MARKET STUDY 2013 Self-Service Kiosks · to Kiosks. This study looks at the kiosks of today as well...
Transcript of MARKET STUDY 2013 Self-Service Kiosks · to Kiosks. This study looks at the kiosks of today as well...
MARKET STUDY:2013Self-Service KiosksAnalystsLee Holman, Greg Buzek
Publication Date: September, 2013
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Table of Contents
Introduction ................................................................................................................................... 6
Some Definitions ............................................................................................................................... 6
Some Basics ........................................................................................................................................ 7
1.0 Trends and Challenges in Kiosks .................................................................................... 9
1.1 Self Service Options are Clearly Desired .............................................................................. 9
1.2 Mobile Impact .......................................................................................................................... 9
1.3 Alive and Kicking, but Under “Press”ure ............................................................................ 9
1.4 Fragmentation and More Fragmentation ........................................................................... 10
1.5 Gesture-Based Technology and Augmented Reality ....................................................... 10
1.6 Where is the Line of Demarcation? ..................................................................................... 10
1.7 Security Concerns .................................................................................................................. 10
1.8 Open Thread ........................................................................................................................... 11
2. 2012 Self Service Market Share ............................................................................................ 13
2.1 Shipments by Device Type ................................................................................................... 13
2.2 Installed Base by Device Type ............................................................................................. 15
2.3 Estimated Kiosk Revenue Turn ........................................................................................... 15
2.4 Forecast Shipments ................................................................................................................ 16
2.5 Forecast Installed Base .......................................................................................................... 17
2.6 Forecast Revenue Turn ......................................................................................................... 17
3. Best Practices in Self-Service Kiosk Types ........................................................................ 19
3.1 Self-Checkout Systems .......................................................................................................... 19
3.2 Ticketing Kiosks ..................................................................................................................... 23
3.3 Check-In Kiosks ..................................................................................................................... 26
3.4 Food Ordering Kiosks ........................................................................................................... 28
3.5 Postal Kiosks .......................................................................................................................... 30
3.6 Other Retail Kiosks ................................................................................................................ 32
3.7 Future Kiosks ......................................................................................................................... 34
4. References ................................................................................................................................. 36
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List of Figures Figure 1 – Overall Shipments by Device Type ............................................................................................ 13
Figure 2 – Overall Shipment Growth by Device Type................................................................................. 14
Figure 3 – Installed Base Growth by Device Type ....................................................................................... 15
Figure 4 – Estimated Kiosk Revenue Turn by Device Type ........................................................................ 15
Figure 5 – Shipment Forecasts by Device Type ........................................................................................... 16
Figure 6 – Installed Base Forecasts by Device Type .................................................................................... 17
Figure 7 – Revenue Turn Forecasts by Device Type.................................................................................... 17
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INTRODUCTION It wasn’t so long ago and every place was Full Service. Today more and more arenas of life are
Self-Service in this fast changing world. We started with ATMs, then gas pumps and migrated
to Kiosks. This study looks at the kiosks of today as well as the threat of the kiosk in the
consumer’s hand, namely their mobile device.
In the preparation of this study, we found that one of the overwhelming issues industry-wide is
the decided lack of consistency in nomenclature for the various types of kiosks. In some circles,
there is no distinction between a kiosk that performs full transaction processing features (such as
a self-checkout system in Kroger) and one that simply serves as an information provider. Further,
some retail publications make no distinction between a self-standing technology-based kiosk and
a small portable “manned” kiosk such as is found in shopping malls (Dippin’ Dots, Sunglass Hut,
etc).
To help resolve some of the confusion, for this report we will adopt the convention wherein a
kiosk refers to the former, namely, a self-standing technology-based unmanned device. We will
address five specific types of Self-Service Kiosks (plus an “Other” category) that are deployed in
various retail, travel and hospitality settings.
The beginning of the report addresses the trends and challenges of such devices in the
retail/hospitality/travel industries. The report then moves to the quantitative functions of the Self-
Service market (Shipments, Installed Base, and Market Value) and presents four-year forecasts
for each. In the body of the report, we begin to focus on the particular kiosk types, why they have
been implemented, who they target, and the best in class as of this writing. We place a special
focus on how payment is accepted and methods for improving card acceptance.
We conclude the report with a Look to the Future.
Some Definitions
For the purpose of this report, we will look at six types of self-service kiosks that are found in
the retail and hospitality environments. Granted, there are many other types of kiosks found in
retail and hospitality settings, but these are the ones that lend themselves most readily (either
currently or in the near future) to payment acceptance.
1. Self-Checkout – We define Self-Checkout Machines as computerized systems that allow
shoppers to purchase tangible products unassisted (including full payment) in a retail
setting. This includes a measure of security built into the unit that may be based on
cameras, scales, beams, or other electronic means. We have limited this definition to
include only those systems that handle tangible consumer products.
2. Ticketing Kiosks – We define Ticketing Kiosks as those kiosks found at airports,
amusement parks, bus terminals, parking, movie theatres and subway/train stations that
enable the customer to purchase a ticket for a ride or movie. These are distinct from Check-
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In Kiosks (described below) in that Ticketing Kiosks are a “first-contact” type of device,
meaning that these kiosks may serve as the first payment point for a customer. This having
been said, these devices may also serve as Check-In Kiosks from the standpoint that the
customer may have already paid for their ticket elsewhere (phone order, web, etc). In this
case, the device is simply used to provide a boarding pass, print the movie ticket, etc. The
Ticketing Kiosk may therefore typically be a technically more complex system than a
Check-In Kiosk.
3. Check-in Kiosks – We define Check-in Kiosks as those kiosks located in lodging or travel
settings that confirm previous payment. They may essentially serve as a stand-in for a
receptionist at a hotel, motel, lodge or resort and may have built-in functionality that
provides a room key after a credit/debit/smart card has been authorized (the same card
that was used to reserve the room). As mentioned above, these devices tend to be of a
“second-contact” form, meaning that the customer has already “made contact” and
tendered payment elsewhere (phone order, web, etc) before encountering this device.
4. Food Ordering Kiosks – We define these as devices that allow customers to place orders
for food, either in a fast food, casual dining (for take-out), or in deli environments. These
are distinct from ordering kiosks found in some casual dining settings, where the server
enters information that is relayed to the kitchen; rather, these devices are used by
customers to order their own food.
5. Postal Kiosks – We define these as devices currently located in US Post Offices that allow
customers to mail letters and packages without the assistance of postal workers. These are
distinct from vending machines in those same locations that simply dispense stamps.
6. Other Retail Kiosks – This group consists of a wide variety of transaction kiosks that may
be found in retail or hospitality settings. The most notable in this group are DVD rental
kiosks such as those offered by Redbox and NCR (who acquired TNR). We have chosen
to not include in-store web-based kiosks (such as those found in Staples and Office Depot)
since they typically consist of a standard PC with a persistent internet connection locked
to the store’s eCommerce site, rather than a separately configured kiosk.
Some Basics
Though features and design differ, Self-Service kiosks will have some common components.
Units use a display (typically a touchscreen) to guide the customer through the process of
purchasing goods or services. Typically there is a processing unit built into the kiosk, though
sometimes the system may take the form of a thin client. Self-Service kiosks may appear to the
customer to be stand-alone devices, but they are indeed networked to the in-store systems.
In the case of Self-Checkout Systems, customers simply scan (bar-coded) or weigh (non-bar
coded) each item as the screen keeps a running tab of their purchases. The customer then bags
the items. Bags are most often placed on scales or sent through a tunnel to verify the accuracy of
the purchase and insure no items are stolen. An attendant keeps track of several units at a time,
watching the process via cameras attached to the checkouts, verifying non-bar coded items and
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checking ID for age-related purchases (alcohol, tobacco, etc.). They most often use a nearby
command center to care for all these activities. Attendants are also available to assist and instruct
customers in the process.
Ticketing, Check-in, Food Ordering and Postal Kiosks are functionally similar to Self-checkout
systems; all but the Postal Kiosks are typically smaller, mainly due to the need for scales, scanners,
etc required for security. In the Self-checkout and Postal systems, security for the entire
transaction is built into the unit. In each of the other kiosks, security for the transaction is shared
by other devices or personnel (the fast-food worker has to hand over the food, the gate personnel
has to check the boarding pass, etc).
Payment is accomplished using cash (using a coin or cash accepter), credit/debit/smart card
(using an EFT device) or check (using a check reader). Self-checkout systems can also double as
convenient ATM machines.
Receipts, itineraries, tickets or boarding passes are printed at the unit, completing the transaction.
Self-checkout systems, due to their typically more complex transactions, require a remote
attendant (usually one for every four systems) for monitoring proper use of the device. Other
kiosks require no such support.
Kiosks can usually integrate well with current POS and back office software through pre-
designed conduits or available configuration toolkits. Purchase information is interpreted as a
regular transaction by the retailer’s POS software.
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1.0 TRENDS AND CHALLENGES IN KIOSKS
1.1 Self Service Options are Clearly Desired
The trending in the data that we have seen through the past decade is neither surprising nor
discomfiting; consumers continue to embrace self-service solutions. A 2011 study conducted by
NPD for NCR confirms this, as two-thirds of respondents indicate they want self-service options
when they are shopping, and nearly half want more self-service options than they are seeing
when they are shopping. This speaks well to the types of kiosks we address in this report,
especially insofar as payment is involved.
1.2 Mobile Impact
Some retailers view kiosks as an interim technological step, and they might forego them entirely
in order to embrace Mobile technology. Without question, mobility is transforming how retailers
and hospitality providers interact with their customers. It comes in forms such as restaurants
giving their wait staff mobile devices for order taking or pay-at-the-table, or Specialty retailers
planning to replace their traditional POS terminals with handheld devices / tablets or embracing
consumer mobile (for further in formation, please see our report titled, Consumer Mobile: The
End of The Store As We Know It
http://www.ihlservices.com/ihl/product_detail.cfm?page=Store%20Automation&ProductID=76.
The competition that kiosks face from mobile devices has to do with the reassessment retailers
and hospitality providers have to perform on how they interact with their customers.
All that said, the really interesting aspect to this is the concept whereby a retailer will use an iPad
(or other tablet device) as the "guts" of a kiosk, resulting in a device that performs the same
functions as a traditional kiosk, but with considerably less power consumption and infrastructure
and footprint requirements. Companies like Armor Active and Tryten Technologies are
providing this kind of technology, and in some cases the iPad can be removed from the pedestal
and used like a store associate's tablet.
1.3 Alive and Kicking, but Under “Press”ure
As we continue to struggle in the relatively jobless recovery, Self-Service and particularly Self-
Checkout has taken a great battering in the press. Journalists looking for the sensational stories
have treated Self-Checkout like it is the Big Bad Wolf with no redeeming qualities and thus any
news of potential disruption or removal of the devices even pondered is great news. There have
been 1-2 stories of Albertson’s and another retailer removing Self-Checkout that have proven to
be false. The press picked up on the fact that a retailer was being more judicious in rolling out
the technology, and that became the “end of Self-Checkout,” thus ignoring market realities.
To say things have been greatly exaggerated would be an accurate understatement.
The market continues to grow for Self-Checkout, and although retailers are being smarter for
where these and other kiosks are deployed, the death of the devices is greatly exaggerated.
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1.4 Fragmentation and More Fragmentation
The kiosk arena is characterized by being very fragmented, not only in terms of the types of
products available, but also the vendors offering those products and the retail and hospitality
segments at which they are targeted. While we expect this condition to continue for the next
several years, we recognize that the presence of vendors such as NCR, Fujitsu and Toshiba TEC
(due in large part to IBM’s spinoff of RSS) has a stabilizing effect on the rest of the industry.
Simply, if big players like them are involved, they must be serious about the use of kiosks. We
also expect technological advances to continue, to the extent that as the devices continue to shrink
and require less power; the limiting constraint then becomes the size of the human interaction
points (keyboard and display).
1.5 Gesture-Based Technology and Augmented Reality
Taking a page from the script of Minority Report, at NRF 2013 we saw some examples of gesture-
based technology being applied by the likes of Intel, Cisco and Microsoft. We have seen the early
efforts to engage customers with one’s brand using augmented reality (accessorizing, virtual
dressing rooms, etc) and facial recognition (demographics, makeup applications) and are
intrigued by what we see so far. While we question the merits of applications like ZombieMirror,
we acknowledge that the technology is in its infancy, and while all of it may be cool, as with all
such situations the business case must be made before purse-strings will be loosed.
1.6 Where is the Line of Demarcation?
We have said before that kiosks can be viewed as a “tweener” technology in that they are in
between a mechanical vending machine and a full-up networked self-checkout system. We have
also stated that Digital Signage is different from the kiosks in this study since there is no
opportunity for payment. As technology has advanced, vending machines have become more
sophisticated (note the Best Buy Express “kiosks” in airports) and digital signage offers much
more than unsolicited product or deal information (think about the technology from vendors
such as Screenreach or the interactive wayfinding displays at NRF). The line dividing these
technologies is awfully blurry right now, but one thing is clear...these technologies will be
competing for the same IT spend dollars.
1.7 Security Concerns
It seems that as soon as any new technology comes on the scene, somebody of ill repute has
already found a way to exploit it. The fact that kiosks are intended for self-service dictates that
there will be a greater presence of non-employees in the vicinity than employees. Retailers must
therefore do a balancing act between security (without the aforementioned intervention) and
convenience of use for the customer. Technology can be applied in ways that are both non-
invasive (weight-sensing scales in the bagging area) and invasive (biometric fingerprint
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scanning). Some may find it interesting that while some features of Self-Checkout systems
provide deterrents, they are designed more to eliminate the employee-aided theft rather than
customer theft. This aligns with the findings of the National Retail Security Survey, which found
that employee theft (47%) was the largest contributor to inventory shrink. It makes sense that if a
customer is going to steal something on their own, they will do it somewhere else in the store
before they come to the Self-Checkout with the camera, an employee watching them and a scale
to monitor their purchases. The end result is that supermarkets are seeing a decrease in shrink
after self-checkout systems are installed.
PCI compliance is part and parcel of any discussion about data security, especially with the heavy
use of card-based tenders involved. According to SelfServiceWorld magazine, some kiosk
software applications “…have been found to store trapped data, use default passwords and may
have other vulnerabilities. Older machines may store data and conduct batch transactions via
dial-up…” That said, it is incumbent upon retailers to make sure that their kiosks are included in
any audit and upgrade processes related to PCI compliance.
1.8 Open Thread
The advent of so many technology-related issues in such a very short period of time makes it
difficult to fully address each of them in the detail that we sometimes desire. This section is
included to provide just a brief mention of some of those issues as they pertain to kiosks.
EMV Adoption – Two years ago VISA announced their roadmap for EMV adoption in
the US (Canada is ahead of the game). More recently, MasterCard announced that they
had formed a cross-industry group in order to implement standard adoption of EMV in
the US. Proponents claim EMV is more secure than mag-stripe cards. Detractors claim that
EMV will be the “New Metric System.” If EMV is widespread in its adoption in the US,
then every kiosk type that accepts payment will have to be modified.
Social Media Integration – Kodak (who no longer makes Kodachrome film, digital
cameras, pocket video cameras or digital picture frames) announced in May 2011 that they
had introduced social network connectivity to the Kodak Picture Kiosk, allowing
customers to access and print photos that they have published or shared on the likes of
Facebook. In other news, it’s looking more and more like the Wild West with kiosks, social
and mobile, and a whole report still couldn’t fully address the subject completely.
Government Kiosks – As Federal, State and Local governments continue to grapple with
serious budget issues (cities, such as Stockton CA, and counties, such as Jefferson County
AL have declared bankruptcy in the past year) and tight staff, kiosks have made some
headway. Whether these kiosks are used to process Medicaid applications, check jurors
in, or handle DMV transactions (a personal favorite), customer service will hopefully be
enhanced efficiently.
Payment – As varied as the types of kiosks available are, the methods and technologies
for payment are even more so. The one are to really watch is the fairly recent development
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of alliances intent on inserting themselves into the card transaction process. MCX is one
that is commonly mentioned, and its biggest strength is the fact that it is a consortium of
retailers. In our view, they have the biggest stake in the transaction, and are therefore
more inclined to provide innovation in order to lower transaction costs for themselves
and for the consumer. What many of these new payment groups fail to realize is that
retailers are not looking for a new payment option unless it speeds the checkout and
lowers their interchange fees. And consumers are not looking for a new payment option
either unless they are rewarded handsomely. None of the payment alternatives as of yet
have cracked that equation.
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2. 2012 SELF SERVICE MARKET SHARE
2.1 Shipments by Device Type
Figure 1 – Overall Shipments by Device Type
Simply, for the six kiosk types of interest, Other Retail Kiosks (such as DVD Rental and Photo
kiosks) accounted for 50% of shipments of kiosks that accept payments for 2012. The growth for
these devices was somewhat muted due not only to the tremendous growth of DVD rental kiosks
in previous years, but also Redbox’s acquisition of NCR’s Blockbuster Express program. This
latter point will require close observation for the next couple of years as that transaction shakes
out. Still, rollouts of these devices continue, and Redbox has stated that they are looking at dollar
stores as a next target. Further, this category saw continued installs of photo kiosks at Walmart
and others.
Self-Checkout systems (as found in grocery stores and other retail formats), which historically
have been the leader in shipments, accounted for 25% of shipments. Though up a bit from last
year, Self-Checkout’s slice size has been getting smaller over time with the rise of Other Retail
Kiosks, but their shipments continue to increase due to the broader segment acceptance as well
as retailer size acceptance. Non-Supermarket retailers like Home Depot and Costco have had
2012 Kiosk Shipments
Ticketing Kiosks
14%
Self Checkout
Systems
25%
Check-In Kiosks
5%
Food Ordering
Kiosks
7%
Postal Kiosks
0%
Other Retail Kiosks
50%
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them for a number of years now, and vendors are providing smaller footprint devices (that cost
less) for smaller retailers and for some non-traditional self-checkout users. The really interesting
aspect is that Self-checkout systems cost 2-3 times more than other kiosks, yet retailers can justify
their purchase due to the ROI.
Ticketing Kiosks were in third place with 14% of shipments. These devices saw an uptick in
growth for 2012, and they have appeared to be stabilizing for the last few years. One upside is the
expansion of these kiosks into sporting and entertainment venues continues.
Food Ordering Kiosks were next with 7% of shipments, due to the continued exploitation of the
largest long-term potential of the six. Between the QSR and Entertainment (Theme Park, Sports,
Museums) segments there are over one million potential installations in the US alone. The leading
fast food providers still refuse to pull the trigger on any major rollouts (Jack-in-the-Box being the
lone exception). Successful pilots abound, and the up-selling potential for each transaction
remains. NCR’s focus on kiosks has had a positive influence on growth numbers here, especially
with their recent acquisition of Radiant.
Check-in Kiosks were next with 5% of shipments and Postal Kiosks again registered essentially
zero shipments in 2012, mainly due to the fact that the initial contract was for 2,500 units (all of
which were installed in 2004), and there has been no follow-on contract. Ongoing budget issues
(stamp price increases will not cover existing losses, nor will the ceasing of Saturday delivery
service) are a threat to these devices, as is any perceived "they take away union jobs" attitude.
Figure 2 – Overall Shipment Growth by Device Type
Shipments 2010 % Growth 2011 % Growth 2012 %
Self-Checkout Systems 11,336 19% 8% 12,202 23% -5% 11,557 25%
Ticketing Kiosks 5,949 10% 6% 6,277 12% 4% 6,500 14%
Check-In Kiosks 2,120 3% 7% 2,275 4% 2% 2,320 5%
Food Ordering Kiosks 2,746 5% 6% 2,916 6% 5% 3,073 7%
Postal Kiosks 0 0% 0% 0 0% 0% 0 0%
Other Retail Kiosks 38,550 64% -24% 29,185 55% -19% 23,582 50%
Totals 60,701 -13% 52,856 -11% 47,031
Overall shipments declined by 11% in 2012, affected like the PC industry by the increased use of
mobile devices as more and more content is pushed to the consumer’s devices in the way of
specific retail apps. The installed base grew at a healthy rate of 4%. This was after a 2011 that
proved to be a bit ambivalent, as economic data was showing something other than a strong
recovery underway, while the store technology studies we conduct revealed a kiosk replacement
rate that is comparable with traditional store-level technologies.
Another large impact to the negative shipment figures is due to the strong saturation that DVD
rental kiosks created in the 2-3 years leading up to 2011. That growth rate simply could not be
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sustained, and Redbox’s acquisition of NCR’s Blockbuster Express line will need to shake out for
the next year or two.
2.2 Installed Base by Device Type
As in the past couple of years, Other Retail Kiosks are the leaders in installed base, as DVD kiosks
and Photo kiosks continue to proliferate. Self-Checkout systems, in spite of their significant cost
differential, hold fast to second place, having seen their historical lead evaporate. Ticketing
Kiosks are next, and this includes the many fare card machines installed in urban transit settings
(and which represent the most mature installed base) as well as kiosks in and around cinemas
and outside ballparks. We have seen an up-tick in the growth rate for the installed base of Check-
in Kiosks due to the lodging industry starting to embrace the technology. This is in spite of
upgrades of Check-in kiosks to Ticketing capability and the heavier use of CUSS kiosks (which
will promote a consolidation of the installed base for Check-in kiosks). Expect the Food Ordering
kiosks to thrive in the Entertainment (Sports, Theme, Museum) segment, but also expect them to
suffer due to the extreme franchise mentality found in the QSR segment. Postal Kiosks will
continue to see flat zero-level shipment growth.
Figure 3 – Installed Base Growth by Device Type
Installed Base 2010 % Growth 2011 % Growth 2012 %
Self-Checkout Systems 93,247 21% 5% 97,615 21% 2% 99,375 21%
Ticketing Kiosks 77,034 18% 6% 81,979 18% 5% 86,400 18%
Check-In Kiosks 20,405 5% 6% 21,543 5% 5% 22,587 5%
Food Ordering Kiosks 29,711 7% 7% 31,717 7% 6% 33,678 7%
Postal Kiosks 2,512 1% 0% 2,512 1% 0% 2,512 1%
Other Retail Kiosks 217,000 49% 6% 229,916 49% 4% 238,413 49%
Totals 439,908 6% 465,281 4% 482,964
This is a market that is beginning to grow out of its infancy, as there are still units being installed
for the very first time. In the case of Ticketing Kiosks there continues to be an opportunity for
continued replacements in the mass transit arena, where historically these devices have handled
cash but not credit/debit/smart cards. The other area that will experience replacements is where
Redbox rebrands all of the 10,000 or so BlockbusterExpress kiosks.
2.3 Estimated Kiosk Revenue Turn
Figure 4 – Estimated Kiosk Revenue Turn by Device Type
$ in Millions Installed Base Annual
Transaction/Kiosk Avg. Trans
Value Turn
($MM)
Self-Checkout Systems 99,375 78,686 $32.98 $257,885
Ticketing Kiosks 86,400 230,463 $21.00 $418,150
Check-In Kiosks 22,587 95,821 $45.00 $97,392
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Food Ordering Kiosks 33,678 118,625 $9.50 $37,953
Postal Kiosks 2,512 20,856 $5.88 $308
Other Retail Kiosks 238,413 5,896 $7.38 $10,374
Totals 482,964 $822,061
The table above demonstrates that approximately $822 Billion was transacted through self-service
kiosks in 2012, which represents an increase of 5.9% from last year. While in the past kiosks have
represented the confirmation of a previous payment transaction, more kiosks are being installed
that are first-contact transaction devices. Ticketing Kiosks continue to be the leaders here, with
Self-Checkout in second. The overall figures for Other Retail Kiosks are a composite of the figures
for Photo, DVD Rental and Propane kiosks, and therefore suffer from a small installed base for
Propane kiosks and a low transaction value for DVD Rental kiosks.
2.4 Forecast Shipments
Figure 5 – Shipment Forecasts by Device Type
Shipments 2012 Growth 2013 Growth 2014 Growth 2015 Growth 2016 Growth 2017
Self-Checkout Systems 11,557 3% 11,904 3% 12,261 2% 12,506 2% 12,756 2% 13,011
Ticketing Kiosks 6,500 6% 6,890 6% 7,303 5% 7,668 5% 8,052 5% 8,454
Check-In Kiosks 2,320 4% 2,413 4% 2,510 4% 2,610 4% 2,714 4% 2,823
Food Ordering Kiosks 3,073 5% 3,227 5% 3,388 5% 3,558 5% 3,736 5% 3,923
Postal Kiosks 0 0% 0 0% 0 0% 0 0% 0 0% 0
Other Retail Kiosks 23,582 2% 24,053 3% 24,775 2% 25,271 3% 26,029 2% 26,549
Totals 47,032 3% 48,487 4% 50,237 3% 51,612 3% 53,286 3% 54,760 Note: All figures in units.
The table above details our forecasts for shipments of each of the six device types. The 3% growth
for 2013 is based in the responses we have received from retailers in the IHL Group / RIS News
Store Systems Study. Note further that we expect to see Self-Checkout shipments decline as
saturation continues in the Supermarket segment. The growth figures for Check-in Kiosks and
Ticketing Kiosks reflect an anticipated migration of Check-in kiosks to Ticketing kiosks. In some
cases, it will be a simple matter of a hardware module swap-out and a software change; in others
the entire unit will be replaced. Postal kiosks are shown with essentially zero growth, with no
expectations of further shipments due to the serious financial situation the USPS faces. Other
Retail Kiosks show muted growth as the combination of Redbox dominance and mobile
downloads begin to cannibalize DVD sales.
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2.5 Forecast Installed Base
Figure 6 – Installed Base Forecasts by Device Type
Installed Base 2012 Growth 2013 Growth 2014 Growth 2015 Growth 2016 Growth 2017
Self-Checkout 99,375 2% 101,188 2% 103,055 2% 104,960 2% 106,903 2% 108,884
Ticketing 86,400 5% 91,086 5% 96,054 5% 101,270 5% 106,747 5% 112,497
Check-In 22,587 5% 23,673 5% 24,802 5% 25,976 5% 27,198 5% 28,468
Food Ordering 33,678 6% 35,736 6% 37,898 6% 40,168 6% 42,552 6% 45,054
Postal 2,512 -1% 2,487 -1% 2,450 0% 2,450 0% 2,450 0% 2,450
Other Retail 238,413 4% 247,081 4% 256,009 4% 265,115 4% 274,494 3% 284,061
Totals 482,965 4% 501,251 4% 520,268 4% 539,939 4% 560,343 4% 581,415 Note: All figures in units.
As a result of the aforementioned shipments, the table above represents our forecast for the
installed base. The installed base for Self-Checkout is trying to stabilize, and Postal Kiosks show
an overall decline as some post offices are closed. The big news, however, is the rapidly stabilizing
installed base for Other Retail Kiosks, as mobile/smart phones begin to gain movie share from
DVD Kiosks.
2.6 Forecast Revenue Turn
The numbers in this table may at first look appear to be aggressive, but the reader must keep in
mind that the Check-in Kiosks represent only the confirmation of a previous transaction. These
figures also reflect Check-in to Ticketing migration.
Figure 7 – Revenue Turn Forecasts by Device Type Revenue Turn 2012 Growth 2013 Growth 2014 Growth 2015 Growth 2016 Growth 2017
Self-Checkout $257,885 6% $273,358 3% $282,668 3% $290,772 3% $299,115 3% $307,706
Ticketing $418,150 9% $455,783 9% $495,463 6% $527,592 6% $561,686 6% $597,864
Check-In $97,392 10% $107,131 6% $113,372 6% $119,928 6% $126,824 6% $134,075
Food Ordering $37,953 11% $42,128 8% $45,494 7% $48,701 7% $52,106 7% $55,722
Postal $308 2% $314 1% $317 1% $321 1% $324 1% $327
Other $10,374 9% $11,308 5% $11,854 5% $12,398 5% $12,965 5% $13,551
Totals $822,061 8% $890,021 7% $949,169 5% $999,711 5% $1,053,020 5% $1,109,246 Note: All figures in $ Billions.
In 2012, just over $822 Billion was spent by consumers through self-service kiosk systems. This is
expected to grow to $1 Trillion in 2015. Readers of previous reports will note that we are showing
kiosks reaching the trillion dollar mark a year or two later than before. This is due in part to the
continued maturation of the Self-Checkout installed base, as well as the cannibalization of sales
due to retailers adopting mobile ordering applications.
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In terms of payments used, we are starting to see some WIC programs that are able to be used at
self-checkout. Further, we expect check usage at self-checkout systems to be nearly non-existent,
mainly due to the opportunity for customers to use it as a substitute ATM machine. This also
helps the retailer in their cash management efforts.
Ticketing kiosks are the cash cows, due mainly to their more mature installed base in the mass
transit arena. Acceptance of cards is a fairly recent occurrence for them. This is one of the scenarios
where we expect no checks, due mainly to the cost of incorporating a check reader in existing
kiosks.
Check-in kiosks will see heavy card use, and this will continue as they are converted to Ticketing
kiosks. Most travelers, especially those on business, use a card for reservations, meals, etc. This
will keep that percentage high.
Food ordering kiosks will see a balance between cash and debit/credit. Up-selling to a
businessman using a card is great, but QSR’s will still have to deal with the high school kid who
has two George Washington’s for lunch.
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3. BEST PRACTICES IN SELF-SERVICE KIOSK TYPES
3.1 Self-Checkout Systems
3.1.1 Rationale
The day and age in which we live is the main rationale for the emergence of Self-Checkout
systems. Customers, with a limited amount of time and just a few items to purchase, don’t want
to be stuck in a seemingly never-moving “express” line. Retailers, pressed on all sides by labor
constraints, need to enhance service or risk losing customers to competitors. Enter self-checkout
systems.
We estimate that 25% of the sales by all US supermarkets ($602.6 Billion per FMI) were handled
by self-checkout systems in 2012, which corresponds to some 4.6 Billion transactions.
3.1.2 Targeted Segments
The following segments tend to be the most targeted in terms of Self-Checkout systems adoption.
Grocery Stores – Grocery Stores are typically multi-lane situations with one or more
“express” lanes available. The volume and throughput in the checkout lanes of these
stores makes them the most likely candidate for self-checkout systems, and they seem to
be most well received by the shoppers. The list of users in this segment is a veritable Who’s
Who, with Kroger, A&P, Safeway, Ahold, Loblaw, Winn Dixie and Delhaize, among
others, all using them.
Convenience Stores – Easily overlooked due to the different technology employed, Gas
Stations/Convenience Stores have been the most aggressive adopters of self-checkout
technology, though for the most part it resides solely at the gas pump (we do not include
pay-at-the-pump in our calculations here). That said, certain vendors have developed
smaller-footprint devices that can be used inside the stores of such retailers. Among the
earliest of adopters is Quick Chek, who installed NCR’s FastLane in approximately 15 of
their 125 stores in NY & NJ.
Mass Merchandisers – These retailers are also heavy adopters, with Walmart and Kmart
leading the way (though Kmart, in the aftermath of their bankruptcy, decided to remove
several hundred of the units from their stores). Target, who cherishes the face-to-face
aspect of their customer service, has so far refused to join up.
Warehouse Clubs – At first blush, retailers in this segment would seem to be likely
adopters, though the average package size would tend to work against rapid adoption.
BJ’s Wholesale and Costco, to a certain extent, have adopted the technology, while Sam’s
Club has leaned more toward a line-buster system.
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Retailers in other segments have been less enthusiastic adopters, though there are some bright
spots.
Specialty Hardgoods – The vast variety of transaction types in this segment make it hard
to generalize the reasons for slow adoption, but DIY leaders Home Depot and Lowes have
both adopted the technology.
Drugstores – These retailers tend to experience lower overall item counts in a typical
transaction than do grocers and mass merchants, although their transaction dollar value
may be comparable. Walgreens and Jewel-Osco are two who are adopting the technology,
though with a smaller footprint device than is found in grocery stores.
Department Stores – JC Penney recently announced that they will be eliminating all
traditional POS, so we expect that in addition to mobile POS there will be a certain level
of self-checkout needed to help pick up the slack.
3.1.3 Best in Class
The unit shown to the right is Fujitsu’s U-Scan Genesis,
their bestselling U-Scan model. This is a Windows-
based system that is geared to the express lane customer
with fewer than 15 items in their basket. The U-Scan
Genesis comes in several models, including the U-Scan
1 (compact 1-bag), the U-Scan 2 (2-bags), U-Scan 4 (4-
bags), U-Scan 6 or 8 (6 or 8 bags) and the U-Scan
Carousel (4- or 6-bag carousel). The most recent
additions (January 2009) are the
Mini-Carousel, a 4-bag carousel that
connects to Fujitsu’s modular U-
Scan Genesis self-checkout systems,
and the U-Scan Payment Station, which is essentially the U-Scan Genesis
without any bagging capability.
The unit shown to the left is Toshiba's new Self Checkout System 6, a direct
result of their acquisition of IBM's RSS group in April 2012 . IBM originally
entered the Self-Checkout market when they acquired then-partner
Productivity Solutions (one of the original pioneers in Self Checkout) in
November 2003. Since that time, IBM’s engineers were brought to bear on the
design of the system, with the result being a new line of completely
redesigned Self Checkout models in 2008 and the modular System 6 in 2010.
It utilizes the Checkout Environment for Consumer-Service (CHEC) software environment, and
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offers 1-, 2-, 3-, 6-bag and belted models. In each model line, units are available with and without
cash acceptance capabilities.
The systems are WEPOS-based (and can now run on 4690 OS) and are geared to the express lane
customer with fewer than 15 items in their basket. The redesign effort was aimed at providing
enhanced usability and maintainability, as well as making use of the WEPOS operating system.
For instance, the unit has been modularized and the overall footprint has been reduced.
Customized enclosures are available that allow the systems to match a retailer’s look and feel. As
with all their retail products, Toshiba/IBM service and support provide the undergirding, and
they integrate with older IBM and newer Toshiba POS systems.
The product shown to the right is the SelfServ Checkout system
from NCR, the world’s oldest retail technology company. SelfServ
is NCR’s fifth-generation device, and it is the follow-on to the
FastLane product that was released in 2001. The system is modular
and starts with a common core module that houses the
touchscreen, the scanner/ scale, a TSP printer and the bulk of the
electronics. Unload options include a basket shelf and a conveyor
belt. Bagging modules include 1-, 2- or 3-bag platforms or a
takeaway belt. Tender options include cash and coin acceptors or
recyclers, signature capture, contactless and other industry
standard devices.
NCR also makes the SelfServ
Checkout Mini, which they claim is the smallest fully-
featured checkout system on the market. Introduced in 2006,
it is a small-footprint version of its larger cousin, and as such
it is targeted at space-constrained retail settings, such as
convenience stores like Quick-Chek, the installation of which
is shown to the left.
The unit shown to the right is called Utopia from Pan
Oston. Pan Oston has been involved in the
development of self- checkout systems for
Walmart and Michaels, and their key selling points
are low cost and the ability of their unit to convert
between a self-checkout lane to a cashiered lane.
The first installation of this device was announced
in May 2008. In August 2009, Pan Oston
announced a small- footprint modular
system (shown below). It works with both
Microsoft.NET or Linux, and the focus is independent grocers.
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The most recent addition to the ranks here is the one shown below from Wincor Nixdorf. The
official name is “360 Scan Portal”, but it goes by the more common moniker of “Tunnel.” A
bulkier version was first revealed at Wincor World in 2009. The concept is simple…the device
does the scanning without having to have the consumer engaged. Wincor teamed with Datalogic
and Royston LLC to create this device. Currently, Sweden’s ICA and Germany’s Rewe are the
only known customers, but we would imagine that one of the Delhaize banners in the US might
pilot it soon.
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3.2 Ticketing Kiosks
3.2.1 Rationale
Ticketing kiosks have been around for quite a while and have historically been found in mass
transit settings. A couple of good examples are the ubiquitous FareCard machines in the
Washington D.C. Metro subway system, and the so-called
“skiosks” found at Colorado ski resorts. Historically, these
devices have been replacements for the attended token kiosks in
places such as New York’s subway system. By one estimate,
approximately 85% of New York City’s 7 million daily subway
riders now use MetroCards, which are the replacement for the
subway token.
Movie cinemas, museums, ski slopes, city parking garages
(shown at right is the installation at UC San Diego) and other
venues have been installing ticketing kiosks in an effort to
enhance customer service and redeploy scarce labor resources.
We see an opportunity for airlines to use such devices as a
replacement or enhancement to the Check-in Kiosks, which will
be discussed in the next section.
3.2.2 Targeted Segments
Some of the more prevalent targets for this technology include public transportation (planes,
trains, busses), and entertainment and recreational facilities. While there is a growing web-
purchase presence in each of these areas for the foreseeable future, recent figures show less than
70% of North American households have Internet access. The ability to walk up to the gate and
pay for admission (to a museum, movie, ballgame, etc) or passage (on a plane, train, subway, etc)
will remain with us for years to come. We have written before about the Delta Airlines Shuttle
Ticketing Kiosks, and it still leaves us scratching our heads. According to Delta,
these kiosks are designed with the business traveler in mind and are located in
Boston's Logan, New York's LaGuardia, and Washington D.C.'s Reagan
National airports. The very curious notion here is that this is targeted toward
business travelers who have an even higher accessibility to the internet, where
such a large portion of tickets are purchased. We have questioned how
significant the market is for this particular application, but they still show them
on their website. Still, it is the first known example of a Check-in Kiosk function
being converted to a Ticketing Kiosk function.
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3.2.3 Best in Class
The installation shown at the right is the kiosk that the Nevada DMV
recently deployed. They have been using kiosks since about 2004
(driver’s license and vehicle registration renewals are the main focus),
and indeed have installed some inside of Albertson’s grocery stores.
Along with the kiosks, the DMV also developed an iPad/iPhone
application called “DMV Mobile”. This app allows wait times to be
checked before residents leave to visit a nearby DMV. If the wait time
is too long, the app also provides a map of other DMV locations with
their respective wait times. In addition, residents can check the next
available date for a driving test in addition to searching the Nevada database of license plates to
check the availability of a personalized plate. Other states such as Connecticut, California,
Massachusetts, Tennessee, New Mexico and Vermont have embraced such kiosks.
The kiosks shown to the left are found at the entrance to Sea World in
Orlando FL. Located out-of-doors, they enable customers to purchase
Single Day, Annual or Fun Card passes using a credit/debit card. They
also enable redemption of "Quick Ticket" eVouchers. These devices were
manufactured by Kiosk Information Systems.
The figure to the right shows the
DecoBike rental kiosk setup located in Miami, FL. We have
written before about these kiosks, and we given them a “Best in
Class” rating due to the novelty and the clear environmental
focus, in spite of the problems we saw with the business model.
By way of update, DecoBike in Miami started operations in
March 2011, and currently has some 75 rental kiosks, and
another 25 coming soon. Within four months of opening, however, the company was been
hampered by a lack of revenue, so expansion of the program has been minimal.
More recently, in July a start-up company called Bike Nation
received approval from the city of Anaheim to begin operations
with its first 10-bike kiosk. Seven other Anaheim locations are
planned as part of the pilot program, and a total of 400 kiosks and
4,000 bikes are planned for the Los Angeles area. Bikes can be
rented using a credit card at the kiosk, or, in the case of a
registered annual member, the RFID key fob can be used.
Another mass-transit kiosk application can be found in the cities of Los Angeles (LA) and San
Francisco. Both cities suffer from severe parking problems, and both have embraced plans to
include parking space sensors as well as updated parking meters, which are part of a wireless
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network that enable the collection and dissemination of real-time parking data. Simply, a motorist
seeking a parking space can be provided with the location of available parking spaces in much
the same way as airport parking garages provide the “204 spaces on level 3” information.
The parking meters intended for LA, shown to the left, are from San Diego-
based IPS Group. These meters are solar powered and wirelessly connect to a
web-base central management system. They accept coin or card payments, and
some 500 were installed beginning in late 2008 in the Little Tokyo and
downtown neighborhoods. A then-current press release claimed that revenues
“have exceeded city official’s expectations”. The key money quote (forgive the
pun) might be found in the words of Dave King, President and CEO of IPS
Group, who said, “With so many cities facing budget crises, increasing revenue
through parking is a trend that is being seen in numerous cities in California”.
One interesting aspect (and indeed, a major selling point) of the combination
of the meters and the parking space sensors is that real-time demand-driven pricing can be
applied to the system, which theoretically should a) optimize revenues for the system, and b)
eventually reduce the overall number of vehicles in the downtown areas. Costs are an issue, and
if we have the numbers right, San Francisco has received nearly $20 Million and Los Angeles has
received $15 Million in Federal money (about 80% of the total cost in each case). Also at issue are
the respective decision-making processes concerning these technologies. Los Angeles, if you’ll
recall, is where the city council insisted on maintaining their red light camera program, in spite
of the fact that a) the revenues generated from tickets were insufficient to pay for the cost of the
program, b) nine states have banned the cameras, and c) numerous other cities had disbanded
similar programs due to the increase of traffic accidents in those intersections that had the special
cameras. This may prove to be another case where we like the technology, but we don’t like the
business model.
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3.3 Check-In Kiosks
3.3.1 Rationale
Check-in Kiosks have been around airports since the mid-1980’s, with the first generation of
machines offering the entire spectrum from success to unmitigated failure. The second generation
(which began appearing in 2001) and subsequent versions seem to be not only more successful,
but also more consistent in performance.
The fact that fully 80% of flight check-ins are currently performed away from traditional check-
in counters would seem to make the long-term case for these kiosks, but there are threats to
making these kiosks obsolete.
Facial recognition is currently deployed at Heathrow and meets the UK Border Force
security standards.
Web-based check-in has been available for the past several years, and is available whether
one is home or on travel.
Mobile technology is already widely embraced for check-in (see our series on Mobility,
available from http://www.ihlservices.com), and there appears no letting up.
Ticketing Kiosks can perform most (if not all) of the functions of a Check-In Kiosk, and
this is cause for an expectation that Ticketing Kiosks will cannibalize sales of Check-In
Kiosks. At the same time, there is no reason to think that an enterprising vendor won’t see
this as an opportunity for a phased migration for their customers; that is, start out with
Check-In Kiosks, and gradually convert them through hardware/software upgrades into
Ticketing Kiosks.
3.3.2 Targeted Segments
Airlines are an obvious target for these devices, and we currently count some 9,000 of these units
deployed among the top 10 airlines in North America, who accounted for 84% of all US
passengers in 2012.
Hotels and resorts are also targets, not only for checking into the hotel or resort, but
also for early check-in to scheduled airline flights. The earliest chain to embrace this
technology is MainStay Suites (part of the Choice Hotels family), who developed the
MainStay Mariner Express kiosk (unfortunately, they abandoned their chain-wide
project in May 2003). Embassy Suites is reporting good results of the kiosks they have
installed now with some 700 installations, and Hilton has upgraded their check-in
kiosks to include airline check-in functionality.
Rental Car companies also have an opportunity to adopt this technology, and Hertz
has recently deployed a live agent assistant via video chat capability to their kiosks.
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3.3.3 Best in Class
The kiosk at right is NCR’s TouchPort 70, their newest kiosk designed for
airport check-in use. Frontier and Delta are among the first to use it, and the
list of features is extensive It was first successfully deployed by US Airways
to extend the convenience of self-service check-in to the curb. Currently, we
show this device installed at 16 North American airports. This kiosk won the
2010 Self-Service Excellence Award in the "Best Travel/Hospitality
Deployment” from Kiosk.com. The devices are designed with air travelers in
mind, who are already familiar with self service through the check-in kiosks
at the airport.
A development that we have addressed before for these kiosks is the
collaboration that started between IBM and ARINC at McCarren International
Airport in Las Vegas. There, the kiosks were modified to allow passengers to
access twelve different airlines' self-service check-in applications from a single
kiosk. This solution is based upon a now-defunct industry standard referred
to as “CUSS” which had been under development since 1998 (it now falls
under IATA's "Simplifying the Business: Fast Travel Program). As of June
2011, the International Air Travel Association (IATA) showed 137 airports live
worldwide (and 44 more under development), 30 of which are in North
America. Interesting data point: Air Canada claims a cost per passenger of
$0.16 for a kiosk check-in, while a check-in at the counter costs of nearly $4.00.
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3.4 Food Ordering Kiosks
3.4.1 Rationale
Food Ordering Kiosks represents a change in the manner in which customers interact with
restaurant or food preparation personnel. These devices allow customers to directly place their
order and allow fast food workers to concentrate on order fulfillment. The benefits are similar to
those found with Deli Kiosks, but with one significant difference. In the case of Food Ordering
Kiosks, payment is a here-and-now situation rather than a down-the-road thing.
Experience shows higher average dollar values for kiosk orders than for those placed at the fast
food counter. Further, the amount of expenditure for personnel training will be drastically
reduced as their duties have effectively been cut in half.
To date, the most significant roll-out of which we know in major Quick Service Restaurants
(QSR’s) belongs to Jack-in-the-Box, who have some 230+ deployed chain-wide. That said,
Convenience Stores such as Sheetz and Wawa have installed some 4,000+ of the units.
One aspect that needs to be addressed for QSR’s is the amount of customization that patrons will
be allowed to perform on their food products. Burger King claims that a Whopper can be
configured in any of over 1,000 ways (including left-handed), so extra effort needs to be put forth
in the POS software and display areas.
Finally, it bears repeating that the QSR manager really needs to take a hard look to see if these
kiosks make sense for each restaurant. The McDonalds in Times Square is a likely candidate, since
100% of their business is walk-in. The McDonalds in Coconut Creek, FL, however, may not be a
likely candidate, since 70% of their business is drive-thru.
Further segments include Deli’s in many supermarkets where consumers are able to order their
deli products as they enter the stores. Some have been outfitted with payment acceptance for
quick meal replacement.
3.4.2 Targeted Segments
The obvious candidates here are a portion of the half-million QSR locations. We say a portion of
the QSR’s because the top 20 in that segment (which corresponds to those most likely to adopt
this technology) account for only 25% of those half-million locations (the top 5, McDonalds,
Burger King, Wendy’s, Subway and Taco Bell, have over 62,000 restaurants between them).
Table Service Restaurants (TSR’s) aren’t to be overlooked either, and we are not just talking about
kiosks that can be used to order “to-go” food. Granted, having a device like this located near the
reception area of, say, a Cheesecake Factory will enable patrons to enjoy the food without waiting
for over an hour for a table. But even more exciting is the spate of efforts at using an iPad or
similar device at the table to reduce the waiting time involved in a sit-down meal. Further,
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convenience stores have been leading the way, as both Sheetz and Wawa have installed kiosks in
about 1,000 stores between them.
3.4.3 Best in Class
While the Radiant/NCR devices are clearly the most-deployed devices in
this field due to the Sheetz and Wawa installs, we still heartily endorse
kiosks such as the EMN8 model to the right found in a Dominos. The idea
of being able to order food in quick service/fast food restaurants without
having to interact with a counter-person appeals to some, especially when
customizing a burger or a sandwich. Any language or attentiveness
problems can be overcome through the use of such a kiosk. A number of
chains have had them in place in a handful of locations for a while,
including McDonald’s, Burger King, Carl’s Jr., KFC and Taco Bell. One
manufacturer claims a 39% increase in the average check from using the
device. Further, they claim a 104% increase in upsize conversion rate over
the front counter. The fact that they accept credit cards enhances sales also,
since in one trial the average credit card sale was $7.61 vs. $3.61 for the
average front counter sale. Our first-hand experience with such units showed them to be fast,
efficient and pleasurable.
Another best-in-class product is the Presto Touchscreen
Tablet (shown at left). Simply, Presto allows diners to scroll
through pictures of entrées, order from the screen, and pay
for their meal by swiping a card through the built-in MSR.
Split checks are possible, and receipts can be emailed to the
payer. The current product boasts a 20-hour battery life, and
certain games can be played on the device while waiting for one’s food to be served. Again, the
deployment of this device may be dwarfed by the myriad iPad installations out there, but this
one appeals to us from the standpoint that the genesis of the idea was a valid customer service
issue, as opposed to an “oh, it can do this too” mentality that is sometimes prevalent with the
iPad.
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3.5 Postal Kiosks
3.5.1 Rationale
You really haven’t entered the Twilight Zone when you’ve stood in a seemingly non-moving line
at the post office between Thanksgiving and Christmas…it really is that slow (we won’t mention
the fact that the Postal Service helpfully removed all the wall clocks from customer-accessible
areas in early 2007). Thankfully, someone had the bright idea to place a self-service kiosk (called
an Automated Postal Center, or APC, that performs 85% of the transactions available at the
counter) in the lobby so that patrons can send their mail and packages 24/7.
3.5.2 Targeted Segments
The obvious initial choice is inside each US Post Office location, but the USPS has looked at other
locations as well. The first self-standing unit was installed in January 2007 at an Albertson’s in
Las Vegas, and recently the USPS announced the first ever APC located inside a business. We are
confident that locations such as office supply retailers (Office Depot, OfficeMax, Staples) and
Walmart Supercenters are likely targets.
A more recent development is the USPS’s deployment of a pilot called “gopost” in several
locations throughout the Washington DC area. Simply, gopost is a secure locker to which Postal
Service carriers can deliver parcels. Customers must first register, and they then receive an access
card which can open the locker. The intent is to enable customers to be able to pick up packages
in locations that they already frequent, thereby eliminating the need for a special trip to the post
office, or running the risk of having a package stolen that is left at the front door of the residence.
Clearly, this is intended for urban areas only.
Regardless of which technology the post office champions, however, all bets are off depending
upon what happens as the Federal Government deals with the financial catastrophe surrounding
the USPS. On one hand, the USPS may decide to close thousands of local post offices and replace
some of them with APC’s or goposts, which would significantly improve shipments and the
installed base of these devices. On the other hand, the USPS may relinquish a significant portion
of their business to third parties such as Fedex and UPS, resulting in a liquidation of such devices.
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2013 IHL North American Self Service Kiosks
3.5.3 Best in Class
The unit shown to the right is the Automated Postal
Center, some 2,500 of which can be found in the lobby of
US Post Offices. Simply, it offers customers the
opportunity to buy stamps and mail domestic letters and
packages and international letters (including Priority
and Express mail) without standing in line to wait for a
postal worker. It is based on Wincor Nixdorf’s ProCash
1500 ATM and sports a 15-inch touch screen, a card
reader for credit or debit transactions, a receipt printer,
color camera, an encrypting PIN pad and software to
assist visually-impaired customers. Interestingly, IBM
Global Services, which exclusively markets, sells and
services Wincor Nixdorf ATMs in the U.S. market, has
adapted the software developed for the branch POS
network to the self-service environment.
A second phase of deployment of these kiosks was delayed due to budgetary constraints. That
said, productivity of these devices has suffered due to the relative lack of understanding of the
devices’ role in the post office; not by customers, mind you, but by the management and staff of
the post office. This was detailed in the most recent post office audit of these devices to which we
had access.
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2013 IHL North American Self Service Kiosks
3.6 Other Retail Kiosks
3.6.1 Rationale
In this section we highlight a few really eye-catching applications of kiosk technology. They may
not fit nicely into the other categories in this report, and we may not yet see wide-spread adoption
of them, but we can not help but suspect that there may be a keen market interest in the years to
come. By virtue of their inclusion in this section, they can all be considered “best of breed.”
3.5.2 Targeted Segments
The simple answer here is that every segment is fair game. As special purpose kiosks are
developed, they will move into those segments that will provide the quickest return initially. For
instance, DVD rental kiosks are currently installed in QSR’s, Supermarkets, Convenience Stores,
Mass Merchandisers, Superstores and Drug Stores. Such kiosks account for 19% of the rental
market, with rent-by-mail (such as Netflix) accounting for 36% and traditional stores the
remaining 45%, according to NPD.
3.5.3 Best in Class
The unit shown to the right is a DVD rental kiosk from Redbox
(founded as a subsidiary of McDonalds, but currently owned by
Coinstar). Redbox currently has these kiosks installed in some
35,000+ locations, including McDonalds, Walgreens, Stop & Shop
and Walmart (dollar stores are a part of their next targeted entry).
The kiosk holds 500 DVD’s for rental and 80 for purchase. All are
of the 50-60 latest movie releases, and they rent for between $1.20
and $2.00 a night. The most recent news concerning Redbox was
the February 2012 announcement that they had acquired the
assets of NCR’s Blockbuster Express line. This essentially gave
Redbox a 90%+ market share in the industry.
An interesting kiosk application, especially to those
of us in the hurricane-prone South Florida area, was
the Amerigas propane kiosk that is found at Home
Depot and Amerigas retail locations. Simply, it
enables the purchase or exchange of a propane tank
without the assistance of a store employee. The
result of collaboration between Amerigas,
Webraiser Technologies and Dekko, this system
accepts credit, debit, gift cards or cash and can
complete the transaction within 3 minutes. Not to
put too fine a point on it, but in the case of Home Depot, benefits include the order these kiosks
bring to the chaos that we have often seen in the area where propane tanks are stored.
© Copyright 2013 IHL Group – All Rights Reserved. www.ihlservices.com 33
2013 IHL North American Self Service Kiosks
Another candidate that we have seen in a number of airports
is Best Buy’s Express kiosk. Typically, these are stocked with
iPods, cameras, speakers and headsets, among other
electronic gadgets. This kiosk can serve the harried travelled
who has left part of his electronic ensemble in the hotel or at
home. Designed by Zoom Systems, this kiosk straddles the
line between a kiosk and a pure vending machine. We are
willing to err on the side of acceptance, however.
© Copyright 2013 IHL Group – All Rights Reserved. www.ihlservices.com 34
2013 IHL North American Self Service Kiosks
3.7 Future Kiosks
Looking ahead to the future, the mind boggles at the types of kiosks that might appear in stores,
restaurants, airports and hotels. As with any technology, the business case must be made in each
and every instance; cool technology by itself is insufficient to make retailers, restaurateurs and
others embrace kiosks.
Some of the types of kiosks we see coming include the following.
Prescription Kiosks – Simply, once a prescription order is placed, either by phone or
dropping off at the pharmacist, the pharmacist will fill the script. Following this, it would
then be loaded into a kiosk and ready for pickup. When one arrives to retrieve the
medication, it would have already been loaded into the machine by the pharmacist and
ready for payment. Following payment, it would then be dispensed and the customer
would be on their way, thus avoiding standing in line potentially a second time.
Kiosks for Golf Courses – There are a couple of different kiosks we see on the horizon.
The first is a simple extension of the online reservation system that many busy clubs
currently use. Tee times can be reserved and payment can be made, which frees up pro
shop staff to focus on the retail sales aspect of their duties. The second type we see are
simply food-ordering kiosks located at strategic points on the golf course. This would
enable food to be prepared ahead of time so golfers waste no time between nines. In both
these cases, it’s not a new technology that is at issue, it’s simply a new application of
existing technologies into arenas that typically might be reluctant to adopt such devices.
For instance, we don’t see Augusta National adopting this technology anytime soon.
Mobile Device Charging – These devices are a fairly recent innovation, and they haven’t
really caught on in a big way in North America just yet, so it’s not a stretch to include a
discussion about them in the “Future Kiosks” section. Simply, this is a solution for the
traveler whose cell phone battery is low and who has forgotten to bring their cell phone
charger. NV3 Technologies (Baltimore MD), Smarte Carte (St. Paul MN) and Hercules
Networks (NY), among others, offer such devices.
Bringing Intelligence to Vending – By some estimates, there are 15-20 million vending
machines throughout the world. As we have seen the lines blurring between kiosks and
vending machines, it is not a stretch to see heavy intelligence being built into what has
heretofore been known as vending machines. Best Buy has already made a foray into this
field with their Express kiosks which have popped up in many airports. We’ve been
involved in discussions about such devices, and our take on it is that consumers may be
somewhat hesitant to conduct a high-dollar transaction for product purchase from a kiosk
device. It’s one thing to purchase a soda, or movie tickets, or even a $200 air shuttle fare
from a kiosk. It’s another to purchase, say, a $400 Blackberry from a kiosk, when there is
no visible recourse should the device prove defective.
Smartphone Impact – Clearly, smartphones have already had a huge impact upon the
manner in which retailers and consumers interact, and there is no reason to expect that
impact to decline anytime soon. Retailers are already using technologies to “detect” when
© Copyright 2013 IHL Group – All Rights Reserved. www.ihlservices.com 35
2013 IHL North American Self Service Kiosks
a consumer is approaching their store, so there is every reason to believe that retailers can
modify it in such a way to get even more granular with the data (which aisle the consumer
walked, what products they interacted with, etc). What part kiosks play in this scenario
remains to be seen.
“Cool” New Stuff – Under other circumstances, a technology such as Microsoft’s Surface
fits in this category, as it’s new, it’s cool, and there is currently so little known about its
limitations that the mind boggles considering its uses. The Kinect-type technology is also
at issue here, and the virtual dressing rooms (Magic Mirror and others) that we have
already seen are part of the picture. The really compelling aspect of this kind of
technology, at least as far as shopping malls are concerned, is the cost-sharing
opportunities as multiple retailers can have their outfits and accessories loaded into a
single device fro use by consumers. Finally, we expect eye-tracking technology to be
incorporated into not just kiosks, but also store shelving. This technology (EyeTech Digital
Systems is one vendor) comes courtesy of gamers, and it simply enables the kiosk to
determine specifically what attracts the view of the user.
© Copyright 2013 IHL Group – All Rights Reserved. www.ihlservices.com 36
2013 IHL North American Self Service Kiosks
4. REFERENCES
IHL Group Market Studies:
POS Software for Hardgoods Retailers, Authors Sean M. Alexander, Jerry Sheldon, Greg
Buzek
North American Retail POS Terminal Market Study, Authors Lee Holman, Greg Buzek
Europe/Middle East/Africa POS Terminal Market Study, Authors Lee Holman, Greg Buzek
Asia/Pacific POS Terminal Market Study, Authors Lee Holman, Greg Buzek
Latin/South American POS Terminal Market Study, Authors Jerry Sheldon, Greg Buzek
North American Self-Service Kiosk Study, Authors Lee Holman, Greg Buzek
North American POS Printer Report, Authors Jerry Sheldon, Greg Buzek
IT and the North American Supermarket, Authors Lee Holman, Greg Buzek
Small/Medium POS Sizing, Authors Jerry Sheldon, Lee Holman, Greg Buzek
North America Hospitality POS Terminal Study, Authors Sean M. Alexander, Greg Buzek
RIS News/IHL Store Systems Study, Authors Lee Holman, Greg Buzek
Company Press Releases, 10K’s
Company Web Sites, White Papers, and Product Literature
Vendor Discussions
CIO Magazine
http://www.nycsubway.org/us/
http://www.kioskcom.com
http://www.fmi.org
http://www.kiomag.com
http://www.kioskmarketplace.com
Movie Studios See a Threat in Growth of Redbox,
http://www.nytimes.com/2009/09/07/business/media/07redbox.html?_r=1&ref=technology
Meter-ology 101: About Those New Parking Meters, http://www.nbclosangeles.com/around-
town/cars/The-Meters-Are-Watching-93410949.html
Wireless Technology To Make Parking Spaces 'Smart' in LA and SF,
http://www.publicceo.com/index.php/local-governments/151-local-governments-publicceo-
exclusive/1317-wireless-technology-to-make-parking-spaces-smart-in-la-and-sf
L.A.'s New High-Tech 'Coin & Card' Parking Meters Debut,
http://laist.com/2010/05/05/new_creditdebit_parking_meters_debu.php
© Copyright 2013 IHL Group – All Rights Reserved. www.ihlservices.com 37
2013 IHL North American Self Service Kiosks
Post office kiosk opens in Carousel Center's Hallmark store,
http://www.syracuse.com/news/index.ssf/2011/06/post_office_kiosk_opens_in_car.html
Bill Would Bar Alcohol Sales Through Self Checkouts,
http://www.ufcw1167.org/news/AB163_bans_alcohol_sales.html
California Passes Law Banning Self Service Alcohol Sales,
http://articles.latimes.com/2011/oct/11/business/la-fi-business-laws-20111011
Walmart Admits Glitch in Self Checkout,
http://www.kioskmarketplace.com/article/198395/Walmart-confirms-self-checkout-
glitch?rc_id=433
3 Self-service Solutions Moving in on the Hotel Industry,
http://www.kioskmarketplace.com/article/194715/3-self-service-solutions-moving-in-on-the-
hotel-industry
http://retailtechnologytrends.com
http://www.govtech.com/e-government/Are-Government-Kiosks-Making-a-Comeback.html
http://www.gokiosk.net/kiosk/gokiosk/2012/07/california-gets-its-first-city-bike-sharing-
program-in-anaheim.html
CUPPS: No longer a priority?, http://www.futuretravelexperience.com/2012/01/cupps-no-
longer-a-priority/#more-6089
Kiosks Order Up Faster Fast Food, http://www.selfserviceworld.com/article/179307/Kiosks-
order-up-faster-fast-food
May the Tablet Take Your Order?, http://www.businessweek.com/articles/2012-05-01/may-the-
tablet-take-your-order
Meet The Mirror That Tries On Clothes For You, http://news.stylecaster.com/meet-mirror-
clothes/
Unnamed Study, conducted for NCR by NPD, 2011
© Copyright 2013 IHL Group – All Rights Reserved. www.ihlservices.com 38
2013 IHL North American Self Service Kiosks
Other IHL Reports Available Include:
Mobile POS: The First Real Test - $3,500
RIS News/IHL Store Systems Study “Mobile Meets Retail’s Big Data - $3,500
Big Data – Best Practices and Benchmarks - $1,995
North American Retail POS Study - $3,495
Europe/Middle East/Africa POS Market Study - $3,495
Asia/Pacific POS Market Study - $3,495
Latin/South American POS Terminal Market Study - $3,495
POS Software for Hardgoods Retailers - $795
POS Software for Softgoods Retailers - $795
North American Self-Service Kiosk Study - $995
North American POS Printer Report - $2,695
Small/Medium POS Sizing - $4,000
All pricing contained herein is valid as of the publication date and supersedes
any pricing from previous price lists.
For details and free market summaries, please see our website or see below for more contact information.
Retail Technology Data Services Include:
Sophia – Wisdom for Retail – By Subscription
The North American Retailer Technology Database is the most comprehensive review of retail
technology in our industry, providing the key performance, technology, and contact information on
3,500 Retailers and 2.5 Million records. It is the only Subscription database that takes an enterprise
view of the technology that retailers are deploying AND the performance that they are achieving
with the use of these technologies. For Details and a Free Database Report, visit our website at
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