Since launching the kiosks in January, 20% of BlueLight.com's site traffic has come through the kiosks. That's twice as much as expected, according to Karraker.

Thousands of retailers and service providers are hoping for the same results as they add kiosks through which customers can order furniture, burn custom music CDs, check in at the airport, rent cars and even order a newborn's first photographs at the hospital. Jupiter Media Metrix Inc. in New York predicts that consumers will purchase almost $200 million in goods and services through kiosks this year and $6.5 billion by 2006.

So far, the most successful kiosks have been ones that help consumers research or locate products or fulfill orders (such as airline check-in kiosks) or that extend shelf space by offering unusual or bulky products.

But some companies may be deploying kiosks without such a clear idea of the purpose or payoffs. "We find that [enterprises] are interested in kiosks . . . but their thoughts about what's the value to the consumer and the enterprise are not very well formed. It's just something that's cool," said Carol Ferrara, an analyst at Stamford, Conn.-based Gartner Inc.

Infrastructure Requirements

There's more to Internet-based kiosks than simply making a Web site available at a store location. The No. 1 IT requirement is a high-bandwidth, reliable network.

"We're finding retailers don't have the infrastructure in their physical stores to support the connectivity requirements of a Web-based kiosk," Ferrara said. "It's not something a lot of retailers have invested in, and it's probably not prudent to invest in it just for the sake of a kiosk."

Response times are also critical. Customers may be willing to tolerate slow response from a Web site while sitting at a home PC, but they're far less tolerant standing at a kiosk in a store, Ferrara said.

Companies that want kiosks but lack the IT staff to support them often hire hosting services, at least initially, to see how much usage and revenue the kiosks generate.

For example, Netkey Inc. in Branford, Conn., and Autopulse Inc. in Raleigh, N.C., are jointly rolling out kiosks for Raleigh-based Lucor Inc., the nation's largest franchisee of Jiffy Lube International Inc. stores.

NCR Corp. in Dayton, Ohio, is another kiosk-hosting provider. It claimed a tenfold increase in its Web kiosk business last year.

Retailers with robust data networks can handle kiosks themselves. In January, office supply retailer Staples Inc. installed more than 2,500 kiosks in 954 stores. The kiosks emulate the Staples.com Web site, but at the store, customers are able to order products online and pay at a cash register.

This is possible because in the late 1990s, Staples installed a frame-relay network with circuits that carry integrated voice and data. "In a given store, there are 13 different devices that can connect into our system directly or over the Net," such as cash registers, telephones and back-office software, said Max Ward, vice president of technology at Framingham, Mass.-based Staples.

The IT department constantly monitors the network status to avoid downtime and has trained the help desk to handle problems that might occur inside the stores. The kiosks combine IBM thin clients with laser printers.

At the Staples store in Sterling, Va., store manager Steve Saunders said that he has experienced few problems with the thin clients and that customers need little assistance with them. All sales associates are trained in kiosk operation, and each has to pass a test on its use, he added. If problems do occur, Staples' help desk contacts a contractor handling support and repairs for the kiosks.

Kmart's IT department maintains the hardware and Internet connections at the company's stores. The department also provides ongoing technical support through a toll-free number. Kmart associates have been trained on kiosk use and are responsible only for assisting customers and keeping the keyboard and monitor clean and powered up.

Built to Last

Ruggedness is important, because kiosks can take a beating. Alamo Rent A Car LLC lets hurried customers rent cars online and use kiosks at airport locations to check out quickly. But the kiosk enclosures have to be sturdy, said Rickie Hall, vice president and CIO at ANC Rental Corp., Alamo's parent company, in Fort Lauderdale, Fla. "If you dropped a Coke on them, it wouldn't bother it," she said.

Hall added that Alamo must also consider factors such as sunlight and the angle of the screen, because kiosks are placed at indoor and outdoor locations.

For day-to-day maintenance, shift managers are trained on kiosk use and have a small guide with instructions on changing printer paper or monitor lighting. All IT issues are handled through ANC's centralized help desk. If the problem can't be fixed by phone, ANC technicians go on-site. As a last resort, IBM, which makes ANC's kiosks, is called in. "You try to keep IBM for the very last because it's the most expensive [option]," Hall noted.

Usability is another critical success factor. "Create a nice, simple interface. It has to be a clear task that the kiosk is completing. You don't want the customer to find that the kiosk isn't doing what they expected it to do," said Heather Dougherty, an analyst at Jupiter.

The potential of Web kiosks is still untapped in many markets. Consumers say they're willing to rent movies, purchase event tickets, make bill payments and create customized products at kiosks, Jupiter's research found.

But those services will require kiosks that have card scanners, printers and additional security features, all tied to a central host and reliable network. "If it's down all the time," Ferrara said, "customers will absolutely never go back."