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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2013 IHL North American Self Service Kiosks

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



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-




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




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.




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




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




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.




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%




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




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




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.




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.




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.




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.




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




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.




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.




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.


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.




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




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.




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.


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.





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.




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.


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,




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.




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.


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.




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.




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.”


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.




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.




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




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.




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


http://www.nycsubway.org/us/

http://www.kioskcom.com/

http://www.fmi.org/

http://www.kiomag.com/

http://www.kioskmarketplace.com/

http://www.nytimes.com/2009/09/07/business/media/07redbox.html?_r=1&ref=technology

http://www.nbclosangeles.com/around-town/cars/The-Meters-Are-Watching-93410949.html

http://www.nbclosangeles.com/around-town/cars/The-Meters-Are-Watching-93410949.html

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

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

http://laist.com/2010/05/05/new_creditdebit_parking_meters_debu.php



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


http://www.syracuse.com/news/index.ssf/2011/06/post_office_kiosk_opens_in_car.html

http://www.ufcw1167.org/news/AB163_bans_alcohol_sales.html

http://articles.latimes.com/2011/oct/11/business/la-fi-business-laws-20111011

http://www.kioskmarketplace.com/article/198395/Walmart-confirms-self-checkout-glitch?rc_id=433

http://www.kioskmarketplace.com/article/198395/Walmart-confirms-self-checkout-glitch?rc_id=433

http://www.kioskmarketplace.com/article/194715/3-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

http://www.gokiosk.net/kiosk/gokiosk/2012/07/california-gets-its-first-city-bike-sharing-program-in-anaheim.html

http://www.futuretravelexperience.com/2012/01/cupps-no-longer-a-priority/#more-6089

http://www.futuretravelexperience.com/2012/01/cupps-no-longer-a-priority/#more-6089

http://www.selfserviceworld.com/article/179307/Kiosks-order-up-faster-fast-food

http://www.selfserviceworld.com/article/179307/Kiosks-order-up-faster-fast-food

http://www.businessweek.com/articles/2012-05-01/may-the-tablet-take-your-order

http://www.businessweek.com/articles/2012-05-01/may-the-tablet-take-your-order

http://news.stylecaster.com/meet-mirror-clothes/

http://news.stylecaster.com/meet-mirror-clothes/



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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

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North American Self-Service Kiosk Study - $995

North American POS Printer Report - $2,695

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