Counting On Technology
Whitepaper Advert from Coinstar: Coinstar's patented technology is one reason the company's machines perform consistently and are used in more than 10,000 supermarkets throughout the country.
By Bob Ingram
Self-service kiosks are increasingly becoming part of the grocery retail landscape. According to a recent study from the IHL Consulting Group, self-service kiosk transactions are on track to reach over $155 billion in transactions in North America in 2003, and could reach $1trillion annually by 2007. As supermarkets increase dependence on self-service devices like self-service checkout and deli ordering kiosks, it's important that they have confidence in the technology that interfaces with their customers.
The Coinstar machine was one of the first self-service kiosks to come on board in 1992, when the first coin-counting machines were installed in four San Francisco Bay area supermarkets. Since that time, the company has turned nearly $7 billion worth of coins, or 550,000 tons of coins, into cash and grown into a multi-national, publicly traded company.
"Our turnkey solution combined with superior patented technology has served our supermarket retailers well for over a decade," says Rich Stillman, president of Coinstar, Inc. in Bellevue, Washington. "We have relationships with more than 270 supermarket partners with over 10,000 locations across the U.S., United Kingdom and Canada."
More than 45 U.S. and foreign patents are directed to coin counting and voucher dispensing, networking, encrypted vouchers, coin cleaning, sensors and deflectors for coin discrimination, restricted access, and de-jamming. "The investment we've made in the Coinstar technology translates into tangible benefits and peace-of-mind for the retailer," added Stillman.
Counting 600 coins per minute, Coinstar machines detect the metal content of the coin, as well as the size to accurately identify the coin denomination - and efficiently sort out all kinds of debris typically found in consumer coin. The company has found paper clips, key chains, wedding bands, gum wrappers, even teeth, all of which are identified quickly as non-coin.
Coinstar machines were designed and built from the ground up with consumer use in mind, unlike other machines that were originally designed as back-office coin sorters for use in establishments such as banks and casinos. Coinstar machines are monitored continuously for performance and they use the network to automatically notify a technician if there's a problem. The machine also automatically sends a message if a coin bin is getting full and needs a pick-up. And a Coinstar field engineer force of more than 200 clean and service the machines on a regular basis and have an average response time of four hours. Transaction data is available for each machine at any time thanks to the central network, and the cleaning process includes a patented, multi-step process equating to fewer jams and increased uptime.
Human nature being what it is, security is a major consideration for Coinstar, and its patented technology plays a key role. Coinstar machines carefully track volume and variances are identified right away. Prompt action to address possible fraud results in a Coinstar shrink value of less than 0.02%, compared to a supermarket average of 2.32%.
Given the dark side of technology, counterfeiting of vouchers is always a possibility, but the patented voucher technology allows encryption of certain values that make it very difficult to create fraudulent vouchers. Other important aspects of Coinstar's technology include bar coding, thermal paper, thermachromic ink, and inventory-controlled voucher paper with fluorescent flakes that are visible when the paper is held to light. In addition, patented restricted access technology can prevent unauthorized access to the coin bins.
Coinstar provides its coin-counting service for an 8.9% fee to the U.S. consumer, and the retailer receives a portion of this revenue. It is estimated that the average American household has about $99 in loose change sitting idle that could be converted into spendable cash via Coinstar machines. The retailer also benefits from this found money, as research indicates that 44% of consumers spend at least a portion of their money in the store - with about half of these people spending 100% of their voucher.
Edith Vargas, the accounting booth supervisor at Superior Super Warehouse, a 16-store independent in Santa Fe Springs, Calif., which serves the greater Los Angeles area and has had Coinstar machines installed for about five years, says that before Coinstar, people were actually bringing their coins to the checkout, causing long delays while they were counted. Vargas added, "Now they use the Coinstar machine, and on heavy days, usually weekends, we get 25 to 30 customers per machine, and on slow days maybe 10 to 15. They are good little profit centers."
Edith Vargas remarks that Coinstar service is "very good. We don't even have to call them. The machines automatically communicate with the center, so the center knows if the machine is out of order."
Coinstar's research and development is ongoing. The company has invested more than $170 million on coin counting and other new consumer services. Coinstar has begun offering prepaid services from the Coinstar machine, including prepaid wireless airtime and a nationally branded prepaid cash card. These services are currently available in several markets across the U.S., and many retailers are evaluating the new products to increase their revenue potential and provide incremental service to their customers.
"Our vision is to create a convenient touch-point for a broad range of consumer services that will be available from a single footprint," said Stillman.
As you join the self-service revolution, count on Coinstar to deliver new innovations through proven technology.
Posted by Craig at November 17, 2003 05:56 PM