December 24, 2011
The Number of Interactive Kiosks in Operation will Nearly Double to Three Million by 2016
SCOTTSDALE, Ariz., Dec 19, 2011 (BUSINESS WIRE) -- As companies in a range of industries seek to reduce costs, increase revenue opportunities, and improve customer service, they are increasingly turning to interactive kiosks as an additional channel to enable their customers with self-service options. The number of interactive kiosks in operation will rise from approximately 1.6 million deployed in 2011 to nearly three million deployed globally by 2016.
"The self-service technology trend has been occurring for several years, with consumers increasingly seeking greater convenience in the channels that they choose to utilize," says Sam Lucero, practice director, M2M connectivity. "At the center of this self-service technology trend are interactive kiosks. Kiosks are not a new channel by any means, but consumers worldwide have grown more accustomed to using them for everything from self- checkout in the supermarket to checking in for their flight at an airport."
Interactive kiosks are having a particular impact on the following seven market segments:
-- Entertainment (e.g. DVD rental, photo printing, movie ticket ordering)
-- Retail (e.g. self-checkout, deli-counter ordering, product information)
-- Travel (e.g. airport check-in, hotel check-in/check-out)
-- Financial services (e.g. bill payment, coin exchange, check cashing)
-- Healthcare (e.g. patient check-in, patient information, prescription refills)
-- Municipal & government (e.g. train/bus ticketing, driver's license renewal, tax payment)
-- Information/other (e.g. wayfinding, information, human resources)
While the interactive kiosk market is expected to grow strongly over the next five years, there remain challenges to address. "Interactive kiosks in various segments, such as healthcare, can face challenges regarding consumer acceptance, channel conflict with other means of interacting with the consumer, and with automated customer service not meeting a desired level of personalized support," says Lucero.
ABI Research's new report, "Next Generation Kiosks and Self-Service Technology," ( http://www.abiresearch.com/research/1004181 ) provides an extensive qualitative and quantitative assessment of the interactive kiosk market.
The report forms part of ABI Research's M2M Research Service ( http://www.abiresearch.com/products/service/MM_Research_Service ).
ABI Research provides in-depth analysis and quantitative forecasting of trends in global connectivity and other emerging technologies. From offices in North America, Europe and Asia, ABI Research's worldwide team of experts advises thousands of decision makers through 40+ research and advisory services. Est. 1990. For more information visit www.abiresearch.com , or call +1.516.624.2500.
SOURCE: ABI Research
June 16, 2011
Self-Service Automated Kiosks Offer Business, Benefits and Bucks
With the proliferation of self-service automated kiosks in nearly every industry and marketplace, it’s not surprising that Phoenix Kiosk is expanding their kiosk software and applications too
Self-Service Automated Kiosks Offer Business, Benefits and Bucks | Point of Sale News
What may have begun as a simple way to retrieve cash, has now become a virtual jack-of-all-trades. Phoenix Kiosk has a wide range of sleek sophisticated interactive kiosks, fully customizable, that are saving companies a lot of money and rendering some unexpected benefits.
Who is using them? Industries across the board are catching on to the beauty of the self-serve automated kiosk. They are now to be found in the arenas of healthcare, utility, retail and vending, education, and government , to name a few. Point of sale capability is only the beginning of the benefits of the self-serve kiosk.
Kiosks may also serve to greet, inform and serve customers. They can collect and store data. They provide opportunities to gain a competitive edge by marketing, promoting a brand and improving customer relations. Most importantly, they offer big savings on labor costs, administration, marketing and advertising, and the all too expensive ‘overhead.’
They help consumers to save time by avoiding lines, retrieve information quickly, self-monitor, manage accounts, offer feedback and so on.
Specs include: rugged and compact steel construction, high resolution LCD (with some LED) displays, allowance for peripherals including printers and credit card readers. The smallest floor standing model needs a mere 2 square feet of floor space.
Phoenix Kiosk Models
Floor Standing: Sleek and slim, these offer many functions, and are stable enough to stand alone in the middle of a floor.
Desktop: Keyboard optional and portable enough to offer mobility. Used for data collection, cataloging, as well as point of sale (can handle cash collection.)
Wall Mounted: Affixed to a wall (hardware supplied) with a hinged door to allow further maintenance. Heights are adjustable. These make excellent ticket vendors.
Alternately, the company can take a client through the whole process of designing and building a customized unit: assessing their needs, designing the concept, creating a prototype then producing the model and following it all up with service and support.
Phoenix Kiosk provides digital signage too. The offering of more than 20 models of kiosks can be customized with the logo of the company.
Leading-Edge Kiosk Uses
ssautomated1Retail & Vending Kiosks can catalog inventory, allowing customers to source their product in other stores (or warehouse.) This saves on overhead because it reduces inventory. The kiosk also functions as point of purchase (often a ‘self- check-out’) and allows for tracking of orders. Benefits include lowered transaction costs, branding and more.
Marketing Kiosks work to boost the marketing strategies of any given company, providing branding and lead generation. They may be used for product campaigns, surveys or product information. This allows companies to increase branding and product awareness and collect information on their suspects and prospects
Utility Kiosks can handle any temperatures for outdoor needs. They offer estimations of energy consumption, suggestions of alternate energy sources (including cost- saving estimates). Customers can make bill payments and manage their accounts. Benefits in overhead savings, branding and customer service abound.
Healthcare Kiosks cater to most areas of the industry and are HIPAA compliant. These are used for ‘track and trend management.’ A patient can check in for an appointment, schedule their next appointment or find a directory to help navigate them through the medical center. Obviously, these will reduce costs for administrative and overhead, cut back on wait times and offer a further way to store data.
The Personal Health Station allows for self-monitoring: a patient can check and chart their blood pressure, body mass index, and weight. These are now showing up in health clubs, and will work well in large proactive corporations that are committed to employee health.
Education Kiosks serve students and faculty in a campus setting. Registering for classes, tracking payments, ordering school books, and other school related tasks can be carried out quickly and easily. This is one of the biggest and fastest growing markets for interactive kiosks. The kiosks can get the student out of the admin building and into the bar with ease and speed.
More: Other popular kiosks include solar energy monitoring and gaming kiosks / family entertainment. Both the public sector as well as Government agencies are benefiting from unique kiosk applications.
Consider other applications of the self-serve automated kiosk: a virtual receptionist, a virtual concierge, a Chamber of Commerce business directory, a one-stop company information locale, a scan to win station, a cataloging solution. The possibilities are limited only by imagination.
Phoenix is reputed to have great service and support. Their kiosks include a warranty, installation services, technical support and on-site repair.
Self-Service Automated Kiosks Offer Business, Benefits and Bucks | Point of Sale News
January 04, 2011
Kiosk experts predict 2011 trends
2011 Kiosk trends from KioskMarketplace. Interviews with TIO, Frank Mayer and Summit Research. TIO points to tablets, FMA to loyalty and Summit sees decline in DVD and airport check-in.
Kiosk experts predict 2011 trends | kioskmarketplace.com
As retailers continue to bounce back from a weakened economy, their No. 1 goal is bettering the consumer experience to keep them buying. Most industry experts agree that the convergence of kiosk, tablet and mobile technologies is key to making that happen. In fact, they predict it as the year's top trend.
Other trends for the coming year should include these two:
- The erosion of DVD-rental and airport check-in kiosks
- The increase of vending machine kiosks.
Technologies combined
Hamed Shahbazi, CEO of TIO Networks Corp., a multichannel expedited bill payment processor, said the trend to watch out for is all the new feature-rich, tablet-class devices that will enter the market this year and continue to drive consumer adoption.
"I think you'd be hard pressed to find something bigger than the rise of the tablet," he said. "The iPad is a game-changer in many ways."
Shahbazi expects 2011 to be a gold rush for app developers.
"I think it impacts everyone, including the kiosk industry, which will continue to have new access to low-cost, connected touch screen devices to embed in their solutions," he said.
Summit Research Associates president Francie Mendelsohn agreed, saying the best kiosk developers will find ways to leverage what people already have in their pockets.
"They are already factoring in iPhones and iPads," she said. "I don't think anybody could have predicted the success of the iPad, not even Apple."
Apple has already connected with the kiosk industry. New York's JFK and LaGuardia airports recently installed iPad-based kiosks to allow customers to place food orders, check flight details and play games.
And that's not all. Last week, the U.S. Patent and Trademark Office made public Apple's patent, "Social Networking in Shopping Environments." It describes how in-store kiosks would allow customers to access a product list and information on their phones and then share those details through Apple's social-networking tool.
"Apple has nibbled around the kiosk space for a long time," Mendelsohn said. "I think it's smart."
Apple declined to comment for this story.
Other companies are sure to follow, according to Ron Bowers of kiosk manufacturer Frank Mayer & Associates, who said kiosks allow the retail industry to engage shoppers.
"It's about helping the consumer to do what the consumer wants to do," said Bower, who is a frequent blogger on KioskMarketplace.com. "We will see technology becoming about the user experience and even more customizable."
Although most experts predict a huge growth in the mobile industry, Bowers said it won't replace kiosks. Instead, the mobile and kiosk industries will work together.
"The cross-channel opportunity is a really important part of what we have to strive for," he said. "It's the conversion of all those technologies that will help us engage the consumer. They get a positive experience, and they want to engage again. That's what real loyalty is."
Bowers cites the loyalty-membership kiosks his firm designed for Giant Food Stores as an example. The kiosks act as check-in portals for customers entering the stores and allow them to access coupons and discounts based on personal profiles created from their buying history.
"It allows the retailer to have a closer relationship with the consumer that is personalized and convenient," Bowers said.
Shoppers can not only access their accounts via store kiosks but also online or on their mobile phones.
"The kiosk is the focal point as it coordinates with the overall consumer experience and has extra services that aid the consumer experience in-store," Bowers said.
The kiosks are even personalized enough to allow shoppers to print coupons, recipes, ingredients and nutrition information. They can also access a way-finder, place orders for cakes, party trays and pre-order items for later pick-up.
Bowers expects loyalty-membership kiosks to be a hot trend with retailers this year.
"It's all designed to create a positive, engaging experience for the customer in the retailer's store," he said. "The best experience is one that is seamless across channels, yet engaging while in the store."
Are kiosks an endangered species?
Kiosks will be coming and going throughout 2011, said Mendelsohn: "We've already begun seeing some erosion, and that will continue into 2011."
Those industry phase-outs include check-in machines at airports and DVD-rental kiosks.
"They both are reaching saturation," Mendelsohn said. "More and more people are loading boarding passes on their phones, so those kiosks won't be needed. And more people are renting movies through streaming."
Mendelsohn said companies such as Redbox are already looking for new uses for their machines and expects new deployments to decrease.
"Watch what happens there this year," she said. "They will be replacing existing units, and we'll see minor upgrades or tweaks. But there will be no radical surgeries."
No, they're on the rise
However, the kiosk industry is far from fading away, Mendelsohn said. In fact, the public is more accepting than ever of self-service machines.
"The days of people being scared to use them or thinking they're too complicated are pretty much gone, but some of the same issues will always be there," she said. "They have to be easy to use, they gotta be intuitive and they always gotta work."
As the usage of airport check-in and DVD kiosks slows, Mendelsohn expects other industries to increase the deployment of machines. For example, she predicts an increase in the number of vending kiosks selling small electronics, including iPods or Rosetta Stone language programs.
"Those (kiosks) are expensive, but they make sense in places like airports, where you already have a captive audience," she said. "The (language programs) are an expensive sale, and a kiosk lends itself to that beautifully because you can sample the lesson right there. It shows you exactly what you are buying and you don't need humans to stand there eight hours a day."
Kiosk experts predict 2011 trends | kioskmarketplace.com
December 31, 2010
A look back -- How Did We Do in 2010
Easy enough to come out with predictions and ad hoc musings on the next great thing or place or whatever. But didn't we do that last year? We are pretty demanding on investment returns and we track those but just how good was that advice we so easily pushed out last year?
For reference we'll use the feature article from KioskMarketPlace that Keefner wrote for them. Let's grade each one....
Here is a roundup of 2010's potential suspects, from my point of view, divided into three market groups — maturing, growth and new drivers.
Maturing market
Vending and reverse vending — These are apps where customers put money in to get a product, with the DVD kiosk being a prime example. Reverse vending is where products/goods are deposited into a machine and money/credit is given to the customer. The ecoATM self-service e-cycling kiosks would be an example of this, and the TITO ticket and token redemption machines in Las Vegas are good examples as well.
Customer flow — These are apps like check-in, ticketing, customer ordering and queue managment. Patient check-in terminals at clinics and hospitals are all the rage, and why shouldn't they be? They have a captive audience that requires the service (health) and is willing to pay for it (copay). Though we've said it before, I expect 2010 will seethe QSR and related segments hit their stride in this area, as well.
Ticketing — As we enter 2010, the airlines are well into a major upgrade/update cycle for check-in kiosks, which by itself signifies maturity. Ticketing kiosks in entertainment venues such as movie chains also are growing and are feeding the trend toward outdoor-rated terminals.
Financial services terminals for self-pay — Kiosks featuring money-transfer and bill-payment applications, among others, saw double digit growth in 2009's weak economy. Look for that growth to continue in 2010 as the cash-preferred segment remains relevant.
Public services — Many public services are being forced into the self-service kiosk camp simply as a matter of survival and existence. Drivers licensing centers, payment centers, information centers and many more are getting into the game.
Growth markets
Coupon, incentive and loyalty applications — These applications are poised to grow right alongside the mobile revolution. Being able to download coupons in your home or at the store and then redeem them at checkout is an exciting application. Telecommmunications giant Sprint deployed branded couponing units in movie chains last year, and in December 2009 we saw mobile couponing announcements from Wendy's and 7-Eleven. With Cellfire, Kroger has the ability to save coupons to your savings card, as well as to your phone.
Evolving deployment models — Flexible business processes have reinvigorated the classic revenue share and leasing deployment models from the past. New deployment scenarios often are coupled with more robust service packages, remote monitoring and warranty agreements.
Transactional terminals — Where's the beef? Most deployers are looking for a way to add revenue streams or cut their bottom lines. Informational terminals will continue to be used, but they will tend to be a la carte installations rather than mass-deployed.
New drivers
Mobile — This rates subcategories of its own as it has several dividend impacts in the self-service kiosk market...
Kiosk interfaces — It used to be that the office desktop drove the design of user interfaces, but suddenly kiosk UIs are beginning to resemble those of handhelds, such as mobile phones from Apple and Google with touch capabilities. Buy some tacos at the order/payment kiosk at Jack in the Box if you don't believe me.
Kiosk devices — Smaller and greener devices, such as the cloud computing model with energy efficient (and green) computing terminals (thin clients) are a common new model in the self-service kiosk world. Self-service terminals now often marry small hockey puck-sized computers to touchscreens. A big question these days for kiosk applications is whether they can run on an ATOM?
Kiosk connections: Bandwidth — Many more kiosks now utilize wireless connections rather than the usual LAN connections. This is a nice dividend from new 3G networks. And with the latest and greatest 4G going into place, wireless network connections may finally be as fast or faster than the old T1/DSL/ISDN model.
Kiosk advertising: Expanded geographic context with GPS everywhere — Self-service terminals, along with mobile phones, are more capable of geo-context so that users experience a comfort level more quickly and more targeted advertising is possible. Better and more effective communications are a result of stronger customer context.
PC over IP — This is already a real technology being used for transaction touch terminals in store aisles. This year we'll see POE (power over Ethernet) increase its footprint, thanks to its low cost.
Security regulations — This might be the year of the Payment Card Industry (PCI). A few years back, ATMs went through their 3DES cycle and chip-and-pin in Europe. July 2010 is the deadline for PA DSS applications to pass, and the rush to get platform and applications certified is ongoing. Data warehouses and merchant gateways/accounts in the cloud will become the norm. Along with PCI regulations having a bigger impact, many privacy issues will result from technology stars such as biometrics and new focus markets in healthcare and general identification.
Craig Keefner runs multiple blogs in his spare time, including gokis.net, thinclient.org and gokiosk.net. Keefner has been in the kiosk industry for more than 20 years and during the day is the channel manager for the largest kiosk company in the United States, KIOSK Information Systems.
October 29, 2010
Kiosks with a personal touch could replace ATMs: Verizon
A major telecom firm is predicting that technology and other events will dramatically change the financial services industry in the next 10 years, with banks pushing customers to perform more self-service.
Kiosks with a personal touch could replace ATMs: Verizon | selfserviceworld.com
A major telecom firm is predicting that technology and other events will dramatically change the financial services industry in the next 10 years, with banks pushing customers to perform more self-service on their accounts through interactive kiosks and mobile phones.
Verizon Business, a research arm of the telecom giant, recently released its prediction on changes impacting banks in its report "Top Trends in Financial Services," a briefing on the 10 changes it believes the financial services industry will experience by 2020.
These changes will be driven by "(t)echnology advances, regulatory changes, demographic shifts, and digital lifestyles and work-style revolutions," according to the report.
Several of Verizon's predictions don't touch on the self-service or kiosk industry. For instance, few will be directly impacted as the trading markets become more liquid and volatile. Still, banking customers will turn to self-service as the dominant way they conduct their financial transactions, according to Verizon.
In the last decade the typical bank interacted with its customers through several channels — the branch, ATM, contact center and mobile phone, says Raj Dhinsa, managing principal, with the financial solutions group at Verizon Business. "Now, banks are building up mobile and social networking. Those are trends that will shape the customer experience."
Kiosks will come to replace many ATMs and be used by banks more widely due to their mobility, interactive abilities, and because they are cheaper to operate than a branch, says Dhinsa.
"The next step is the digital commerce kiosk with video. In a few years it will be interactive and offer bank customers concierge-type services, say tickets to a play or personal analytics to drive (financial) products," Dhinsa said.
The kiosk will perform the tasks now conducted by ATM — dispense cash, accept deposits and so on — but also provide more functionality, such as showing videos and advertisements tailored to each bank customer.
Dhinsa believes this personalization will be made possible because kiosks will be equipped with biometric readers that authenticate the consumer, providing greater security than a PIN.
Kiosks also offer convenience to the bank because they can be installed relatively quickly and easily at events, say a marathon or county fair, or any other place consumers gather.
Verizon also suggests that "transactional self-service will become the norm" for banks as consumers increasingly use mobile phones, the Web and their home telephone to conduct their financial business. More consumers will visit neighborhood branches for advisory services rather than depositing a check or getting cash.
Another finance area that will be greatly impacted by technology is payments, with consumers shifting to digital payments and away from cash. Dhinsa questions whether today's payment system made up of credit card issuers and processors will remain the same.
"Merchants and consumers will look to refinements of the existing payments sector," he said. "New technology like the smart phone could become a wallet. Retailers want to be prepared for that."
The Top Trends document doesn't state directly whether Verizon and other carriers could become payment processors if consumers use their phones to make purchases, as many predict.
However, Dhinsa and his team predict that "strong non-traditional competitors will emerge both in retail and payments, threatening current business models."
Banks will try to grow their base by using mobile phone technology to serve the unbanked and under-banked. Many of these consumers have phones but not bank accounts, offering an in to banks seeking non-traditional customers. One sure-to-grow product is international remittance, allowing the consumer to send money around the world using their mobile phone, says Dhinsa.
In addition, advances in security means financial firms will migrate more of their technology infrastructure to network providers, according to Verizon. The network will be a "strategic business infrastructure platform" where banks control the delivery of services, locally, nationally and globally.
Kiosks with a personal touch could replace ATMs: Verizon | selfserviceworld.com
September 14, 2010
Research - Self-service kiosks will see $740 billion in transactions this year
New research report from IHL puts $740B number selfserve transactions this year.
Burney Simpson Editor
• 13 Sep 2010
Consumers have made self-service kiosks a part of every day life and will transact $740 billion in business through the devices this year, according to a new research study conducted by the IHL Group. However, while the use of kiosks has risen tremendously in recent years that growth rate will slow as consumers turn to their mobile phones for certain transactions.
That massive transaction figure includes certain airline tickets, DVD rental, transit, self-checkout at retailers, food orders, bill payment, hotel check-in, cinema tickets, and other transactions, according to Lee Hohlman, co-author of the “2010 North American Self-Service Kiosks” study from Franklin, Tenn.-based IHL Group.
The $740 billion represents growth of 9 percent from $678 billion in 2009, with self-checkout and ticketing kiosks accounting for the great majority of that value. DVD kiosks may be highly visible to the general public but transactions through these devices account for less than 1 percent of the value conducted through all kiosks. That’s because the value per transaction, often just $1 per DVD, is so low.
Retail self-checkout continues to grow. IHL has reported that major supermarket firms like Kroger and Albertson’s have seen consumers use the self-checkout kiosk for “anywhere from 15 to 40 percent of the daily transaction volume and 12- 30 percent of the daily dollar volume.”
Airline use is solid too. At Southwest, Northwest and Delta, as much as 70 percent of flyers at domestic check-in use the kiosks, IHL found. For many passengers there isn’t much choice whether they want to use the device. Still, IHL finds that some airlines report check-in can take as little as 30 seconds when done through a kiosk.
Airlines are an industry where kiosk use has paid off with benefits for the customer and the company. Checking in so quickly leads to great customer satisfaction, and delivers to a company a “significant return, whether in financial or customer appreciation/loyalty terms,” according to the report.
In the report Hohlman and co-author Greg Buzek put self-service kiosks in six major categories:
• Self-Checkout, such as that seen at grocers and convenience stores,
• Ticketing Kiosks, which covers airports, amusement parks, parking, movie theatres, and public transit,
• Check-in, such as hotel and motel registration,
• Food Ordering, at quick-service, take-out and casual restaurants,
• Postal kiosks, located in the U.S. Postal Service,
• Other Retail, which covers DVD rental and other retail and hospitality kiosks.
The report lists the number and type of kiosks shipped historically and provides forecasts for each type of kiosk, both in terms of units shipped and revenue transacted. The report also details best practices and best-in-class machines for each class of kiosk.
Most of the six categories continue to grow in consumer use and value of conducted transactions. One apparent failure is the U.S. Post Office.
In 2004, the post office made plans to install about 2,500 kiosks and study their adoption by the public, according to Hohlman. Though some postal purchases require the assistance of a clerk, about 80 percent of the transactions conducted at the window could have been done with the kiosk, he says.
Despite this, kiosks at the post office never gained wide acceptance, and there was no follow through on plans about two years ago for further expansion, Hohlman says. Today, self-service kiosk use at the post office has dropped to virtually zero, he says.
EDITOR NOTES:
Put the kiosk transactions at top of bellcurve and points to mobile as new growth mechanism. No news there. Interesting on the categories the IHL people seem to have looked at major press releases and feature stories and then skimmed off the top to come up with their categories.
Most people know what categories are constantly called out on media sites: self-checklout, ticketing, check-in, QSR, Postal & DVD. Appears to be driven more by audience expectation than by actual revenue numbers.
Generally reports like these tend to disappoint us and this one doesn't cast any new light.
August 27, 2010
Small rise in kiosk costs despite increases in power and reliability
Summit report lists average kiosk cost at $5,100 (up from $4800 in 2006). Hucksters selling to churches at $27K per unit. Also reiterates warning to companies to avoid the penny wise pound foolish error.
Small rise in kiosk costs despite increases in power and reliability
Burney Simpson Editor
• 27 Aug 2010
One of the most, if not the most, common question regarding kiosks is the cost of a typical unit. There’s no quick response to that, just as there is no typical kiosk. A DVD-rental device is going to have a different pricing structure from an airline sign-in kiosk, from a blood pressure-reading device in a drug store. The diversity of the business stymies the easy answer.
The question arises following recent news reports of two kiosk salesmen who are alleged to have run an elaborate con that tricked hundreds of churches nationwide into signing contracts for kiosks that either were never delivered or never performed as promised.
State attorneys general investigating the alleged con have reported that some churches agreed to pay as much as $27,000 for kiosks that could surf the ‘Net, provide job leads and display the church’s Web pages. Prosecutors are expected to provide details when the court case against the men begins in late September in Detroit.
That figure is very high compared with the average cost in North America, though some kiosks easily exceed $27,000, according to the 2010 edition of Kiosks and Interactive Technology report from Summit Research Associates. Summit also provides kiosks costs worldwide and broken down by Europe, Asia Pacific and rest of the world.
In North America the average kiosk price in 2008 was $5,393, up about 5 percent from $5,123 in 2006, according to respondents to Summits’ survey of hundreds of companies in the interactive kiosk industry.
On the high end, 2 percent of firms paid between $30,000 to $80,000 for a kiosk, while 5 percent paid between $15,000 and $30,000. However, nearly a third of respondents said they paid less than $5,000.
Two applications causing the average to rise are the turnkey photo kiosk with an instant print capability and sophisticated retail self-checkout units, Summit reports. Both these have seen more installations in recent years.
Summit acknowledges that many firms declined to answer this question, preferring to keep the numbers confidential.
Worldwide in 2008 the average per-unit cost of a kiosk was $5,084, virtually flat from the 2006 average of $4,832. And the average cost in Europe declined from $5,390 in to $5,179 in 2008. In part this was due to the strength of the Euro and British Pound during the time frame of the survey.
Summit points out that the modest change in prices is especially noteworthy when considering the improvements in technology and the increase in power and reliability in many kiosks in recent years. Summit believes manufacturers deserve kudos for keeping prices down, despite a rise in material costs and shipping charges.
On the purchasing side, some firms have sought to contain costs either with in-house software development or by outsourcing the initial development and later taking it in-house for updates and product maintenance.
August 20, 2010
Kiosk and self-service study a goldmine of industry info
New Summit Report -- North America led the world in kiosk adoption with nearly 1.2 million installed devices at the end of 2008. Summit reports that represents an astonishing rise of more than 61 percent from the 734,000 installed at yearend 2006.
The market for kiosks continues to expand despite the global recession as the uses for the devices grow and the public embraces the self-service concept, according to the newly-released Eighth Edition of Kiosks and Interactive Technology – Global Statistics and Trends – from Summit Research Associates.
Since the last edition two years ago, new uses of the kiosk have become widespread with DVD rental, ticketing, rental car pick-up and hotel check -in and -out, joining such applications as digital photography, airline check-in, bill payment and retail self-check-out.
The industry has benefited as new applications are launched and older kiosk models are replaced. In addition, public attitude towards self-service and using a kiosk has changed from wariness to one of confidence and comfort, the report finds.
“(P)otential kiosk users no longer have to be coerced into using the devices; today they eagerly seek them out,” Summit writes.
The Summit report offers comprehensive data, analysis and projections for the kiosk and self-service industry broken down by region, including North America, Europe, Asia Pacific and the rest of the world.
For instance, it may come as no surprise to industry observers that North America led the world in kiosk adoption with nearly 1.2 million installed devices at the end of 2008. Summit reports that represents an astonishing rise of more than 61 percent from the 734,000 installed at yearend 2006.
Worldwide at the end of 2008, there were more than 1.8 million kiosks installed, with Europe accounting for 321,000, the Asia-Pacific region for 271,000 and the rest of the world for 33,000.
This explosion in installations and kiosk use would be even more impressive if it weren’t for the Great Recession which slowed or outright ended many projects, Summit reports.
The report projects that, by yearend 2011, there could be more than 2 million kiosks installed worldwide, with 1.3 million in North America, 360,000 in Europe, 305,000 in Asia-Pacific and 38,000 in the rest of the world.
July 13, 2010
Research Data - Over $740 Billion to be transacted in Self-Service Kiosks for 2010
FRANKLIN, Tenn.--(BUSINESS WIRE)--North American consumers continue to embrace self-service technology, as transactions at self-service kiosks will surpass $740 billion in 2010. However, the rate of growth going forward may be tempered in favor of enabling consumer smartphones in the future, according to a new research study conducted by the IHL Group.
"Self-Service continues to grow, and clearly DVD kiosks are driving huge increases in the number of units in the market. However, the rise of consumer mobile devices will have an adverse effect on many new kiosk installations within the next two years," said Greg Buzek, president of the IHL Group, an analyst firm and consultancy that serves retailers and retail technology vendors.
"The information kiosks will soon give way to the kiosk in the consumer’s pocket, with many consumers already doing price comparison shopping and reading reviews while at the shelf," Buzek added. "In addition, what is particularly interesting looking forward is that Apple has patents in loyalty and payment technologies. It is foreseeable that transactions even in the retail environment could be scanned and transacted through the mobile device rather than a stationary self-checkout."
In the market study, 2010 North American Self-Service Kiosks, IHL examines the increasing use of six types of self-service kiosks where payment is accepted: self-checkout systems, ticketing kiosks, check-in kiosks, food ordering, postal and other retail kiosks.
The study is available immediately at www.ihlservices.com for $995.
“In addition, what is particularly interesting looking forward is that Apple has patents in loyalty and payment technologies. It is foreseeable that transactions even in the retail environment could be scanned and transacted through the mobile device rather than a stationary self-checkout.”
The report covers self-service kiosks in the United States and Canada, detailing the number and type of kiosks shipped historically. It also provides forecasts for each type of kiosk, both in terms of units shipped and revenue transacted. In addition, the report highlights best practices and best-in-class machines for each class of kiosk.
About IHL Group
IHL Group is a global research and advisory firm headquartered in Franklin, Tenn., that provides market analysis and business consulting services for retailers and information technology companies that focus on the retail industry. For more information, see www.ihlservices.com, call 615-591-2955 or e-mail [email protected].
Contacts
Ketner Group Inc.
Jeff Ketner, 512-794-8876
[email protected]
Over $740 Billion to be transacted in Self-Service Kiosks for 2010 | Business Wire
April 14, 2010
New research paper on kiosks in hotels
Statistics from two hotel chains totaling 163 hotels to determine the ratio of automated check-ins and the ratio of failed check-ins, using lobby self-service kiosks. Executive summary and also pdf at gokiosk.net
Statistics from two hotel chains totaling 163 hotels to determine the ratio of automated check-ins and the ratio of failed check-ins, using lobby self-service kiosks. Executive summary and also pdf at gokiosk.net
April 04, 2010
Self-checkout continues to expand
While some deployments haven’t been the most customer friendly, and not everyone loves self-checkout, industry watchers expect deeper adoption and expanded technology use as businesses move forward on projects this year — all while concerns about job displacement fail to take root.
When it comes to using self-service kiosks, whether it’s self-checkout at the supermarket or choosing a movie from a DVD station, there is still diverse and passionate public opinion about their value.
Just take a quick gander at feedback at Consumerist.com to get an idea on how varied public response is regarding self-service technology despite the fact it’s hardly new stuff.
Consumers who like full-service claim that it's more trouble free, offers up better quality of service and is more reliable. Many users say they embrace it for quick purchases, love the speedier transaction capability and some even enjoy the lack of human interaction.
While psychologists may have a field day with that latter feedback, greater efficiency, having control and the ability to verify item pricing are top benefits cited in the Consumerist’s informal poll about self-service.
Speed, convenience and fun were the top three benefits cited by consumers in the 2009 Self-Service Consumer Survey, published by SelfServiceWorld.com, and the survey indicates satisfaction levels are increasing as the technology continues to improve.
Yet not everyone’s enthralled about being put to work in the shopping environment. Many like the idea of a cashier to help with coupon issues and the tedious bagging process, and some worry the technology could put the retail cashier occupation out to pasture.
As Consumer Reports blogger Anthony Giorgianni wrote in a recent post, “self-checkout scanners at supermarkets, home improvement stores and elsewhere have just made paying for your merchandise more frustrating.”
While admitting he may be reviled as a Luddite, he predicts stores soon will eliminate cashiers “and we’ll have row after row of miffed shoppers in constant battle with machines, mechanical versions of Seinfeld’s Soup Nazi, proclaiming, ‘No produce for you!’”
But industry watchers believe the scale will continue to dip in favor of self-service....
Read rest of article at KioskMarketplace
October 21, 2009
Market Segments - Discount Grocery Chains
Betting that consumer thriftiness won't be going away anytime soon, Supervalu Inc. Chief Executive Craig Herkert Tuesday unveiled plans to double the size of the underperforming grocer's discount chain Save-A-Lot to about 2,400 stores over five years.
"This is not an abandonment of traditional grocery; this is an acceleration of Save-A-Lot," Mr. Herkert, a former Wal-Mart Stores Inc. executive hired in May, told analysts during Supervalu's fiscal second-quarter earnings call.
Supervalu's main business will remain its chain of traditional supermarkets, including Albertson's, Jewel-Osco and Farm Fresh. Save-A-Lot's 1,180 stores have a similar format to that of discount-store chain Aldi U.S., selling a limited number of items, mostly private label, at lower prices every day versus a discount model used by traditional grocers.
Supervalu, the nation's fourth-largest U.S. food retailer by sales, Tuesday reported profit for the quarter ended Sept. 12 of $74 million, or 35 cents a share, down 42% from $128 million, or 60 cents a share, a year earlier. Total revenue fell 7.5% to $9.46 billion.
Supervalu has struggled to capitalize on its national scale since it acquired more than 1,100 Albertson's stores in 2006. A more centralized purchasing structure for the chain's 2,500 stores and the 1,800 supermarkets it supplies as a wholesaler should drive down nondiscounted, or everyday, prices of national-branded items. Mr. Herkert called the disparity between discounted and nondiscounted prices "out of whack."
"There is no single pill we get to take to get this right.
July 15, 2009
Perspective - Help Yourself article from Economist
Nice piece on Economist.com which lays out some predictions and then gets some quotes from some industry players on what they see. All are upbeat of course. It's good for the industry for magazines to inject the blue sky or in this case state the obvious (ie help yourself if you really want good service these days).
Help yourself
Jul 2nd 2009 | NEW YORK
From The Economist print edition
Customers are working for companies free of charge, and they like it
AMERICANS worried that cheap labour in faraway countries threatens jobs at home should redirect their gaze to the mirror. Yes, companies are outsourcing jobs—to their customers. They are steering ever greater numbers to ATMs instead of tellers, websites instead of telephone hotlines and automated checkouts instead of manned registers. The recession is making them even keener.
Self-service is on the rise in industries from retailing and entertainment to travel and telecommunications. According to VDC Research Group, retailing, hospitality and health-care firms spent $2.8 billion on self-service technology in 2008. Between now and 2013 their investment will grow by around 15% a year. Speech-recognition technology, which permits automated responses to telephone calls, is also faring well. Datamonitor Group, a consultancy, expects spending on that to rise by around 8% in 2009.
Firms that embrace self-service technology like to talk about the joys of “customer empowerment”. Customers have grown increasingly used to self-service devices, whether they like them or not. A lot of consumers would still like to speak to a human being. But many people, especially younger ones who grew up with the internet, like doing things themselves. Gartner, a research firm, estimates that nearly 60% of customers prefer to check themselves whether an item is in stock at a store, often through a self-service kiosk or their mobile phone, instead of relying on an employee.
When done well, self-service can even increase customer loyalty. According to NCR, which makes self-service technology, 85% of consumers prefer brands that offer several forms of self-service: online, at kiosks and via mobiles, for example. Sometimes self-service can be more personal, not less. Many speech-recognition services store customers’ information and greet them by name when they call. Companies that provide up-to-the-minute online account statements, including some mobile-phone and cable-television firms, appeal to those wanting to keep a close eye on their spending amid the recession.
The main reason why companies are so keen on self-service, however, is cost. On average, transactions performed through kiosks cost a tenth of what they would have had an employee handled them, according to Summit Research Associates, a consultancy. Comverse, a technology firm, reckons savings from online self-service can be even greater: it costs $7 to answer a query through a call centre, but only ten cents to deal with one online. Comverse says one of its clients deflects 200,000 calls a week through its online self-service portal, saving it around $52m a year. The savings come chiefly from replacing employees with machines, which do not require health benefits or a salary. According to Francie Mendelsohn, the president of Summit Research Associates, each self-service checkout at a grocery store replaces around 2.5 employees.
The extra convenience that self-service affords can also bring in new customers. Blockbuster, a video-rental firm, plans to set up 3,000 kiosks by the end of the year at supermarkets and convenience stores in order to reach people who do not come to its own stores. Pitney Bowes, which makes franking machines, has set up self-service mailing kiosks in shops and office buildings and is sharing revenue with the United States Postal Service, which is facing dramatic declines in mail volume. Pitney Bowes’s research suggests that people who might otherwise not have bothered mailing packages or letters are now doing so.
The recession has made the savings from self-service especially welcome. Companies claim they do not fire employees but redeploy them to do more important work. But in a slow economy they are likely to get the boot. Self-service technology may provide other ways of helping companies through straitened times. Retailers, for example, are eagerly awaiting near-field communication (NFC) chips, which would store credit-card information in mobiles and so allow customers to use them instead of cards to make purchases. The technology would also help retailers keep track of customers’ spending habits and advertise special offers. Brad Fick of Direct Source, which sells self-service technology, says NFC devices will be introduced in the next year or two. For retailers that last until then, that is good news.
July 01, 2009
Research Data - What are we willing to believe this year?
Another research firm posts their latest prediction of market size today. This time it's $775B in 2009 and grown to $1.6 Trillion by 2013. Just for reference what if we look back at what these same people predicted earlier. Here is 2003 predictions. In 2007 it was "estimates North American consumers will spend $525 billion at self-service machines in 2007, a 19.8 percent increase from $438 billion in 2006." If its $128B in 2003, $500B in 2007 and $1Trillion in 2009 we guess that is a good thing (if true).
June 29, 2009
Research: Self-Service Kiosk Transactions in 2009, According to IHL Group
New research report -- North American consumers continue to embrace self-service technology, as transactions at self-service kiosks will surpass $775 billion in 2009. This will grow to over $1.6 trillion by 2013, according to a new research study conducted by the IHL Group.
"We expect continued double-digit growth in the revenue generated by self-service transactions, particularly as retailers, restaurants, and transportation authorities offer more devices in more locations," said Lee Holman, Lead Retail Analyst of the IHL Group, an analyst firm and consultancy that serves retailers and retail technology vendors.
"Most consumers have adapted to self-service as a way of life," Holman added. "The current recession is actually increasing the acceptance of the technologies, as they are a hedge against increasing labor expenses during a tough economic climate. They allow companies to schedule their workforce for high-volume periods without sacrificing service during non-peak times."
In the market study, 2009 North American Self-Service Kiosks, IHL examines the increasing use of six types of self-service kiosks where payment is accepted: self-checkout systems, ticketing kiosks, check-in kiosks, food ordering, postal and other retail kiosks.
The study is available immediately at www.ihlservices.com.
The report covers self-service kiosks in the United States and Canada, detailing the number and type of kiosks shipped historically. It also provides forecasts for each type of kiosk, both in terms of units shipped and revenue transacted. In addition, the report highlights best practices and best-in-class machines for each class of kiosk.
About IHL Group
IHL Group is a global research and advisory firm headquartered in Franklin, Tenn., that provides market analysis and business consulting services for retailers and information technology companies that focus on the retail industry. For more information, see www.ihlservices.com, call 615-591-2955 or e-mail [email protected].
SOURCE: IHL Group
Ketner Group Inc. for IHL Group
Jeff Ketner, 512-794-8876
[email protected]
February 15, 2008
Kiosk Research - Summary of Kiosk market from VDC
Excerpt: According to VDC's recently released Kiosks for Self-Service and Interactive Applications: Technical and Vertical Market Analysis, the retail market for complete kiosk solutions exceeded $524 million in 2007 and is expected to grow at a compounded annual growth rate (CAGR) of 22% through 2010. Approximately 210,000 kiosk units were deployed in retail establishments in 2007.
Nearly 80% of kiosk installations within the retail vertical market are capable of conducting transactions.
MoreRFID - Self-Service Kiosks: A Practical Platform for Growth
Retailers are increasingly using Kiosks to move past the constraints of 'traditional' transactional management standards and procedures in attempts to provide more value to the consumer throughout their in-store experience. The consumer's in-store experience is no longer limited to a simple interaction with an employee or sales associate on the floor. Through recent deployments of self-service technologies (i.e., kiosks), retailers are redefining the way that they conduct business and interact with their customers.
"Both the consumer and the enterprise have comprehended and embraced self-service kiosks and their value propositions," cites Rory Gardner, Research Associate for Venture Development Corporation (VDC). "In fact, recent research from our retail automation market intelligence programs indicates that enterprises are observing increased demand from consumers regarding the deployment and integration of self-service technologies (i.e., kiosks and self checkout solutions). Consumer comfort levels and preferences have become so strong regarding self-service technologies that many are beginning to use them as a key decision-making criterion when selecting a retail establishment."
According to VDC's recently released Kiosks for Self-Service and Interactive Applications: Technical and Vertical Market Analysis, the retail market for complete kiosk solutions exceeded $524 million in 2007 and is expected to grow at a compounded annual growth rate (CAGR) of 22% through 2010. Approximately 210,000 kiosk units were deployed in retail establishments in 2007.
Nearly 80% of kiosk installations within the retail vertical market are capable of conducting transactions. Retailers continue the deployment of transactional-based kiosks due to their ability to improve customer loyalty and in-store experiences, provide operational efficiencies, and create new marketing and revenue-generating opportunities. Enterprises now have the ability to use information gathered from commonly deployed kiosk applications, such as loyalty programs, and incorporate that data into their new cross-promotional activities, cross-selling opportunities and catered/personalized marketing campaigns. As enterprises continue to place added importance on the collection, analysis and incorporation of customer-specific information, the consumer's in-store experience will improve.
"We're seeing a convergence of informational and transactional kiosks particularly in the Micro/Mini kiosk segment," states Gardner. "Enterprises are now leveraging the value propositions of both types of kiosks to create a dynamic tool that can provide even more value to the consumer. While the customer is leveraging additional information (i.e., conducting a side-by-side comparison of all their product options), the retailer has a captive audience and an established platform through which they can promote other products, provide customer loyalty incentives/discounts, and introduce new products."
Kiosks provide a robust platform for retailers to expand upon. New technologies and processes can be rapidly integrated and evaluated largely due to the ability to 'stack' new applications on top of the existing platform, thus simplifying integration and minimizing costs. The most prevalent example of this can be seen in the evolution of the ATM. ATMs began as an application specific solution with very limited flexibility (i.e., exclusively for personal banking). Over the past few decades, the ATM has been able to provide more value via the addition of several complementary applications (i.e., bill payment). Kiosks are currently positioned to experience a similar evolution. As consumer comfort levels with self-service technologies continue to increase, they could play a major role in the development and deployment of new applications and technologies, functioning largely as a 'beta-test' for enterprises.
VDC analysts will be attending KioskCom April 16 - 17, 2008. To schedule a meeting with an analyst, please contact Rory Gardner at rgardner [at] vdc-corp.com.
VDC is currently engaging in their 2008 Retail Automation Equipment Planning Service. To view the program proposal for the upcoming study, please go to:
http://www.vdc-corp.com/PurchasedDownloadFile.asp?type=proposal&id=2239
November 05, 2007
History of the Interactive Kiosk
We are historians of sorts and it's interesting to see how information on the internet is now being manipulated. In the history of the traditional kiosk for example the key players were companies such as Factura (original driver) along with Neoproducts, Elotouch and Microtouch. Any industry insider familiar with the industry will agree with that. There were other companies for sure such as St. Clair, Apunix, Netshift, KIS and others. What must be acknowledged is how larger companies now sensing an opportunity are beginning to restate history with themselves being key players over the years. At times paying for that recast...Presumably anything is for sale and that goes for factual history.
August 08, 2007
Kiosk Self-Service Study - Consumers prefer self-service
New study from NCR and BuzzBack points out consumer preference for self-service and we might be wrong but looks to be the first time that Bill Nuti is at the mike so to speak. Whether or not the majority of the public prefers self-service and the demographics of that audience, it's a foregone conclusion that business will continue to find it much more effective/profitable to provide self-service if only as part of its mix.
The real pointer/clue here is the side mention of mobile phones and allowing them to control/authenticate with the self-service terminals. That's one of the holy grails still to be hatched.
Consumers prefer self-service, study finds > Inside Retailing > Source
An American study for NCR has found modern consumers prefer to deal with retailers who offer self-service options.
‘On-the-go consumers’ prefer to handle an increasing number of transactions themselves through self-service devices, and are more likely to do business with companies that make it easier to for them to do so, according to the study, conducted by BuzzBack Market Research.
More than three out of four (77%) of the 633 US and Canadian consumers polled said they were more likely to do business with organisations that offered self-service, and 92% value combining mobile devices – like mobile phones or PDAs – with the internet and self-service kiosks or ATMs to improve their overall service experience.
“People want more control of their interaction with your business,” said NCR president and CEO Bill Nuti. “Why wait for assistance with transactions they can more quickly and easily do themselves at guaranteed quality? Consumers increasingly expect to be served where and when they choose, and are putting pressure on businesses and government agencies to deliver seamless service through the integration of self-serve devices, including the internet, mobile devices and multipurpose kiosks.”
Some of the more frequently cited transactions respondents said they would like to see automated through multipurpose kiosks include: renewing drivers’ licenses or vehicle registration (76%); checking the status of items ordered online (71%); purchasing transit or airline tickets (62%); making photo copies (57%); and ordering flowers, books and other items (54%). The top-three locations where respondents would like to see this type of convenience are in airports (70%); malls (65%); and grocery stores (55%).
Respondents also showed a strong preference for self-service when it comes to printing on-the-go. An overwhelming majority (85% to 94%) of respondents indicated they would prefer to use self-service to print items such as maps, tickets, schedules, coupons and other items while banking, shopping, travelling, dining or visiting a medical clinic.
The research also examined the extent to which consumers would prefer to wait for personal assistance when banking, shopping, dining, travelling or visiting a physician. Results showed that while respondents prefer to manage the majority of activities on their own, a significant number still prefer person-to-person interaction for complex transactions such as obtaining mortgage or investment advice.
“Proper deployment of self-service will allow business to focus personal assistance where consumers find it most valuable,” said Nuti. “Companies that want to remain competitive in the future will need to understand how to deploy self-service to maximise convenience and provide the flexibility required by consumers.”
Industry-specific consumer preferences for self-service:
Retail:
printing loyalty points or coupons – 89%
printing food and wine information and recipes – 88%
picking up, signing-in or checking the status of merchandise ordered online – 84%
Banking:
transferring funds – 78%
printing statements, mortgage or loan documents – 77%
dispensing stamps – 75%
Travel:
printing maps or directions – 94%
checking departure or arrival status – 88%
obtaining alerts such as weather delays or flight changes – 88%
Dining:
accessing entertainment content – 83%
getting information such as menu, prices, directions and reviews – 78%
receiving promotions and tendering coupons – 72%
Most consumers showed a preference for serving themselves across a number of industries. However, results indicate many respondents prefer to obtain personal assistance with more consultative, financial transactions. For example, 74% said they would prefer to speak with someone to obtain investment advice, 73% would prefer this option for purchasing insurance, and 69% would like assistance obtaining mortgage advice.
* Background on survey methodology: A total of 633 US and Canadian respondents, at least 18 years old, participated in this study. The total sample is representative for age, gender, household income and region.
August 05, 2007
Tech Specs -- Green IT and Energy
Energy consumption by devices is beginning to get some ink in the journals and blogs. Here is article comparing many different types of devices and their energy footprint. What about panelpc computers or mini-ITX motherboards?
The question begins as : is a Thin Client from energy standpoint a much cleaner alternative than a PC. That question morphs into power consumption of many devices. One of the more unusual facts is that game units from MS and Sony run about 180 watt while Wii is less than 20w.
LCDs are a major contributing agent and its easy to see that as PCs get smaller and more energy efficient (ie smaller power supplies and fewer inherent devices) that the difference is being made up by larger factor LCDs. A 15" used to be a standard, now its nearly obsolete.
Includes related links for more information.
Posted by staff at 03:18 PM
August 03, 2007
Self-service Kiosks Adoption Growing
As digital kiosks become more user-friendly and capable of handling more complicated tasks, healthcare providers, fast-food chains and other businesses say trading face-to-face encounters for face-to-monitor transactions improves service and saves money.
Self-service economy arrives gradually
By DAN CATERINICCHIA
AP Business Writer
* Self-service economy arrives gradually
WASHINGTON --
At airports, supermarkets and big-box retailers, "customer service" in recent years has meant self-serve - aided by touch-screen kiosks.
As digital kiosks become more user-friendly and capable of handling more complicated tasks, health care providers, fast-food chains and other businesses say trading face-to-face encounters for face-to-monitor transactions improves service and saves money.
Yet the complexity of human decision-making and service expectations in different industries means any possible self-serve revolution is more likely to be a gradual transition.
"Every time you see a door, there's an opportunity for a kiosk to be deployed," Juhi Jotwani, director of marketing and strategy for retail stores at Armonk, N.Y.-based IBM, likes to tell her staff.
Numerous airlines use IBM's customer kiosks. Caribou Coffee and Cheesecake Factory employees use them to manage recipes and to enhance order speed and accuracy. The Virgin Megastore in Times Square has 150 kiosks that process 450,000 music previews per month.
Still, "none of the players in this market have even scratched the surface" of the multibillion-dollar potential, Jotwani said, even though consumers hooked on text-messaging and interactive Internet gaming now expect greater control over their purchasing experiences.
An April report by consulting firm Summit Research Associates Inc., estimated 800,000 customer kiosks, not including ATMs, will be installed in North America by the end of 2007 and hit 1.2 million by 2009.
North American consumers in 2007 are forecast to spend more than $525 billion at self-checkout lanes, ticketing kiosks and other self-service machines, including postal kiosks, according to IHL Consulting Group. That figure could reach nearly $1.3 trillion by 2011.
NCR Corp. products process more than 23 billion transactions annually and roughly 40 percent of the Dayton, Ohio-based company's $6.1 billion in 2006 revenue was from self-service hardware, software and services.
Since a 2-for-1 stock split in January 2005, the company's stock has risen about 50 percent and was trading at $52.70 Thursday afternoon after second-quarter results beat Wall Street estimates earlier this week.
Consumers now accustomed to ATMs dispensing cash and self check-out aisles in supermarkets and home improvement stores expect self-service options in other parts of their lives.
Mike Webster, NCR's vice president and general manager of self-service, is targeting the health care market. More than 100 U.S. hospitals use NCR technology and the company plans to expand overseas by year-end.
NCR's Web-based "patient portal" allow appointment scheduling, lab result viewing, and the updating of insurance information or family history.
The Heritage Valley Health System in southwestern Pennsylvania said check-in and registration times dropped to two minutes from nearly 10 since it began using NCR products last year.
The change cost Heritage Valley $750,000 over four years, and David Carleton, the company's chief information officer, is pleased with the return on investment.
Yet many retail outlets remain kiosk-free, with consumers preferring to try on clothes and ask sales associates for help. Fast-food executives say they're waiting for better, more flexible technology.
Gap Inc.'s use of consumer kiosks failed because shoppers were being left alone for too long and many preferred talking with sales people, said Praveen Kopalle, a professor in Dartmouth College's Tuck School of Business.
"This technology is very useful when customers immediately see where the benefit is, where the convenience is and where it's more personalized," Kopalle said, citing simple tasks such as withdrawing cash or placing a fast-food order.
McDonald's, Burger King, Subway and others are testing kiosks and while technology providers predict widespread adoption by 2010, restaurant executives seem unconvinced.
Burger King, Arby's, Taco Bell, Jack in the Box and other restaurants are testing kiosk software from San Diego-based EMN8. Basic machines that allow customers to order and pay with credit, debit and gift cards cost about $3,000 each, while full-service models that accept cash run up to $17,000 apiece.
Peter Boylan, EMN8's vice president of sales, said restaurants like the machines' "upsell" potential when customers realize they can add a milkshake or other item to a combo meal for just a few cents.
Some restaurant kiosks may even become advanced enough to recall past orders and ask customers if that's what they want. The impact on employees should be minimal as cashiers most likely will be redeployed to help customers use the kiosks and to assist on food preparation and delivery, particularly at locations with drive throughs, analysts said.
Airlines that use check-in kiosks are reaping upsell rewards on upgrades for first-class or aisle seats. It costs airlines more than $3 per customer when agents check them in versus as little as 14 cents each with a kiosk, said Forrester Research analyst Henry Harteveldt.
"Mobile commerce," which involves tapping a credit card "wand" or cell phone against a kiosk at a gas station is offered by some U.S. companies, but is more the norm in Japan and some parts of Europe, said Craig Johnson, president of Customer Growth Partners, a retail consultancy in New Canaan, Conn.
"The technology is here now, it's just a question of companies providing it and then consumers" buying in, Johnson said.
Those that prefer the personal touch can rest easy, at least for a little while.
July 17, 2007
Self-Service Kiosk market Numbers
"We expect that expenditures made at self-service kiosks will rise by about 20 percent this year and another 18 percent in 2008," Buzek said, adding that demand for self-checkout systems and other kiosks should push the dollar value of transactions to nearly $1.3 trillion by 2011.
Digital50: News and more Business News
Consumers Should Spend $525 Billion at Self-Service Kiosks This Year, Says New Report from IHL Consulting Group
FRANKLIN, Tenn.-(Business Wire)-July 17, 2007 - When it comes to paying for goods and services, consumers continue to take matters into their own hands. North American consumers are on pace to spend over $525 billion at self-checkout lanes, ticketing kiosks and other self-service machines in 2007, an increase from $438 billion in 2006, reports a new research study conducted by IHL Consulting Group.
The revenue generated by self-service transactions should continue this pace of growth in the coming years, said Greg Buzek, president of IHL Consulting Group, an analyst firm and consultancy that serves retailers and retail technology vendors.
"We expect that expenditures made at self-service kiosks will rise by about 20 percent this year and another 18 percent in 2008," Buzek said, adding that demand for self-checkout systems and other kiosks should push the dollar value of transactions to nearly $1.3 trillion by 2011.
"Consumers enjoy self-service and increasingly seek out retailers that offer the technology," Buzek said. "Retailers and other businesses are finding that self-service kiosks can significantly increase customer loyalty, as well as customer satisfaction."
In the market study, 2007 North American Self-Service Kiosks, IHL examines the increasing use of four types of self-service kiosks where payment is accepted: self-checkout systems, ticketing kiosks, check-in kiosks, food ordering, and postal kiosks. The study is available immediately at www.ihlservices.com.
The report covers self-service kiosks in the United States and Canada, detailing the number and type of kiosks shipped historically. It also provides forecasts for each type of kiosk, both in terms of units shipped and revenue transacted. In addition, the report highlights best practices and best-in-class machines for each class of kiosk.
About IHL Consulting Group
IHL Consulting Group is a global research and advisory firm headquartered in Franklin, Tenn., that provides market analysis and business consulting services for retailers and information technology companies that focus on the retail industry. For more information, see www.ihlservices.com, call 615-591-2955 or e-mail [email protected].
March 11, 2007
KIOSKS - NCR launches new website
It's been 3 years but NCR launched a new website last week. It has a new Self-Service Kiosks section in its Self-Service segment. The newest member is the new Easy Point Advantage which is a 15" panel-pc that can be mounted any number of ways. Solutions featured include the hotel check-in, QSR ordering, medical check-in and Bill Payment Express.
NCR - Transforming Transactions into Relationships
The new EasyPoint Advantage panel-pc appears to be a lower priced unit that is designed to compete better with the Anyplace from IBM. For now it is 15" with 17" to follow in the future.
The other units seem to share a common enclosure which is your plain square unit with room for devices.
We're a little surprised that the Payment unit is still offering Windows 2000 and that it doesn't address VISA PED and uses the strapped-on Verifone.
All in all though it appears NCR is developing more focus across its POS and Retail Check-Out solutions while also expanding it Teradata-related solutions.
It has definitely raised the visibility of their self-service solutions.
Interesting article on the side is the Forbes interview of Mark Hurd, former CEO and now in charge of HP that covers quite a bit of NCR along with HP.
NCR has always been a bit of three-headed monster (Retail, Financial, Data) and it has stayed focused on that though the Financial side seems to no longer be the dominant thread like it has been historically.
March 08, 2007
KIOSKS Research -- Distance Education Kiosks
Research reports from The University of Texas at Austin and its Center for Black Business History publish reports on the need/viability of kiosks and Distance Education Enrollment.
CBBH Research Projects
REPORTS’ OVERVIEW: “Kiosk Technology and Distance Education Enrollment"
REPORT PART 1: "The Distance On-Line Industry: Competitors For Kiosks and Traveler Enrollment Booths"
REPORT PART 2: "If You Build It They Will Come: Kiosks and Traveler Booths for Distance Education Online Enrollment at Airports, Train Stations, and Retail Venues"
REPORT PART 3: "Advantages to Locating Distance Education On-Line Enrollment Kiosks and Traveler Booths at Baltimore-Washington Thurgood Marshall International Airport"
January 17, 2007
Kiosk Case Study -- Hackers Find A Way
Nice report by on Zoom vending kiosks being "tricked". We've looked at the unit in Flatirons in Colorado and were unable to find that weakness so this could be a new version being deployed (without sufficient testing perhaps).
Davis Freeberg’s Digital Connection - Zoom Kiosks Hacked - Hackers Can’t Resist Free iPods
Zoom Kiosks Hacked - Hackers Can’t Resist Free iPods
BacklightOne of the major advantages to using kiosks at a retail store is the reduction in shrinkage that retailers see, once they introduce kiosks at the retail level. Because customers have to actually pay for a product before they can get their hands on it, vending can save retailers significant amounts of money by reducing the amount of theft from shoplifters and unscrupulous employees. Like anything though, if you give someone enough incentive, people will always figure out a way to get around theft deterrent systems.
When I was a kid, people took the time to figure out a way to short circuit Coke machines into giving away free sodas, by spitting water into the slot for dollar bills. Considering that Zoom systems is catering to a much higher end of the retail market with their iPod and cell phone kiosks, it shouldn’t be much of a surprise that hackers have already figured out a way to get around the theft protections built into the Zoom vending machines.
Because Zoom is using internet explorer to run their kiosk software, hackers have figured out that it’s relatively easy to bypass their security protections by accessing the file explorer window and then tricking the machine into thinking that you’ve already paid.
Since most of the Zoom’s kiosks are either inside of a Macy’s location or in an airport, this limits the effectiveness of this hack because there are still security guards that can watch out for this, but this hack could still undermine the usefulness of kiosk technology, if you have to have physical security monitoring the machines. While I’d be surprised to find out that Zoom hasn’t already responded to this threat by making it more difficult to gain access to the file explorer window, this hack still highlights an important issue for kiosk manufactuers to consider when designing their vending solutions.
By removing an actual human from the transaction process vending can save time and money for many businesses, but without the right theft controls, it can also expose retailers to even higher levels of theft. Even with this exploit, I would still be willing to bet that retailers see significant less shrinkage with Zoom kiosks than without them, but for a technology that depends upon removing humans from the transaction process, these sorts of exploits are a significant threat to the kiosk industry. If retailers can’t feel comfortable in having an unmonitored vending machine selling their inventory, it will greatly diminish the appeal and convenience that vending can have as a retail solution.
Links
http://machinetricks.indieword.com/view/vending-machine
November 21, 2006
Content Channels - eMusic Hits 100 Million Downloads
With all the talk about Zune and iTunes, the "no-DRM" solution from eMusic notes that they are nearing the 100 million download mark. Its worth noting the iTunes hit the Billion downloads-to-date mark recently and that the sharing services still see over a billion downloads every week. eMusic delivers its music in Open MP3 format (unlike the Windows WMA DRM or Apple's Fairplay).
Independent digital download store eMusic is nearing the 100 million-mark, a milestone that should arrive within "the next few weeks". eMusic started its download ticker on November 1st, 2003, the point at which the company moved away from an unlimited monthly download model. Ahead of the accomplishment, the company has tapped pop rock group Barenaked Ladies to pen a song for the winner, a unique digital commission. The lucky downloader will also receive a lifetime eMusic subscription, and inclusion within an upcoming print advertising campaign.
eMusic has long billed itself as the number two paid download provider behind iTunes, and the latest tally helps to validate that claim. eMusic is catered towards a targeted audience, one that prefers lesser-known indies over blockbuster artists and smash hits. Depending on the specific tier, the company offers its users a fixed number of downloads per month, part of a hybrid subscription and download model. And eMusic offers all of its tracks as open MP3s, enabling iPod compatibility. Meanwhile, Apple has crossed the 1.5 billion mark on its iTunes Store, a number that eclipses eMusic and other competing download providers. Others like Napster, MSN Music, and RealNetworks have not shared download figures.
October 30, 2006
For Better or Worse -- self-service
Nice article from Wall Street Jounal on self-service and the limitations of it that people see. Could be when they call in for the voice-recognition system for the airline reservation or just checking-in. Last week Target found itself on the spot with its website and how its design did not accomodate certain users.
For Better or Worse
High-tech tools can be a godsend for companies looking to improve customer service. Or they can be a nightmare.
By DIONNE SEARCEY
October 30, 2006; Page R5
One evening last year, Faye Kiefer was supposed to pick up her daughter at the airport. But she wanted to check the status of the flight before she left home.
So she phoned Northwest Airlines, and its automated customer-service system picked up the call. Again and again, Ms. Kiefer spoke her daughter's flight number into her speakerphone. But the system couldn't understand her, and she couldn't find a way to get to a live operator. Frustrated, she hung up.
THE JOURNAL REPORT
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• See the complete Leadership report.
The automated phone system is "a wonderful feature to make your life simpler so you don't waste time," says Ms. Kiefer, a homemaker in Madison, Wis. "But if you can't get your message across or you can't make them understand you, then you're just sitting there...speaking to a robot."
According to Northwest, the trouble, most likely, was Ms. Kiefer's phone. The airline says its voice-recognition system may have trouble understanding some callers with poor speakerphone connections.
Ms. Kiefer's complaint, though, sums up a glaring truth about modern customer service: Technology has made life a lot easier for customers. And a lot harder.
Over the past few years, companies have plowed billions of dollars into automated customer-service systems, from call centers to Web sites to self-checkout lines in stores and hotels. When they work properly, they can simplify a host of chores. But tiny problems can sometimes throw these systems for a loop -- leaving customers feeling cut off and frustrated.
Some voice-recognition systems have trouble deciphering speech across a fuzzy phone connection. Company Web sites can take customers on virtual tours to nowhere with broken links or incorrect information. Self-service checkout terminals sometimes jam, leaving customers to search for a clerk to help them out.
The solution, say customer-service experts, is the human touch. Too often, companies abandon service workers altogether, or dramatically reduce their role, when installing automated systems. Companies must ensure that employees monitor and regularly update the technology to weed out glitches, keep the systems running smoothly and gauge customer satisfaction, the experts warn. Otherwise, frustrated customers may take their business elsewhere.
"Automation really just complicates things more unless you have a lot more knowledge and you have people behind it," says Howard Lee, chief executive of HyperQuality Inc., a Seattle firm that helps companies improve call centers and other customer-service operations. "People expect technology to be a magic bullet, and it's not and never will be."
The good news is that companies are starting to pay attention to the complaints. Here's a look at some of the biggest gripes about the most popular automated service systems -- and what companies are doing to fix them.
VOICE RECOGNITION
Dialing into an automated phone system can be one of the most frustrating customer-service experiences out there.
If conditions are right -- the caller has a land-line connection with a quiet background and enunciates carefully -- the systems can work like a dream. Needless to say, conditions are often less than ideal. Systems sometimes can't understand callers using a speakerphone with background noise or a cellphone in the middle of loud traffic (or sometimes any traffic, for that matter). And even if the connection is crystal clear, the systems may stumble if the caller has a speech impediment or foreign accent.
Silvia Mazzucchelli, a native Italian who lives in the Los Angeles area, says she has learned to "Americanize" her accent when dialing directory assistance or other voice-activated systems. "I hate them, I hate them," she says. "I always try to get to the operator. I just can't stand it. Most of the time they're giving me information I don't want."
Sometimes even regional quirks can hinder voice-recognition technology. When Verizon Communications Inc. rolled out its new automated 411 directory service system in Boston about two years ago, callers were greeted by a recorded voice that chirped, "City and state, please." But the system had a big problem: It couldn't understand a Boston accent. Callers who pronounced "Worcester" and "Peabody" in the local fashion ("Wooster" and "PEE-buh-dee") were told, "I'm sorry, I didn't get that." The system eventually transferred them to a live operator for help.
Fortunately, experts say, companies commonly check their automated systems to fix the glitches. Verizon tweaked its system after complaints, and says it has had few problems since. Similarly, Northwest says it constantly updates its system based on customer feedback and the comments of employees it hires to track the system's performance. The company also brings in speech experts to tweak the system to ensure that customers looking for information about, for example, flights in and out of Asheville, N.C., aren't fed information about Nashville, Tenn.
In some cases, advanced voice-recognition systems such as Verizon's can actually fix themselves if a critical mass of callers continue to pronounce a word a particular way. Moreover, some companies are trying to make the caller's experience as smooth as possible if the system screws up. Northwest, for instance, says that if its system fails to understand a caller's request twice, the caller is now routed to a live operator -- instead of getting stuck repeating the information again and again.
Companies are also increasingly using a "whisper," or a recording of the caller's request, to make things easier for customers. If an automated system can't answer a caller's question, it plays the whisper for a live operator before transferring the call. By listening to the whisper, operators know what the customer is looking for. That way, the caller doesn't have to repeat information they've spent the past few frustrating minutes trying to convey to a computer.
TOUCH-TONE SYSTEMS
Some companies don't splurge on high-end voice-recognition systems and instead ask customers to use touch-tone keypads to input information such as account numbers or other data. "The nice thing about touch tones is they're reasonably reliable. If you push the button, it does what you want it to do," says Paul Kowal, a customer-service specialist who runs the Cambridge, Mass., consulting firm Kowal & Associates.
But too often, Mr. Kowal says, companies spend money only on the initial programming of the system -- and don't invest more as customers' needs and expectations evolve, or as the company itself changes. Recorded information may grow outdated, or calls may get routed to departments that no longer exist.
Even worse, many touch-tone systems trap customers in a seemingly endless automated loop in which they can't easily reach a live operator. Dialing zero doesn't always work. Sometimes there's a secret code for reaching the operator, but the system won't tell you what it is. Other times there's no operator at all.
As customers become more vocal about their unpleasant experiences, more companies are learning to stay on top of problems, Mr. Kowal says. And some amateurs are lending a hand, as well. Frustrated by his own experiences with automated phone systems, Boston-based consumer advocate Paul English began asking associates how they get through to humans when phoning various companies. He compiled a list of their answers and last winter posted it to his Web site, gethuman.com. The site now contains the tricks to escape phone loops at more than 500 companies.
"There are lots of conditions where the caller knows more than the machine, and the caller should decide when it's time to talk to a human," Mr. English says.
WEB SITES
For the most part, customer-service experts report overwhelmingly positive consumer experiences with company Web sites. Many credit-card, phone and bank customers love the convenience of paying bills and monitoring account activity online at any time of the day or night. And more Web sites are offering convenient new features and sales help.
So it's even more frustrating for consumers when they run across a site that doesn't do it all. Some companies simply don't have the money or wherewithal to offer anything but a basic site that answers generic questions. And sometimes, out of sheer sloppiness, they don't even get the basics right. Important information, such as phone numbers or driving directions, may be incorrect, or the links to the information may be broken. In some cases, there won't be phone numbers at all; some companies don't employ live operators, to push customer transactions onto the Internet.
But there's good news, according to the experts. As Web business becomes increasingly important to even the smallest companies, more businesses are making an effort to fix their sites. They're asking customers for their feedback, and assigning employees to monitor the sites as well.
As part of the cleanup, experts stress, businesses should always offer real-world sales assistance to customers. The very same technology that makes life better for some customers can make it miserable for others, depending on their age, familiarity with computers and other factors.
Consider Ms. Kiefer. When she has a banking question, she drives to her nearby branch, pulls into the drive-through lane and speaks with a teller. She knows she could use her bank's Web site from home. But she rarely turns to the Internet for help because she doesn't want to waste time firing up her computer.
"Of course everybody wants to give you their Web site," Ms. Kiefer says. "Well, for someone in their 60s, as I am, we've learned the computer but we aren't as adept at it as all the young people are."
SELF-SERVICE CHECKOUT
Increasingly, grocery stores, hotels and fast-food restaurants are installing self-service kiosks that allow customers to ring up their own purchases. The services can offer speedy checkouts for customers who have few purchases and don't want to wait in long lines.
But customers can end up frustrated and embarrassed when scanners don't ring up a price or kiosks won't accept their crumpled dollar bills. In April, a Texas man was arrested for shattering the screen of a self-service kiosk at a Wal-Mart when the machine jammed as he was entering his debit card.
For some customers, the possibility of problems keeps them out of the self-checkout lines altogether. "What do you do when it scans the wrong item or the item isn't scannable? You have to get someone to come over and make you feel like a moron because you can't get it to work," says Peter Ambrozaitis, vice president of Novations Group Inc., a Boston-based customer-service consulting company.
Many of these systems are fairly new. But experts say that businesses, facing lines of grumbling customers, realize they need to do more to ensure the technology works smoothly. One common solution: positioning workers near the checkout lines to help customers who encounter problems.
Customer-service consultants say businesses must also make sure they have enough information-technology workers behind the scenes to keep the systems working properly. And until consumers are comfortable with self-service kiosks, they need to have enough live checkout clerks available to cover demand.
--Ms. Searcey is a staff reporter in The Wall Street Journal's New York bureau.
Write to Dionne Searcey at [email protected]
July 21, 2006
Case Study: Customer Focused Self Service
Making self-service add up so that it is not only cost-efficient but also customer-effective is premise for this whitepaper which creates the ROC factor for building Balanced Business Case for Self-Service. That would include self-service terminals providing web-based help systems for customers ala kiosks.
Excerpts
Meet Albert
With an important business trip coming, Albert is about to place a rush order for a set of long
sleeve shirts with coordinated wool trousers from the Web site of a retailer he has used on
several prior occasions. This time, however, Albert has questions about the products: Should he
choose a 100% cotton fabric or a wrinkle-fighting polyester blend? Does the retailer offer a
tailoring service? He types “tailoring” into the Web site search engine and receives 542 “matches.”
Lost in a sea of options, he does a second search under the term “wrinkle-fighting polyester
blend.” But this time, his search produces zero matches. Albert sends an email request to
customer service, but in return receives a polite but uninformative, standardized response. As a
last ditch effort he places a call, but soon hangs up because the interactive voice response “menu
tree” doesn’t have options corresponding to his questions.
The good news is the retailer saved $8 by deflecting Albert’s request to automated self-service
channels.The bad news is that Albert is frustrated and abandons his shopping cart, which costs the
retailer a $271 purchase.At a competitor’s Web site, he finds the products and information he needs,
and places the order. Happy with the self-service experience and support from the competitor,
Albert shifts his clothing purchases–about $1,500 a year–to the competition.
By 2010, says Gartner, self-service will account for 58% of interactions.
A recent study shows that 99% of U.S. adults said that, if they had a positive customer service experience with a company, they would be likely to recommend that company to a friend or colleague. Eighty-five percent said that if they consistently received excellent customer service from a company, they would be most likely to greatly/somewhat increase their business with that company.iii
Traditionally the self-service business case has focused on lowering costs-and for good reason.For every email that selfservice prevents, about $3 is saved. For every telephone call, $5 is saved (and as much as $30).
According to a 2005 survey of Forrester’s 200-plus member Customer Experience Peer Research Panel, 65% of respondents from companies with $200 million+ in revenue said Web-based self-service was critical or very important to their 2006 customerexperience spending plans.
April 21, 2006
Software Brief: Microsoft Vista too late?
Much has been made of Vista being delayed and now we have Boot Camp from Apple so we can run XP on imacs. Vista will come in 6 different flavors though not sure if that includes all of the embedded variants (CE, WiPOS, etc), which will impact self-service and POS. Nice comprehensive article on outlook for Vista rom newsfactor. Is it too late? Has Microsoft finally lost the monopoly of Windows?
Microsoft's Worst Nightmare
Mark Long, newsfactor.com
Few events in the technology sector generate more scrutiny than the release of a new operating system from Microsoft. The world's biggest software company had planned on releasing the next version of its flagship product, which runs nearly 90 percent of the world's computers, in time for the holiday season. But when Microsoft announced in March that its new Windows OS, Vista, would be delayed until January 2007, some observers smelled blood in the water.
The delay is only the latest roadblock for the first new OS from Microsoft in five years. Vista's development has been marked by setbacks, including scrapping the data-driven system that was the hallmark of "Longhorn," the project's former code name.
Meanwhile, Microsoft's competitors have been busy. Apple recently released Boot Camp, software that enables its Intel-powered machines to run Windows XP, giving customers a choice of OS on the same computer. While the release of Boot Camp in and of itself shouldn't affect Microsoft's market share (it might even sell more copies of XP), it could draw people to the Mac platform, where they could eventually abandon MS altogether. What's more, now that Macs can run XP, speculation continues that Apple's OS X will someday run on PCs built for Windows.
There is also the question of which company offers the better operating system. Apple has made accessibility, security, and cool graphical touches its stock in trade, and Microsoft has placed much emphasis on these features for Vista. On the open-source front, Linux on the desktop has advanced by leaps and bounds, garnering praise for stability, flexibility, and a user-friendly interface.
Is the venerable Windows OS finally vulnerable in the market it has dominated for years?
You bet, said Louis Suarez-Potts, community manager of OpenOffice, a free, open-source office suite. The longer the delay on Vista, he said, the bigger the opportunity for vendors of OS alternatives. But the greater issue, he said, is that the delay affords the opportunity to evaluate not just OS alternatives, but also strategies. "Does one really need, in practice, the overhead Vista will demand?"
'A Scary Proposition'
For its part, Microsoft says that the extra time is necessary to ensure quality, and that business versions of Vista will be available in November of this year. In fact, Microsoft is planning to offer Vista in six versions. Only the higher-end iterations will feature the snazzy new "glass" interface, however, and some business versions will require a subscription to Microsoft's Software Assurance service.
This tiered approach has some people wondering if it's all just too much to keep track of. Others have predicted that consumers and businesses using older machines won't even bother to upgrade because these PCs won't be able to support the more-advanced features of Vista.
"Microsoft has lost the monopoly logic that made it the most powerful and richest software company in the world," Suarez-Potts said. "I don't think an eventual Vista -- perhaps better named 'RearView' -- will help; it's already a lost cause."
However, not everyone is convinced that Redmond will suffer. "Microsoft may be more vulnerable than it's been in the last 10 years, but I don't think it is going to lose to an open-source alternative, because I don't see any other cohesive capability to match them," said Jim Murphy, a director at the advisory firm AMR Research.
"They continue to provide features and functions that are pretty compelling once you see them," he said. "And for the most part, the customers we serve are not in a position to want to experiment with drastic alternatives, because that's a scary proposition."
Microsoft appears to have the most at risk in the basic terminal and kiosk markets, where companies are looking for ways to minimize costs. "Microsoft has never liked the idea of a thin client, like Novell and Sun offer, because it threatens their desktop business," Murphy said. "But they've had to make some concessions to it. This has placed Microsoft in a position of having to hedge its bets, by supporting a hybrid approach that will support a rich desktop experience as well as kiosks and smart devices in the field that don't require a rich OS and the extra hardware that goes with it."
Microsoft therefore faces the unpleasant prospect of companies resisting wholesale upgrades and investments, Murphy said. "Fewer workers will need or get full versions of Office, and fewer will require Vista to do their jobs," he said.
A Switch in Emphasis
Microsoft's initial Vista development effort was dedicated to giving PC operators vastly expanded search capabilities. But along the way Microsoft had to switch its emphasis to security, which these days ranks first and foremost in the minds of business managers and consumers alike.
"Microsoft's popularity makes it and its users the continual targets of exploiters, spammers, hackers, and malware makers," Murphy said. "Since they are more vulnerable, they have to find more ways to stem that flow."
For example, Vista will incorporate a technology called BitLocker that will encrypt and password-protect the contents of any desktop or laptop hard drive. This is expected to make it harder for unauthorized users to access data on a stolen PC. The technology should appeal to businesses worried about compliance with Sarbanes-Oxley and other government regulations that incorporate data-protection provisions.
From the home user's perspective, perhaps the greatest upgrade to the Windows OS will be how Vista will provide a multimedia experience that has been optimized for high-definition (HD) wide-screen displays. The move comes as a result of folding today's Windows XP Media Center Edition software into the new Vista OS.
The Media Center embedded into Vista will include the requisite support for allowing people to watch and record premium and HD cable programming on Media Center PCs without the need for a separate set-top cable box. Satellite TV households also will benefit from a partnership between Microsoft and DirecTV that will enable the flow of DirecTV digital content, including HDTV programs, between Windows-based PCs, DirecTV's digital set-top boxes, and even Microsoft's Xbox 360 gaming platform.
From the business perspective, however, there's not much interest in Media Center, and melding such sophisticated software with Vista could prove to be a liability, Murphy said. "Microsoft probably wants to move people forward, but if your choice is between fat-client and thin-client architectures, the fat one is starting to look extremely obese and there's where all the hardware requirements also get boosted."
The extended multimedia capability of Vista is overwhelming for a lot of companies to think about and will have to prove itself as an asset at some point, Murphy said. "But, invariably, there will be demand for that somewhere down the line."
Vista also will sport several enhancements to the Windows graphical user interface (GUI) that is designed to help people find information quickly on their PCs. "There's a lot of 'eye candy' that comes with Windows Vista, including live icons on the task bar and a 3D capability that gives previews of windows as you flip through them," said Michael Silver, a vice president at the Gartner consulting firm. "While attractive to consumers, most businesses won't see a lot of benefits from these features in terms of better performance and management, and you'll need the right graphics card to make it play."
Everything but the Kitchen Sink
Vista will be offered in two versions for businesses, three for consumers, and one geared to "emerging markets." The strategy is meant to ensure that Vista buyers only pay for the feature sets they truly need. All versions will be available for either 32-bit or 64-bit PC systems.
For the PC fanatic who wants the best of all possible worlds, Vista Ultimate will include the entertainment, mobility, and business-oriented features available in all Vista offerings. At the other end of the spectrum, Microsoft will be offering a stripped-down version called Vista Home Basic for the cost-conscious, and somewhere in the middle sits Vista Home Premium, which will ship with most consumer PCs. Companies will have a choice between Vista Business and its security-heavy cousin, Vista Enterprise, in November. The low-cost Vista Starter is designed for families and entry-level PC users in developing economies.
"The number of Vista versions is a little bit overblown, but on the other hand the Vista mix is more straightforward than what happened with Windows XP," Silver said. Windows XP was released in five versions, but these were tailored to specific hardware architectures, not users.
Vista Enterprise is geared to organizations with highly complex I.T. infrastructures. However, the enterprise version will be offered only to customers participating in Microsoft's Software Assurance, a security-oriented subscription service, which will require a multiyear financial commitment.
Linux Alternatives
Ironically, Microsoft's rivals have been among the first to take comfort from Software Assurance. "When Microsoft announced Software Assurance, it was a great day for the Linux desktop, because the multiyear commitment and the large checks that companies have to write will cause them to reevaluate the situation even as the pen hovers above the contract," said Greg Mancusi-Ungaro, director of marketing for Linux and open source at Novell.
"The fact that Vista for the enterprise requires a significant financial commitment opens up conversations for alternate methods for dealing with client-side computing," he said, adding that Novell does not require multiyear commitments for Desktop 10, its forthcoming Linux-based operating system.
Gartner's Silver agreed that the multiyear commitment could be a problem for Microsoft. "Software Assurance is definitely an issue for enterprises, and companies will have to come to grips with it," he said. "It presents an opportunity for Apple, [as well as for] Novell and the other Linux players."
Although Novell's Desktop 10 is much improved over previous versions, the cost of migrating Windows applications remains the main barrier to widespread enterprise adoption, Silver said.
"Novell Desktop 10 is an important milestone but most organizations have to support lots of applications, and so a wholesale migration becomes expensive and not doable due to sheer size and cost," Silver said. "Still, Linux could certainly be appropriate for single-function PCs ... and could be appropriate for users with few applications or browser-based applications. And frankly, that could describe a whole lot of people."
Mancusi-Ungaro pointed out that computing is far different today than what it was even five years ago, when the last Windows upgrade came to market. "It's no longer a one-size-fits-all world," he said. "While I don't think we will see too many headlines of companies doing what Novell has done, which is move its entire work force to Linux, I do think we will read about 10 to 30 percent of the seats in enterprises moving to a commodity-class OS because it is all their users really need."
For example, the cash registers at many retail stores are now special-client computers tied directly into back-office systems. "These transactional fixed-function work stations are used for just one or two tasks," Mancusi-Ungaro said. "This is where Linux is an ideal choice and where we see the first wave of Linux adoption occurring on the desktop."
The second wave is the Linux OS for the basic office worker, he said. "There are sets of users in every organization, which because of job function have a definite need for basic elements such as an office productivity suite, e-mail, a file system and printing, but very little else in the way of additional demand. Dollars previously allocated to proprietary operating systems therefore could be reallocated through the deployment of low-cost Linux desktops that provide all of the set functions that the user needs."
Coercion and the Courts
Few large businesses expect to implement Vista in one fell swoop, according to AMR's Murphy. "Some will upgrade in conjunction with hardware upgrades and updates while others will upgrade incrementally based on company division, employee role, or geography," he said. "In addition, many believe, based on past experience, that early iterations of Vista will present too many stability and security risks."
The number-one reason for enterprises to upgrade from Windows to Vista continues to be the threat of discontinued support for older products, Murphy wrote in a recent research note. Executives will need some serious convincing, he said, and decision makers "will continue to bristle at what looks to them like coercion rather than a value proposition."
When all is said and done, just how nervous should Microsoft really be about losing more market share to its OS competitors?
"Microsoft is one of the more paranoid companies in the world, and they always worry about all of these things," Silver said. Nevertheless, as Richard Nixon famously observed, just because you're paranoid doesn't mean they aren't really out to get you. Microsoft not only must contend with its OS competitors, but also must deal with the threat of future antitrust actions in Europe and Asia. One rumor points to this potential litigation as a reason why Microsoft decided to hold back on its Vista plans. Another rumor suggests that Microsoft decided that a wholesale rewrite of the OS code was necessary.
"Vista is ambitious, and it has a fair amount of compatibility challenges to it in terms of the user access control," Silver said. "I think they did not budget enough time for betas, and as things turned out to be more complex, there was no possible way to remedy those in the short amount of time that they had allotted themselves."
Whatever the reasons for the delays, the real proof will be in the pudding. By and large, beta testers of the new OS have had good things to say, and the January 2007 rollout is sure to attract early adopters and generate a ton of news coverage. No matter the result in the marketplace, however, one thing is certain: the hindsight on Vista is sure to be 20/20.
February 07, 2006
Case Study - GM Test for Kiosks
General Motors Tests Kiosks to Gather Car Buyer Leads: 7 Lessons Learned (Plus Results Data)
SUMMARY:
Last year General Motors decided to junk their paper-based lead generation systems completely in favor of electronic kiosks at autoshows and summertime events across Canada.
It was a huge risk that got great results. This exclusive MarketingSherpa Case Study outlines the nitty-gritty details of the program. (Example: Did you know you should always bolt your kiosks to the floor?)
CHALLENGE
Every year General Motors Canada exhibits at about 50 autoshows, sporting events, theme parks (such as water parks) and other events consumers throng to.
The typical display includes at least one vehicle for the crowds to admire, plus stacks of paper "enter to win" sweeps entries and ballots. The goal is to generate brand awareness and sales leads.
But, those handwritten sweeps and ballots are a pain to manage on the back-end. Consumers don't have perfect handwriting, and many resort to strange shorthand abbreviations for things like city-name. Also, although GM's data center had a crack team processing the paper forms, the work took awhile, so leads couldn't always be acted on while they were still hot.
By December 2004, Susan Walker GM's CRM Enterprise Data Enablement Manager was fed up with bad data, wasted time, and processing costs. She had a vision of a better world for 2005 -- paperless lead generation.
At the time practically no other consumer lead generation marketer in Canada was using electronic kiosks. The risk of handing over all event lead generation to an unknown technology for the year was stupendous.
CAMPAIGN
Walker carefully mitigated risk by first running a quick pilot test that month, putting kiosks in five dealerships. The promotion was for an end-of-year contest.
"It got us hooked. Consumers were not scared to walk up to them. So, we made a leap of faith to go wireless. We crossed our fingers."
With just three weeks left until the first big autoshow of the new year, Walker and her team, including a kiosk vendor and GM's ad agency (links to both below), scrambled to get the program up and running in time for all events in 2005. The team carefully based their tests and tactics on seven lessons learned by other kiosk users:
Lesson #1. Use alterable creative
The kiosks, which looked a bit like old fashioned videogames, were designed with interchangeable displays so the "packaging" could be changed to match the event or GM's promotional elements at the event. "We wanted the surveys to blend into the event and not look like typical GM corporate surveys."
This gave the brand marketers a chance to make an impression about GM even to consumers who didn't stop to fill out the form.
Walker decided to put GM's agency in charge of this creative element rather than the kiosk folks, because the agency were keepers of the brand.
Lesson #2. Make it light -- but bolt it down
The team shipped between eight and 20 kiosks to each event. The kiosks had to be light enough to keep down shipping costs and manageable for the booth crew on site. The final kisosk weighed about as much as larger laptop. However, "stability was a concern for us. We bolted it to the floor to make sure if it got crowded, it would not get knocked over."
This also stopped the adventurer in every crowd who thinks it would be super fun to take a kiosk home. This is the type who also walked off with or broke the pens that were attached by wires to the kiosks. (The pens were used to mark answer buttons on the screen.) So, the display team always kept a bag of spares on hand and routinely patrolled for pen losses and breakages.
Lesson #3. Wireless data downloads
It's critical to have the ability to download entries from each kiosk easily and remotely on a routine (at least daily) basis. As Walker notes, you don't want to risk keeping info in the kiosk itself in case it's damaged, or simply 'switched off' at the end of the day.
Also, remote wireless control lets the home-team control the kiosk data rather than relying entirely on the efforts of the events team who may be busy managing a heck of a lot else.
"We did online reports too posted to our intranet," notes Walker. "I could go in and instantly see how many people entered the day before. I could slice and dice the data."
Lesson #4. Optimize your form
With that sort of data available on a daily basis, the team were able to tweak their entry form on the kiosk itself. Their goal, to maximize the number of survey completes while measuring lead quality.
To that end, they optimized the kiosk screen just as you normally would optimize a Web landing page. Tests included number of questions in total, number of questions per screen-page, size of questions on the screen, and where offer reminders "You'll be entered to win a …" would appear during the survey to encourage completion.
Plus, they also optimized the final "thank you" page to direct kiosk users to the next step at GM's booth based on their answers. For example, you might instruct people who are ready to buy to check out easy credit options at the financing station on site.
Lesson #5. Rent (don't buy)
"I'm glad we didn't buy last year's kiosks. There are new and improved kiosks out this year. We also didn't want the insurance liability. We wanted someone else to worry about storage, breakage, and all of that. Renting might be a little more expensive, but I don't want to buy technology that has a one-year lifespan. Rent from an expert and let them run it."
Other advantages to renting, "We had back-up kiosks in every city and support from the vendor for replacements within 24 hours."
Lesson #6. Test alternative technology (tablets, swiping)
While lines can be a good thing, causing other consumers to wonder what the excitement is about, Walker worried about losing potential leads if kiosk lines got too long at some events.
So she tested adding a 'swipe your driver's license' to some kiosks (newer Canadian licenses can be swiped) to add in contact info on the forms and save typing time. She also tested handing portable laptop-style screens to booth staff and having them walk out into the crowd to collect entries.
Lesson #7. Follow-up with an email
The automotive industry has been studying the effects of lead response time for years. Walker knew it was critical for all leads generated from each event to receive a new "thank you" touch from GM within a matter of a day or two. So, she set up an email program that automatically sent a follow-up message to leads. (Link to email samples below.)
RESULTS
"We're a big fan of kiosks," says Walker after her first 13 months of kiosk use. However, she's got one reservation -- "as long as the event is indoors." Turns out outdoor events, in particular at water parks, weren't suited to electronic kiosks.
Overall GM captured 24% more leads at events year over year when they made the switch from paper to kiosk. Plus, the number of leads spoiled by incomplete or illegible data was down by almost 10%. And, data entry costs were down enough to help cover the cost of the program.
Form optimization tests showed that it was best to remind consumers about the sweeps offer on the screen where they entered their contact information. This was the most-likely bail page before. "You must reinforce the contest on the greeting page as well."
The team also learned forms should never take an average consumer longer than a minute to fill out. Walker's first forms were almost two minutes long and she shaved them considerably.
One other lesson: Don't have staff walk around with portable entry tablets at an auto show. We've heard this tactic can work for other types of brands at events (example: CareerBuilder.com) but consumers are too wary of automotive sales people to appreciate being approached by anyone from an automotive brand.
The follow-up thank-you emails worked well, with 16% of recipients clicking on a link in the email to get more information about GM. These emails were very soft educational offers for 2005. For 2006 the team is testing slightly harder special offers to see how they do.
The other big change for 2006 -- Walker switched from the pens to allowing people to enter their information using a fingertip. Results are already better, and the event staffers are relieved of their pen patrols.
Useful links related to this article:
Creative samples from GM Canada
http://www.marketingsherpa.com/cs/gmcanada/study.html
In-Touch Survey Systems – the company that supplied the kiosks and programming:
http://www.intouchsurvey.com
MacLaren McCann Canada - GM Canada's ad agency who handled all creative and many of the logistics around the Kiosk campaign
http://www.maclaren.com/
General Motors Canada
http://www.gmcanada.com
MarketingSherpa.com : Practical News & Case Studies on Internet Advertising, Marketing & PR
November 20, 2005
KIosk Market Research Report Released
VDC Releases new report on the kiosk industry at recent tradeshow.
Thursday, November 17, 2005
By Rick Redding
Optimism Abounds in New Report
Industry Growth Predicted to Approach 20 Percent Through 2007
It�s been seven years since Venture Development Corporation published research on the Interactive Kiosk market. Needless to say, a lot has changed since then.
With its newest kiosk research coming out this month, the 30-year-old Massachusetts-based firm sees investment in self-service and interactive kiosks at its highest level, with more to come.
Among the research company�s initial findings, released at the KioskCom.com Fall Summit in Miami Nov. 9, is that the search is still on for the next great application.
�The search for a killer application is on the forefront of everyone�s mind,� said Bennett Mason, one of VDC�s research analysts. �People are looking for the next one. Industry growth is driven by key indicators.�
The history of electronic self-service, of course, starts with the ATM and continues with airline ticketing kiosks. Self-checkout, photo kiosks and bill payment have helped fuel industry growth in the recent past. Mason mentioned two areas that could significantly contribute to a predicted annual growth rate of 18.8 percent during the next two years.
�I think quick-service restaurants and music downloads are getting a lot of interest,� he said. �With QSRs, there�s a lot of questions about how you sell, how to get to the ownership. For a killer app, you need the perfect storm of user interest and industry interest, like what we experienced with the airlines.�
The interim findings suggest that revenue and unit shipments place North America slightly ahead of Europe in 2005. In an estimated $680 miilion market, with more than 265,000 units, North America represents 50 percent to 55 percent of shipments. Mason said the final numbers may be adjusted.
�The markets are really different. There are a lot of smaller players in Europe, while in the U.S. you have a number of large deployers,� Mason said.
The report acknowledges that the European market has more product innovation, functionality and advanced payment options.
Mason said European projects are more likely to be customized from the ground up, and have more smaller deployments. He added that the rest of the world makes up a small percentage of kiosk shipments.
Another significant finding is VDC�s projected growth by vertical market. VDC has divided the kiosk landscape into four verticals: Retail, Hospitality, Health Care and Government. Not surprisingly, it cites Retail as the largest sector, estimating 46 percent of the overall combined revenue shipments in North America and Europe. The annual growth rate in retail is also highest at 20.4 percent. Still, VDC considers government and health care as "greener field" opportunities, especially in supplying informational kiosks. Health care and Government are much smaller verticals (each below $55 million), but Mason said there are plenty of emerging applications in those markets.
VDC's preliminary results predict annual growth rates of 20.4 percent of Retail, 18.2 percent for Hospitality, 14.0 percent for Health Care and 16.2 percent for Government.
The report�s news for the kiosk industry is significant and encouraging. It predicts increased technology innovation and investment in all facets of the industry.
The full report will be available Nov. 30. For more information on the study, go to www.vdc-corp.com or contact Marc Regberg ([email protected]).
October 15, 2005
Forbes points to kiosks as signs of 'changing marketplace'
The Exponent: Steve Forbes, editor-in-chief of Forbes Magazine and former presidential candidate, was the keynote speaker at the fifth annual Krannert School of Management Leadership Speakers Series, held Oct. 13. Forbes started his speech by mentioning the changing face of the economy. He cited the growing number of kiosks as a sign of our economy's changing environment, naming airport and McDonald's kiosks as examples of the simplification and innovation that results from a changing marketplace. originating news site with full article link
Research: Six Simple Rules For Successful Self-Service
CIO Article on the successful steps to integrate self-service. In the article she iterates/references many points from Francie Mendelsohn of Summit Research (longtime consultancy on kiosks)
Six Simple Rules For Successful Self-Service
You can save money, increase revenues and generate loyalty when you let customers help themselves. But only if you do it right.
BY ALICE DRAGOON
Advertisers
Chances are it's been about 20 years since you've stood in line at your bank to get cash from a teller. ATMs offer such convenience�and are so much more efficient for banks�that no one can fathom going back to the old days. Ever since then, companies have been eager to tap into the free labor pool of customers who can be convinced to help themselves. Through self-service, organizations have been able to reduce labor costs, increase revenue from orders of out-of-stock items or increase the loyalty of customers who appreciate speedier service.
But as surely as you love using ATMs, you've walked away from a kiosk that's confusing or abandoned an unscannable item at the self-checkout line�and some company lost a sale. The reality is that although some self-service projects pay off handsomely, the ROI from such projects can be elusive. Francie Mendelsohn, president of Summit Research Associates, estimates that 15 percent to 20 percent of all self-service kiosk projects ultimately fail. Success with kiosks and self-checkout systems is often tricky to achieve because so many things can go wrong. Such systems won't work if customers have no incentive to use them. If kiosks are too complex, customers get confused and give up in frustration. Sometimes, self-service fails for the simple reason that customers don't know it's an option or are wary of trying it on their own.
American Greetings once spent millions on kiosks that enabled people to design their own cards, only to find that customers weren't willing to pay a premium for their own creativity. Grocery chain Hannaford Bros. fared better, but its first attempt at self-service fizzled. In the late '90s, Hannaford piloted handheld self-checkout scanners in its Scarborough, Maine, store. The few customers who used the scanners loved them, says Hannaford CIO Bill Homa, and tended to spend more. But no more than 11 percent of customers used the tool, so Homa couldn't justify a full rollout. Homa suspected that customers, who were required to sign out a scanner but still had to pay a cashier, found the scanners too much of a bother. So Hannaford turned to the more convenient self-checkout lanes. Today, as much as 28 percent of customers use the service and the ROI is slightly ahead of breakeven.
Companies such as Hannaford that have done well with self-service succeed by following six simple rules, which they derived from their own and others' mistakes. Learn from them, and you can fix what ails your own self-service systems�or even get them right the first time.
Rule #1 Provide a Benefit to Customers
Self-service has to make something faster, cheaper or better for customers, says Sam Israelit, a Bain & Co. partner and retail IT strategy expert. "If it doesn't do one of those three," he says, "you're wasting your money."
For instance, kiosks that the Mayo Clinic once installed in Target stores in Arizona offered consumers little to no value. The kiosks were intended to sell books, newsletters and a CD for kids about anatomy. Yet instead of setting up the kiosk to demonstrate the CD or let consumers swipe their cards to order one, Mayo just displayed the CDs and books on a rack. Meanwhile, the clinic squandered the kiosk screen: Set up to provide health information to customers, it spewed out too much data. The "coughs and colds" entry, for instance, included a 12-page, single-spaced list of over-the-counter and prescription medications. After four months, Mayo Clinic pulled the plug.
On the other hand, airline passengers are willing to use kiosks to avoid long lines. Although a check-in agent will beat a kiosk user in a time trial, kiosks make it possible for multiple simultaneous check-ins, which make for shorter lines. "The time the customer has invested from the time they arrive at the counter to the time they go to the gate is shorter, even though individual transactions can be longer," says Rocky Wiggins, CIO of AirTran Airways. In some cases, even the perception that self-service technology saves time is enough to get customers happily using it. Homa says that customers think Hannaford's self-checkout is speedier, even though cashiers generally scan more than four times as many items a minute as the average customer. "Customers are busy scanning and not waiting," he says, "so it just seems faster."
Rule #2 Make Transactions Intuitive
The simpler the transaction, the easier it's translated into an intuitive self-service process. "The secret of self-service is four words: Don't make me think," Mendelsohn says. "If the interface is confusing, people are not going to stand there and figure it out. They're just gone."
Under pressure to reduce costs, airlines have succeeded at shifting a large chunk of their routine check-in transactions to kiosks. After all, if a passenger just needs a boarding pass, having an agent confirm the flight information and print it adds cost but no value (the average cost of printing boarding passes drops from $3.68 to just 16 cents when customers do it themselves). When US Airways introduced self check-in kiosks in 1999, the goal was to make them so intuitive that they'd be "dead simple," even for people who were not technically savvy, says Mark Kuhns, managing director of marketing and e-commerce. After extensive testing in focus groups, the airline created a process that is still largely in use: Passengers swipe a credit card or loyalty card to identify themselves, confirm their flight information, then choose a seat or confirm a previous seat assignment. Then they're asked if they have any bags to check; if yes, they enter how many. A final screen offers them the option of printing an itinerary. The kiosk then prints a boarding pass and an itinerary. The airline claims that customers without bags to check can complete the entire process in as little as 30 seconds.
Customer-Friendly Kiosks
A well-designed kiosk is easy to use. Francie Mendelsohn, president of Summit Research Associates, has seen enough kiosks to know which features are essential to usability. Here's her list:
� Big buttons. Small touch-screen buttons will foil large fingers.
� Feedback. When you touch a button onscreen, it should "depress" and change color.
� Readability. Dark text on a light background is the most legible.
� Consistency. Give every touch screen the same look and feel. Even slight deviations can confuse users.
� Speed. Have enough bandwidth so that users don't have to wait for transactions to be processed.
� Cleanliness. Choose dark-colored kiosk cabinets to hide finger smudges, or use enclosures made of fingerprint-resistant materials.
� Short screens. Customers prefer not to scroll.
� Clear directions and unambiguous choices. Remember that people are standing up. If it's confusing, they'll walk away.
� Minimal animation. Fancy flashing lights and movement will slow down transactions and annoy customers.
� No annoying sounds. Employees will pull the plug.
To further simplify the process for passengers who don't carry loyalty cards�or who just don't want to pull out their wallets�the airline added a cardless access feature in early 2004. Once customers were allowed to identify themselves by entering their name or flight number on the touch screen, kiosk usage went up 25 percent. Today, kiosks handle 50 percent to 55 percent of all check-ins at US Airways, in line with the industry average.
When companies add complexity to their transactions, they run the risk of confusing�or worse, losing�customers. Complexity increases the time customers need to spend at the kiosk, as well as the likelihood that they'll get stuck and need to ask for help. At AirTran, check-in kiosks from Kinetics are programmed to refer nonroutine transactions to agents. For instance, if two passengers with the same last name and first initial are leaving from the same airport, the kiosk will ask for the destination city. If that tiebreaker doesn't identify the person, the kiosk will prompt for the travel confirmation number. But if the passenger doesn't have it, she will be instructed to see an agent, who can determine her identity more quickly and free up the kiosk for the next customer.
"We don't try to handle all the minute, complex scenarios that may come about," says Wiggins. "If [your] target is to handle 100 percent of them, you will be in development forever and will overcomplicate the process for most of your customers."
Hilton had unsuccessfully piloted a self check-in kiosk in its hotels in 1997. Before trying again in 2004, Robert Machen, vice president of corporate and brand solutions, and Chuck Scoggins, vice president of OnQ Customer Solutions (OnQ is Hilton's integrated technology platform), made simplicity their guiding principle. "The fewer things on the screen, the better," says Machen. Hilton's kiosk replicates the steps of the familiar hotel check-in process so that the self-service version seems logical to guests.
The new kiosks have proven to be effective line-busters. One day in March 2004, the 1,544-room Chicago Hilton & Towers was expecting 1,100 arrivals. Although that many arrivals would normally lead to significant lines at peak check-in times, says Machen, the kiosks processed 33 percent of the day's check-ins, and there was no line at the front desk all day. He adds that kiosks have also prevented lines in similar situations at Hilton's other large hotels.
Rule #3 Show Customers What to Do
Ideally kiosks should be so intuitive that customers can figure out how to use them on their own. But just because you're offering self-service doesn't mean you should leave customers to fend entirely for themselves, especially when you launch a new system. Machen and Scoggins say that one of the main reasons Hilton's first kiosksdidn't take off was that the hotelier didn't do enough to educate guests or help them when they ran into trouble. "Our original approach with kiosks in 1997 was, 'This is self-service. It should be like an ATM, where you set it out and it works 100 percent of the time,'" recalls Machen.
This time around, Hilton is going with an assisted self-service model, making sure there's always a service agent available to teach guests how to use the kiosks and help if they run into problems. Some agents are equipped with handheld devices that give them full access to front-desk systems. If they can't resolve an issue, they'll make sure the guest gets expedited service there. In addition, the agents also serve as greeters and are accessible to guests who need directions or have questions.
Stores using self-checkouts typically have one person manning four self-service lanes. At the Pittsburgh-based Giant Eagle grocery chain, a paystation attendant monitors the self-checkout, helps customers with problems and watches for fraud. In some cases, a bagger is also assigned, according to CIO Russ Ross. With such assistance, as much as 25 percent of customers use self-checkouts, accounting for 20 percent of sales. Even when staff are available to assist customers with self-checkout, the savings on checkout labor can still run from 40 percent to 60 percent, says Israelit.
Because employees play such a critical role in training customers to use self-service technology, it's essential to get their buy-in up front. "If they see it as a threat, the kiosk is going to fail," says Mendelsohn. Instead, they need to see self-service as a way to help them do their jobs more effectively. At AirTran, Wiggins says, the airline convinced employees to get behind the technology by giving them self-service targets to shoot for.
At the same time, don't force self-service on customers. Self-service can shortchange�and alienate�those who genuinely need personal attention. Israelit advises that high-value clients and customers with complex problems should never be foisted off onto a kiosk. "Self-checkout at Tiffany's is not going to work."
Rule #4 Choose the Right Locations
The location of a kiosk can have a lot to do with its success. Hilton has found that from 20 percent to 30 percent of guests use self check-in at hotels near airports compared with 10 to 12 percent of guests overall. The company concludes that people who fly are accustomed to using kiosks and like to have that option at their hotel.
Following this logic, Hilton has installed a kiosk in the Honolulu airport so that guests can check themselves in while they wait for their baggage. Hilton's IT department monitors and supports that kiosk remotely over the Web, as it would any other kiosk. (Remote monitoring software that pings kiosks to make sure they're up and running is essential, notes Israelit: You can't count on someone like the cashier in a convenience store to tell you your kiosk is broken.) Someone from Hilton also makes sure the Honolulu airport kiosk is stocked with paper and room key cards.
Where a kiosk is located inside a hotel, airport or shop also matters. You have to put kiosks where people are most likely to want to use them. "If you've got 400 people in a conference room," says Machen, "you know they all need to check out and head to the airport, so you can put a kiosk right in front of the conference area." But because customer needs or business needs may change, kiosks must be easy to move. Hilton's 1997 kiosks were so large and cumbersome that once installed, they couldn't be moved, and this fact may have contributed to their poor usage.
Kiosks are more streamlined now, but it's still expensive to pull cables for a new location. So this time, Hilton went wireless. Likewise, AirTran's Wiggins prefers secure, wireless kiosks because they are cheaper and provide greater flexibility. "Airports are notorious for saying, 'Move from this ticket counter location to that one,'" he says. Sometimes AirTran doesn't even have to move a wireless access point to set up kiosks at the new location. And if volume justifies installing extra kiosks, it's just a matter of getting them delivered and assembled.
Wherever you locate a kiosk, make sure customers can find it easily. When the U.S. Postal Service rolled out its Automated Postal Center (APC) kiosks last year, it needed to inform customers that they could use it to buy stamps and post packages. The USPS drew attention to the kiosks with bright yellow footprints on the floor, as well as large yellow circles with red arrows that point to the APCs and say things like, "New. Buy Stamps. Automated Postal Center."
Rule #5 Beware of Legacy Systems
Investing in self-service technology can be a bad idea if your technology is outdated or if the data needed for self-service transactions isn't integrated. "If you work largely off legacy systems, [integration] can be a significant challenge," says Israelit. "It may require you to upgrade overall systems, and if so, the economics may not make sense."
Hilton's first attempt to introduce kiosks failed in part because of integration problems. The kiosks were connected to Hilton's proprietary property management system, which stores information on reservations and occupancy, through what Machen calls "archaic" serial interfaces. As a result, the kiosks sometimes had trouble communicating with the property system and had limited ability to resolve reservation or room selection issues. Because of this, more than 30 percent of the time customers were forced back to the check-in line. Hilton shut down the pilot within a year. Since then, Scoggins and his team have deployed a Web services layer on top of the property system, making it possible to create a reliable interface to the kiosks using Web-based transactions. They also upgraded the property system to separate business rules from the user interface so that kiosks can access the business rules from the property system and IT is spared the work of recreating them.
To make integration easier, Israelit advises, also use the same content management, logistics or product information systems you use for conventional transactions rather than create extra systems to manage kiosk content.
Rule #6 Take a Test-Drive
U.S. Postal Service (USPS) CTO Robert Otto recalls when customers first began using the postal service's APC kiosks, and it was possible for them to get their fingers caught in the heavy door to the package drop. This problem was identified during the pilot phase and the USPS modified the door before rolling out to its first 2,500 locations.
Having pilots in several locations also gave the USPS a chance to test its processes for supporting the system. Staff learned, for instance, that they needed to rethink the process of pushing virus protection to the kiosks. Because the kiosks are located in post office lobbies that are open around the clock, Otto's team could potentially cause delays for users whenever they installed patches or updates. Piloting allowed the team to figure out the best way to manage that process in order to minimize its impact on customers. The pilots also helped the USPS fine-tune the services the APCs offered. "Initially we let customers buy one stamp," says George Wright, manager of finance and administration systems. "But we found out that the cost of the transaction was greater than the cost of the stamp." Today, APCs sell stamps only in multiples.
The time spent fine-tuning the kiosks paid off. A month after the first ones were deployed, a survey found that 98 percent of customers who used them felt that the APC was easy to use, 100 percent said they'd use it again and 98 percent indicated they'd use it after normal office hours. To date, the USPS has generated more than $200 million in revenue from the APCs and has reduced staffing at post office counters enough to save $12 million during FY04.
Ultimately, success with self-service comes down to understanding your customers and designing systems that meet their needs as well as yours. If they value such benefits as shorter lines or more control over their transactions, letting customers serve themselves could benefit your company as well.
August 04, 2005
Analysis: PRN Sale to Thomson and Digital Signage Market
From: Dynamic Digital Signage and Interactive Kiosks Journal -- in case you haven't heard by now, digital signage behemoth PRN (the firm responsible for the Wal-Mart in-store television network) is being acquired by media conglomerate Thomson Worldwide to the tune of around $285M.
Throw that in with Mercury Online's recent sale to 3M and the successful IPO of Focus Media, and I think July 2005 may have been the most eventful month ever for the dynamic digital signage industry, at least in terms of M&A and the capital markets. But even more interesting than the news of the acquisition itself are the insights that we can gain by looking at the two companies and the possible drivers behind the deal.
First off, $285 million is a lot of money. On first glance, it might not seem like that much for a company that's doing $100M in sales, which PRN is. And it's not really that much for a rapidly growing company, which PRN is. And it's not particularly much for the largest profitable company in a burgeoning industry, which again, PRN is. So what's the story? Where did the Thomson execs come up with this number, and what made PRN say yes?
Well, part of the story is that while PRN's revenues have been big, their margins (historically) weren't. In fact, if you look back at my May 2004 analysis of PRN's S-1 filings, they only made about 8% net margins on their $112M of revenue in 2003, which translates to around $10M in net income. So at roughly 29x earnings, the $285M number seems pretty respectable (for reference, stocks in the S&P 500 historically trade at around 13-14x earnings, though in the last fifteen years or so that number has averaged closer to 22-23x).
Another thing to note is that while PRN has run perhaps the most highly visible experiment in digital retailing, it isn't really a technology company. It's a content creation and marketing company. In fact, PRN uses a combination of off-the-shelf and custom applications to run its digital sign network, and has switched technologies at least once (that I know of) during the course of its deployments. They spend the most money and employ the most people in their ad sales and content production departments, which have to re-sell space and re-create content month after month. In light of that, it's pretty amazing that they were able to get as much as they were for the company, since firms who derive a significant portion of revenues from creative services and other consulting activitiestypically don't fetch large earnings multiples.
Next, note this paragraph taken from their 2004 S-1:
We are highly dependent on our relationship with Wal-Mart Stores, Inc., our largest retailer relationship, and we expect our reliance on this relationship to continue for the foreseeable future. Our dependence on Wal-Mart consists of two principal elements: (1) revenues earned under contracts entered into directly with Wal-Mart for media management services, advertising airtime and creative services and (2) revenues earned under contracts with third-party advertisers purchasing airtime or creative services for the PRN Network in Wal-Mart stores. Revenues from contracts entered into directly with Wal-Mart accounted for 35% of our total revenues for the year ended December 31, 2003 and 37% of our total revenues for the three months ended March 31, 2004. Revenues from contracts entered into with third-party advertisers purchasing airtime or creative services for the PRN Network in Wal-Mart stores accounted for an additional 54% of our total revenues for the year ended December 31, 2003 and 50% of our total revenues for the three months ended March 31, 2004.
So in 2003, 89% of PRN's revenue came from Wal-Mart related activities, with that number probably reduced slightly in 2004. I know that PRN has signed deals with a number of supermarket chains in the past 12 months, but in reality, the Wal-Mart deal will continue to represent a very sizable chunk of PRN's revenues for the foreseeable future. Again, in light of that, it's amazing that they were able to sell for as much cash as they did.
Now, as for why they would want to sell right now, that's perhaps the most interesting question. I'd like to posit one theory myself, and I'd love to hear any thoughts that you might have. My theory goes something like this: we know that PRN has been looking to retrofit the Wal-Mart network with new technologies, like plasma screens with content targeted to each area within the store (rather than the current one-channel-fits-all approach). Let's assume that they can purchase plasma or LCD screens for $1,000 (and let's be honest: if you're purchasing 60,000 of them, you're going to find some economies of scale). Additionally, let's conservatively estimate that installing the screens, retrofitting the cabling to handle VGA signals, and installing new head-end equipment to play the higher definition content and/or additional channels also works out to $1,000 per screen. Now let's assume that they install 20 plasmas or LCDs per store, and there are around 3,000 Wal-Marts. That comes out to $40,000 per store, or a total of $120,000,000. That is a lot of cash to lay out for network upgrades that will provide unknown benefits and uncertain incremental revenue. But if Wal-Mart demands it, and they still drive somewhere in the range of 75-80% of PRN's revenues, then PRN is suddenly very motivated to find a way to deliver. I doubt very much that a bank would lend PRN that much money for what can only be described as a risky business maneuver, so now PRN needs to look for more creative sources of funding. In comes Thomson with a large amount of cash, and the rest, as they say, is history.
Read Rest of Story on Dynamic Digital Signage and Interactive Kiosks Journal
May 25, 2005
Financial Services to Grocers and C-Stores
Convenience and grocery stores are in trouble. Long-standing revenue streams like cigarettes are disappearing in a puff of smoke. Intense pricing pressure from Wal-Mart has flattened margins for the foreseeable future.
An aging store asset portfolio drains available working capital. And the channels have blurred � with Starbucks coffee at Safeway and gasoline at Wal-Mart.
Convenience and grocery executives are desperately looking for new growth drivers. And smartly, they�re looking beyond physical products � you can only stock the shelves with so much stuff � and they�re finding success with services.
The success convenience and grocery chains are having with prepaid wireless has led them to look for other services beyond prepaid and to evaluate the consumers who are purchasing prepaid phones and refill. These chains are finding a plethora of deliverable services which, like prepaid wireless, are targeted toward the unbanked market � people who through choice or necessity manage their finances outside of the traditional banking system. Some call this activity �fringe banking.�
The unbanked population, estimated at over 40 million strong, or over 30 percent of the U.S. population, is made up primarily of teens and young adults, minorities and the working poor. They�re already shopping in convenience and grocery locations, yet these locations have not offered the services they need in order to manage and access their money, forcing them to make special trips to outlets outside of their daily routine.
Services expand
Convenience and grocery stores will now become �banks� for the unbanked. They�ll seek to offer point-of-sale or kiosk-driven services, which will allow unbanked customers to manage their money, pay their bills, purchase and consume products and services, and make their lives a bit simpler.
Prepaid wireless is one service already offered at many of these stores. This market has exploded from $4.5 billion in 2000 to over $23 billion in 2004 � driven by youth, minorities and unbanked customers. Another service, prepaid debit cards, is currently a $600 million market. The Pelorus Group expects it to grow to over $5 billion by 2007. Next Estate Communications reports that 65 percent of prepaid debit users are under the age of 35 years.
Payroll check cashing can also be offered. The Financial Service Centers of America (FiSCA) reports that this $60 billion industry processes over 180 million checks a year, growing 10 percent annually. Walk-up bill payment would be another convenience for the unbanked. Checkfree, the online bill-payment service, reports that 20 percent of American households regularly pay their bills in person.
Offering money transfer service can be lucrative for convenience and grocery stores. Celent expects the global money transfer market to surpass $170 billion in 2006. InterAmerican Bank reports that over 60 percent of foreign-born U.S. Latino adults send money back home regularly.
Retailers look for partners
Overburdened convenience and grocery merchants will look to one-stop full-service distributors to carry the load � bringing in the offers, enabling the transactions and developing the signage and display. For these distributors, banking services would allow them to establish deep relationships with the merchant from a product portfolio and technology perspective and would enable them to cash in for years to come.
Distributors of prepaid telecom have been playing a key role in the U.S. prepaid supply chain � securing the locations, deploying the delivery technology, communicating the offer and enabling the transaction. But margins are getting squeezed; many of the best locations have been secured, competition is fierce and consolidation is rife. The addition of new revenue-driving products and services to the portfolio is crucial.
Offerings that appeal to the same consumer base as prepaid telecom, utilizing the same point-of-sale or kiosk-based delivery technology, make fringe banking, or banks for the unbanked, a natural for distributors to take on and for retailers to migrate toward.
To be successful in this space, distributors will need to:
� develop the relationships with the necessary product and service providers to form the comprehensive bank for the unbanked offering
� educate their retail partners as to the opportunity and the requirements
� create the point-of-sale and/or kiosk delivery network necessary to successfully deliver the offering
� design clear, concise and relevant marketing communications inside and outside the store to drive adoption and demand
� develop a deep and continual understanding of the unbanked consumer, including who they are, what they need, how they want it delivered and how to reach them
Achieving critical mass
This year promises to be the year fringe banking breaks out. Circle K and 7-Eleven are rolling out check-cashing services to all stores. Stored value gift and debit cards are all the rage. Prepaid wireless continues to explode. Kiosks and multiapplication point-of-sale devices make product delivery possible. All of this is happening while the nation sees a continued explosion in Hispanic population, an increase in population living below the poverty level and a reduction in the number of traditional banking outlets.
Retailers, distributors, processors and product and service providers are all taking note, and many will develop a sense of urgency in 2005 to win in this space, to prosper and to survive. Will you?
The author is president of Tefisto Partners, a consultancy focused on the stored value and fringe banking space. He can be contacted at (602) 750-8055 or visit the company website at www.tefistopartners.com.
May 18, 2005
Self-service Scorecard
The Allen Bonde Group announces their awards for self-service portals such as Broadvision, KANA, Siebel and others. The consulting group does quote some kiosk statistics for check-in and for photo kiosks and even defines self-service in the general sense. It still seems a bit overstated though for that sector to say it is all of self-service though. Historically the call-in software people have always done that though.
(PRWEB) - Framingham, MA (PRWEB) May 17, 2005 -- Allen Bonde Group (ABG), Inc., a strategic advisory firm recognized as the leading authority on self-service applications and market trends, has released its latest annual rankings of the top self service software providers. The 2005 ABG Self Service Vendor Scorecard evaluates and ranks vendors in four categories and nearly 20 dimensions including "Brand," "Partners," "Technology," and "Delivery." In addition, for 2005 "momentum" and "attractor" ratings have been computed to identify specific vendors to watch over the next 12 months.
[-50325]
Based on ABG's ongoing coverage of over 150 vendors in several key market sectors, studies of industry-specific technology adoption and requirements, and proprietary scoring models, ABG's Vendor Scorecards are invaluable to organizations performing vendor selection, vendors looking to understand competitive points of differentiation, and investors looking for trends and breakout opportunities. Highlights from this analysis have been presented at the recent SSPA Best Practices Conference and will be included in upcoming sessions at the premiere of DCI's Self Service Conference in Boston in early June.
New Rankings
For 2005, ABG will announce the top 20 self service vendors on a new site, SelfServiceScorecard.com, which has been developed as a one-stop resource for those evaluating self service solutions. Vendors are ranked by total score, and grouped into "Leaders," "Top 10 Key Players," and "Specialists" categories. In addition, vendors with the top Brand, Partners, Technology, Delivery, momentum, and attractor scores have been identified.
Results from the 2005 ABG Self Service Vendor Scorecard include:
- Two vendors have emerged from the pack to achieve greater than 16.0 out of a total possible score of 20.0: RightNow Technologies (Brand = 4.5; Partners = 4.0; Technology = 3.5; Delivery = 5.0) and Knova Software (Brand = 4.0; Partners = 4.0; Technology = 4.5; Delivery = 4.0). These two have been identified as the current Leaders in this marketplace.
- In addition to these two vendors, eight vendors score higher than 14.0 out of 20.0, and make up the remainder of ABG's Top 10 Key Players (in alphabetical order): ATG, BroadVision, InQuira, iPhrase, Kaidara, KANA, SafeHarbor and Siebel's Self Service division (formerly edocs).
- The "momentum" rating is a measure of a company's performance relative to its reputation. A score greater than 1.00 indicates a vendor who is performing well but may be "a hidden jewel." SafeHarbor has the top momentum rating among Top 10 Players, while RightAnswers has the top momentum rating among Specialists.
- The "attractor" rating is a measure of a company's functional breadth and depth compared to its existing channel and ecosystem. A score greater than 1.00 indicates significant upside for growth or a vendor who has built out significant technological capabilities and may be attractive as a partner. Kaidara has the top attractor rating among Top 10 Players, while Jive Software and noHold have the top attractor ratings among Specialists.
The Launch of SelfServiceScorecard.com
Coinciding with the release of ABG's 2005 rankings, the company has launched a new Web site with the full scorecard rankings, as well as short vendor profiles, links to articles, case studies and a collection of market trends and data points regarding self service adoption and spending. The free site is located at http://www.SelfServiceScorecard.com. Over time, the site will be expanded to include new features like forums and vendor directories. "The self service market is growing and becoming more defined, yet remains highly dynamic, and even confusing at times," stated Rudy Minar, managing director at ABG, Inc. "2005 will continue to be a year when the leaders separate themselves from the rest of the pack. With our scorecard we aim to provide a unique, multidisciplinary perspective on the top players and predict who will emerge in the next 12 months. At the same time, releasing our study online ensures that unlike a printed report, anyone planning to implement self service solutions has access to current and relevant vendor and market data."
May 16, 2005
Acquisitions in Self-Service Kiosk
NCR Corporation (NYSE: NCR) today announced that it has acquired InfoAmerica, a privately held company and leading provider of self-service solutions for the quick-service restaurant industry.
link to press release
In the year 2014, along comes Googlezon
Interesting 8 minute movie on the future of information. EPIC, or the evolving personalized information construct, is unleashed by Googlezon. Robin Sloan looks into the future of digital media and participatory
May 13, 2005
7-Eleven Transforming Technology
7-Eleven is transforming itself into the JetBlue of the convenience store industry. With an imaginative assortment of fresh foods and a cache of financial and tech-savvy services that belie its low prices, 7-Eleven is emerging as the industry�s cheap-chic hybrid -- somewhere between the local quick mart and Starbucks.
Just as JetBlue made it fun to fly on a shoestring, 7-Eleven is using its size, scalability and national buying clout to redefine convenience with panache and panini sandwiches. Over the last few years, the ubiquitous convenience retailer has extended its image beyond Slurpees and six-packs to appeal to a broader demographic, including businesspeople and women. And, with Vcom kiosks installed in more than 1,000 units, the once-dowdy corner store now represents a distribution opportunity for an ever-growing array of services and digital products.
This ambitious makeover is powered by technology systems that, analysts say, rival those of Wal-Mart. Last year alone, the Dallas-based chain invested $93 million in technology, with a majority of the spend tied to enhancing its proprietary retail information system. Though not all stores have been aesthetically overhauled, the business model has been transformed and the tech underpinnings are in place chainwide.
What�s the payoff?
Today, store managers at each of 7-Eleven�s 5,800 units in the United States and Canada can re-order fresh foods in the morning and replenish their shelves that night. Using the company�s sophisticated systems, store managers have a window into what�s selling, item-by-item and hour-by-hour. They can monitor customers� buying patterns, react to changing weather forecasts and capitalize on neighborhood happenings.
Backed by a 24-hour supply chain distribution model, it�s now entirely possible for a store manager who finds out on Thursday about the local high school�s �big game� to have enough soda and hot dogs to satisfy the revelers by kick-off on Friday night.
And that�s just one example of the role information systems play in advancing 7-Eleven�s �convenience through technology� strategy. The company uses technology to strengthen its relationships with suppliers and help them predict demand for their products nationwide.
Merchandising gurus mine the piles of data amassed in its enterprise warehouse hoping to spot emerging trends and spark ideas for new product launches. And 7-Eleven is in a league of its own when it comes to local computer-based training of managers and franchisees on operations, ordering, forecasting and merchandising techniques.
�They have a culture of innovation,� says Jim Crawford, vice president at Columbus, Ohio-based Retail Forward. �If something works they roll it out; if it doesn�t they move on. No one comes close when it comes to exploring the notion of convenience and service through technology.�
With a zealous devotion to research and a keen sense of the value of entrepreneurial sagacity, 7-Eleven is rushing headlong toward the Holy Grail of retailing, precisely wedding customer demand with supply and weeding out slow-moving items in favor of fast-moving sku�s. And industry watchers -- from Wall Street analysts to competitive convenience wannabe�s -- are paying attention.
7-Eleven rising
Having just completed its 34th consecutive quarter of same-store sales increases, 7-Eleven executives believe they�re on a roll. Though the company still has some debt from a 1987 leveraged buyout (and a pre-packaged Chapter 11 bankruptcy three years later), executives say the overall balance sheet is healthy and stable -- showing improvements in cash flow and earnings along with steady advances in gross profit margin. Last year the stores rang up revenues of $12.1 billion, a 12 percent gain over 2003.
Executives at 7-Eleven are upbeat about the prospects for future growth based on adding fresh foods and delivering enhanced digital services. And they keep on adding locations.
The company recently opened its 28,000th 7-Eleven store worldwide. Some 1,700 new stores opened around the globe last year alone. With the U.S. arm of the company now implementing best practices from stores operating in Japan, Taiwan and Thailand and restructuring its business model to take advantage of that learning, CEO Jim Keyes is convinced that his team is well on the way to transforming 7-Eleven from a good business to a great one.
�Technology has allowed us to take back our destiny,� Keyes was quoted as saying earlier this year. Indeed, technology has enabled 7-Eleven to transform its business, and the company is no doubt staking its future on technology. Still, executives are vigilant about costs and spending and underscore the �tech for business sake� imperative.
Steering the tech transformation is Keith Morrow, CIO and vice president of information systems for 7-Eleven. Morrow has made significant progress since joining the company in January 2001, positioning 7-Eleven to leapfrog industry leaders on the tech front and winning the admiration of some of the industry�s largest suppliers.
Morrow recalled the meeting he had with Keyes on his first day with the company and the three goals that were set for IT: automate and simplify the stores through technology; leverage technology both in and out of the stores to improve customer service and the customer experience; and deliver quality information at the moment of truth across the different areas of the business to enable fact-based decision-making.
7-Eleven�s Retail Information System collects data from POS terminals and transmits it in real time to an Oracle data warehouse. Using analytics, the data is mined for evidence about customer preference, pricing and new product launches. It also provides store managers with daily, weekly and monthly sales tallies upon which to base their orders.
While employing item-by-item inventory management goes a long way toward improving in-stock positions on basics and monitoring high-potential items, it also allows entrepreneurial-minded operators to tailor assortments in an effort to maximize sales.
�It�s about giving those in the stores the ability to make decisions rather than having decisions made for them by someone off in an ivory tower,� Morrow says. �They�re the ones listening and interacting with the customer. Our goal is to provide the information they need at the time they need it to make decisions store by store and item by item.�
Efforts to leverage technology inside 7-Eleven stores and within the enterprise have been manifested in improved payment technologies, including signature capture, as well as efforts made to speed up transactions. Last year the company overhauled its back-office server architecture and most of the infrastructure in the stores with the ultimate goal of speeding up various processes and giving store operators the opportunity to spend more time interacting with customers.
Tom Madigan, Oracle�s vice president of the retail industry, has been working with 7-Eleven for nearly seven years. He describes the company�s business and IT transformation as �exponential. They have been able to simplify, standardize and globalize business processes and best practices across the organization, and they�ve done it without ever compromising their focus on the customer, the brand and the product.�
Model market program
A key program created by 7-Eleven is called the model market. Intended to assure that store managers understand how to use the data that�s now at their fingertips and are comfortable making it part of their daily routine, the program consists of extensive training in store operations, ordering, forecasting and merchandising techniques.
�They go right to the back office, sign on and take the training needed for a new task,� Morrow says. �Afterward, they are ready to get back on the job.� Morrow reports that sales, gross profit, and inventory management have improved at stores where the model market program has been implemented.
David Gruehn, Microsoft�s industry manager for retail and hospitality, has high praise for Morrow and 7-Eleven. �They want to take convenience to the next level and they have a keen understanding of both the customer and retail technology,� he says. �Morrow gets what�s coming next. We don�t have to convince him that things are changing; if it�s right for 7-Eleven he�ll go after it.� In particular, Gruehn cites Morrow�s responsiveness to electronic payment solutions, vendor collaboration and hand-held inventory management devices.
Another project that has commanded a sizable share of Morrow�s attention is the growth of the services category, including pre-paid cards, lottery sales, ATM services and money orders. Guided by the light of convenience, 7-Eleven�s Vcom self-service financial kiosks, designed and built by NCR, provide consumers check-cashing, money orders, funds transfer and bill payment capabilities, as well as the ability to purchase and reload 7-Eleven�s E-CASH pre-paid MasterCard.
Deploying digital delivery
Earlier this year, the company developed a co-marketing relationship with H&R Block that allows customers to cash their refund-anticipation loan checks at Vcom kiosks.
Exciting as this is, it�s what lies ahead that has the potential to delight shoppers and shareholders alike. With this network in place, the opportunity to explore the digital delivery of other products could expand exponentially. Executives are toying with digital music downloads � the likes of which could rival the nation�s largest electronics retailers.
�Keith is the type of CEO who�s always challenging vendors to bring meaningful solutions to business issues and customer needs, rather than tech for tech�s sake,� says Nelson Gomez, NCR�s vice president of sales for food, drug and convenience stores. �He does a great job of driving quantifiable ROI to every project he touches.�
Interview with VISA
Contactless News does nice interview with Visa.
Main questions: (1) Can contactless technology transcend the early hype and establish itself as a viable payment tool? And (2) Where the heck is Visa?
story link
May 12, 2005
Digitizing Home Depot
Interview on CIO Today with Bob DeRodes of Home Depot on digitizing Home Depot... "There are other human use issues for us to consider as well. For example, one of our biggest challenges is where to put kiosks and other customer-oriented technology in the store where it won't get smashed by a customer with a big cart or an associate with a fork-lift.."
full story on CIO Today
April 28, 2005
Kiosk Statistics
Self-service and self-checkout is growing in multiple markets, with Frost & Sullivan noting sales of interactive kiosks to have totaled USD 492 million globally in 2004, up 6 per cent on 2003 totals. Kiosk sales are predicted to see an 8.1 per cent CAGR from 2003 to 2010, with IDC estimating IT spending in vertical industries by corporations worldwide to grow from USD 965 billion in 2004, to USD 1.24 trillion by 2008.
Global Kiosk Sales Totaled USD 492 Bn In 2004
Investors.com
Apr 26 2005 : Self-service and self-checkout is growing in multiple markets, with Frost & Sullivan noting sales of interactive kiosks to have totaled USD 492 million globally in 2004, up 6 per cent on 2003 totals. Kiosk sales are predicted to see an 8.1 per cent CAGR from 2003 to 2010, with IDC estimating IT spending in vertical industries by corporations worldwide to grow from USD 965 billion in 2004, to USD 1.24 trillion by 2008. This 6 per cent CAGR growth will be driven by retail systems including self-checkout and photo kiosks, which accounted for 25 per cent of global kiosk sales in 2004.
Tourism, transportation and entertainment was the next-biggest sales category for kiosks in 2004, when the US, the biggest market for self-checkouts, accounted for 66 per cent of sales, Europe for 21 per cent and Asia-Pacific for 9 per cent, according to Frost & Sullivan. US retail chain Wal-Mart has self-checkouts at 1,325 of its 3,159 stores, while Home Depot uses DIY checkout at over 1,000 of its 1,900 stores. Up to half of Home Depot�s sales are handled by self-checkouts and the retailer believes its floor staff have 40 additional hours per week for customer assistance.
Banking and finance, government, retail and restaurants are the main vertical markets in which interactive kiosks are deployed, with banking representing 11.9 per cent of the total, according to IDC. ATMs and kiosks are the most obvious self-service channel for banks to deploy, with value-added services such as prepaid recharge and event ticketing becoming a standard feature. For restaurants, payment card-enabled touch-screen kiosks now enable customers to make orders that are accessible in a restaurant�s centralized orders, inventory and revenue-tracking program.
ePaynews.com - the payment news and resource Center
April 26, 2005
Airport Internet Kiosks by ZD Net
Airport kiosks not showing Windows� best hand by ZDNet's David Berlind -- Of the many character roles played by Windows, the one that probably gets the least coverage is its use in public as the underlying technology behind embedded applications such as kiosks and information panels. Earlier this year, I interviewed a designer of embedded systems who, until then had been unwavering in using Windows as his [...]
Airport kiosks not showing Windows� best hand by ZDNet's David Berlind
4/25/2005
Airport kiosks not showing Windows� best hand
-Posted by David Berlind @ 2:07 pm
Of the many character roles played by Windows, the one that probably gets the least coverage is its use in public as the underlying technology behind embedded applications such as kiosks and information panels. Earlier this year, I interviewed a designer of embedded systems who, until then had been unwavering in using Windows as his choice for embedded operating systems. But, after years of dedication to Windows, he was considering alternatives. Until that interview, almost all of my exposure to embedded Windows, or something like it, was through public Web terminals and headless display. If you travel like me, you know what I�m talking about. With many such applications, it�s sometimes difficult if not impossible to tell what the underlying OS is because users typically have no access to the OS (as well it should be with embedded OSes). But occasionally, you�d see one of three tell-tale signs that Windows was in use under the hood.
The first of these are the signature window-boxes, title-bars, and controls that are fairly unique to Winapps. Many embedded applications hide these "Windows identifiers" (and rightfully so). But sometimes, they�re unavoidable as is the case in the second tell-tale sign: a Windows error message. In public places, I see these so often. Every time I see one, I wish I had a digital camera with me. It�s not that the error is always the fault of Windows (it�s not). It�s that any Windows-based kiosk that�s disabled as a result of a bug is more than just a bad advertisement for the kiosk provider. It looks bad for the establishment that allowed that provider on premises (usually as the exclusive kiosk provider) as well as for Microsoft. It makes me wonder why such systems (at least the ones I keep seeing) aren�t more self-aware of their state and capable on some level of self-repair (or at least an automatic reboot). Or, why isn�t someone monitoring a console from somewhere afar where they can detect malfunctioning systems and either manually do an over-the-wire reboot, an over-the-wire app/os reprovisioning of the system (surely, the blade people keep telling us how easy this is to do), or simply disable the system temporarily instead of advertising that the system is screwed and it�s just going to be left there for all passers-by to observe. Even in the case of terminals with a keyboard and pointing device or kiosks (like an Internet terminal), it probably couldn�t hurt to have a big red publicly accessible reboot button in case something goes wrong (with instructions like "PRESS HERE IN CASE SYSTEM STOPS WORKING").
Last week, while vacationing to Mexico, I happen to have my camera with me. The first time I noticed a problem, my family and I were making a flight connection in Houston on the way to our final destination in Mexico. The error dialog appeared over some sort of digital information panel that was on display in multiple locations throughout the airport. Everywhere I looked, I saw the same error message, obstructing the view of the information behind it. That was over a week ago. But we were in such a hurry, that I didn�t have time to get out the digital camera and take the shot. Suprisingly however, eight days later, on the way back, a bug (I�m not sure if it was the same one) was on prominent display on the same information panels throughout the airport (see photo below). In this case, the dialog, which is hard to see clearly in my photo, is a "The program is not responding" dialog and the offending program according to the dialog�s title bar is HtmlDve-Multi.e. Google turned up nothing on this.
houstonairport.jpg
The tell tale signs that it was Windows weren�t just the familiar Windows accoutrements, but also the instructions "To return to Windows and check the status of the program, click Cancel." This of course is a pretty silly message to display on an information panel that has no way for users to perform a click � a sign to me that, whether it�s the fault of Microsoft, the application provider, or the application deployer, somewhere, someone is doing a really bad job of adapting a desktop or server-based operating environment to a more public environment. At this point, open source advocates will probably chime in to remind everybody that open source operating systems like Linux are more well-suited to the task because of how such error dialogs can be more easily customized through the sort of software re-engineering that open source licensing permits.
I caught a similar situation in the airport at Ixtapa, Mexico where, as you can see by the photo below, I was standing in front of a credit-card operated Windows-based Internet access terminal that is based on Windows 2000 (you can see the credit card slot off to the right). The problem? The system seemed to have hung while Windows was starting up. There was no big red button. Just a display that showed the system sitting there having advanced about half-way through it�s startup sequence. Had it been working, I would have used it to get my first update on what was going on in the real world after having been incommunicado for a week. Unfortunately, that Internet Access Provider would not be ringing the cash register with me.
winkioskbug.jpg
Another tell-tale sign that Windows is under the hood � one that I don�t see as much of anymore � is the infamous Window Blue Screen of Death (BSOD). I guess that�s a good sign that the BSOD isn�t as common as it once was. Lest I single Windows out as a common denominator to all the problems I�ve seen, it�s not. Last fall, while dropping my son off at Logan Airport for a trip to Florida, I spotted a string of terminals that were obviously having problems, in their pre-OS load mode, contacting a remote boot server. What struck me as being odd was the plethora of diagnostic information that appeared on the screen including the MAC (physical layer) addresses of terminals as well as enough information to determine what local IP subnet they were on. While I�m not an expert in airport security (feel free to comment below if you can expound), this just seemed to me to be the sort of information about an airport�s digital infrastructure that the airport would rather not have on public display.
To be fair, more of these terminals and kiosks are probably in good working condition than not. In many cases, because of the way the underlying OS is so nicely concealed, the users will never know with some of them that Windows is under the hood providing the reliable service. Also, Linux is undoubtedly the driving force behind many "public applications" as well and has probably had its fair share of failures in public environments. It�s just that I�ve never had the privilege of seeing such an occurance.
Editors Note: the kiosks pictured at the top of the story are powered by Linux and are made by KIS.
April 25, 2005
Self-service trends
Self-service kiosks and self-checkout are among the hottest products in the integrated systems industry group. The sector includes companies making specialized computer systems for a host of vertical markets, such as banking and finance, government, broadcasting, retail and restaurants.
New Technology Checks Out
Fri Apr 22, 7:00 PM ET
Patrick Seitz
The self-service revolution that started with automated teller machines and pay-at-the-pump gas stations has spread to the retail, travel and hospitality industries.
Grocery stores, hotels and restaurants increasingly are installing self-service stations. And that's ringing up sales for integrated systems vendors like NCR (NYSE:NCR - News) and Radiant Systems (NasdaqNM:RADS - News).
Self-service kiosks and self-checkout are among the hottest products in the integrated systems industry group. The sector includes companies making specialized computer systems for a host of vertical markets, such as banking and finance, government, broadcasting, retail and restaurants.
Shoppers like the new self-service options because they speed the checkout process and put them in control. Businesses like them because they improve efficiency and customer satisfaction.
Consumers have embraced such self-service technologies as airline kiosks for printing boarding passes and choosing seats. Now grocery stores are getting in the act with self-checkout lanes. And hotels are adding kiosks for check-in and checkout.
"It's a self-everything world," said Michael Webster. "Consumers overwhelmingly are voting in preference for using self-service because it gives them greater convenience. It expedites, whether they're trying to finish a shopping trip or get the boarding pass to get through security. Self-service is just a much more efficient process."
Sales of interactive kiosks totaled $492 million worldwide in 2004, a 6% increase over the prior year, according to researcher Frost & Sullivan. Sales are expected to grow at a compound annual rate of 8.1% between 2003 and 2010.
It's just one healthy niche in the overall market for information technology in vertical industries.
Corporations worldwide spent $965 billion on IT last year, says researcher International Data Corp. The largest vertical market was banking, which represented 11.9% of the total. Discrete manufacturing was second, with 11.8%, and government, with 11.3%.
A common theme linking these companies is they sell systems that do more than record transactions and other tasks. They provide useful data for companies to gain insight into their operations and their customers.
Name Of The Game: Businesses and government agencies are looking for new computer systems that can improve efficiency and give them data to make better decisions.
Sales of integrated systems can be hurt by a slowing economy. But some areas, such as self-service technologies, are seen by customers as a necessary expense.
Other products -- like ATMs -- are going through a replacement cycle. Banks are looking to upgrade old ATMs with systems that provide advanced services and meet new regulatory requirements.
Self-service technologies can ease the perpetual shortage of sales clerks, says Rufus Connell, an analyst with Frost & Sullivan. Self-service terminals let one employee do more, such as manage four checkout lanes instead of one.
Retailers also can deploy sales clerks to other areas of the store for better customer service.
"Businesses have a choice," Connell said. "They can either improve their customer service or take advantage of the cost savings."
The resurgence in business travel is prompting hotels to upgrade their information systems, says Jim Yin, an analyst with Ehrenkrantz King Nussbaum. Micros is one company benefiting from the trend, he says.
"Business travel since 9-11 has continued to improve," Yin said. "And only recently have they done anything to upgrade their infrastructure. So they're doing a little catch-up in trying to rebuild their reservation systems and their checking-in and checking-out process."
Technology
Self-service technologies are expanding into new areas and offering better capabilities.
Pennsylvania-based Wawa convenience stores, for instance, use touch-screen kiosks for customers to order sandwiches and pick the toppings.
"They've had tremendous success with it, just taking a piece of the process and automating it and putting it into self-service," said Stephen Smith, an analyst with research firm Gartner.
It speeds up the ordering processing by eliminating the "um" moment when the clerk asks customers if they want mayonnaise or mustard, he says.
Companies are looking to put speech recognition, biometrics and radio frequency identification capabilities into future self-service and self-checkout systems.
Outlook
IDC expects worldwide IT spending by vertical markets to reach $1.24 trillion by 2008. That represents a compound annual growth rate of 6% between 2003 and 2008.
Some customers, such as banks and hotels, are replacing and upgrading their systems. Others, like retailers and restaurants, are adding entirely new technologies.
Retail systems, including self-checkout and photo kiosks, made up 25% of interactive kiosk sales worldwide last year. Tourism, transportation and entertainment was the second biggest category, with 9% of sales.
The U.S. is the biggest market for interactive kiosks, including self-checkout terminals. It accounted for 66% of sales last year.
Europe was second with 21% of sales, followed by the Asia Pacific region with 9%, Frost & Sullivan reports.
Upside: Integrated systems vendors are benefiting from increased spending in vertical markets for new information systems.
Their customers want systems that can improve productivity and customer service. They also want to be able to use data gathered by these systems to hone their businesses.
Risks: The rollout of self-service systems could backfire if customer service declines.
The success of such systems depends on how retailers use them, Smith says.
"If they only move on it as a way to deal with labor issues or as a way to improve their productivity, it's going to disappoint customers," he said.
April 09, 2005
POS Spending Exceeds $6.5B
The convenience store segment, along with various retail industries including grocery, QSR and supercenters, dedicated a large amount of IT dollars and time to upgrading and installing new POS equipment in 2004, according to a study done by IHL Consulting Group
And this focus is projected to continue into 2005.
"Looking ahead, our research indicates that every segment of the retail industry will increase its POS purchases in 2005 over 2004, as retailers upgrade to more reliable and easier-to-use systems," said Greg Buzek, president of IHL Consulting Group. "POS systems and self-checkout systems are where most of the IT budgets for retailers are going the next two years."
Overall, shipments of Linux-based units increased 34 percent, despite still representing only 6 percent of the overall market, and shipments of Windows 2000/XP-based terminals represented 56 percent of the overall market. Additionally, Windows 9x/CE took another 15 percent of shipments for a total of 71 percent of the market.
The C-Store Segment
POS operating systems were up 12 percent at convenience stores in 2004, according to the report, and Windows NT/2000/XP was the leader among larger chains requiring multi-tasking abilities like pay-at-the-pump, Speed Pass (RFID), car-wash facilities and other integrated terminals.
While there is no clear POS leader as far as vendors are concerned, Radiant Systems, IBM, VeriFone and NCR are all popular, the report stated. Also, the choice of operating systems has been a mixture of DOS, Windows 9x/CE, NT/2000/XP and proprietary operating systems.
The complete report by IHL, entitled "2005 North American Retail POS Terminal Study," reviews the shipments and installed base of POS terminals sold to retailers in North America, and includes market shipment and installed base figures, market value and situation analysis for 10 retail market segments. It also forecasts the market through 2009.
The report is available for purchase at www.ihlservices.com.
Demographic Research - Men and Games
Men spend more money on video games than they do on music, research group Nielsen Entertainment said on Thursday, lending credence to a growing belief that video games are displacing other forms of media for the attention of young men.
And video gaming in general is starting to attract an older audience, with nearly a quarter of all gamers over age 40, the agency also said.
The interactive unit of Nielsen Entertainment conducted a random survey of 1,500 people in January and February for its report. Nielsen Entertainment, a unit of VNU NV (VNUN.AS) of the Netherlands, is best known for its benchmark SoundScan music sales service. Its corporate sibling Nielsen Media Research is the standard for TV ratings.
For males, Nielsen said, games now rank only behind DVDs as a purchase category, ahead of CDs, digital MP3 files and other ways of buying music. Nielsen also found that African-Americans and Hispanics spend more money on games each month than Caucasians.
Advertisers are quickly embracing video games as a better way to get to young men than the more traditional medium of television. Many games now have ads inside them, such as billboards in race games, and Nielsen is working on a method to measure audience response to the in-game ads.
Nielsen found 40 percent of U.S. households have some kind of system dedicated to game play, whether a gaming PC, a console or a handheld device. Among gamers, 23 percent own all three types of systems.
Among people who own at least one of the major consoles --Sony Corp.'s (6758.T) PlayStation 2, Microsoft Corp.'s (Nasdaq:MSFT - news) Xbox and Nintendo Co. Ltd.'s (7974.OS) GameCube -- 8 percent said they owned all three.
Nielsen also examined the amount of time spent playing alone versus socially and found that 79 percent of men and 79 percent of women over the age of 45 spend most of their time playing alone. Teen-age women tended to play more socially, Nielsen said, while women 25-54 are roughly split between playing alone and with others.
Overall, the firm said, active gamers tend to spend just over 5 hours a week playing alone and 3 hours a week playing with people or online.
The U.S. video game industry has $10 billion in annual revenue, roughly the same as U.S. box office sales.
Yahoo! News - Nielsen: Men Spend More on Video Games Than Music
February 23, 2005
Self-Checkouts Growing
| Self-service technology is catching on in North America and Europe, with retailers installing automated self-checkout points, and hotels, car rental firms and airlines using kiosks to simplify routine processes. |  |
Source: ePaynews.com
02-18-2005
Self-service technology is catching on in North America and Europe, with retailers installing automated self-checkout points, and hotels, car rental firms and airlines using kiosks to simplify routine processes. While retailers will never shift entirely to self-checkouts, most will use automated tills for line busting or to speed customer throughput at their stores. In the UK, Marks & Spencer, Sainsbury and Tesco increased their self-checkout use in 2003, and in Germany the Praktiker DIY chain has become Europe�s first to deploy self-checkout technology, with further installations planned for Greece, Luxembourg and Hungary.
US-based retailers handled self-checkout transactions to the value of USD 70 billion in 2004 according to IHL Consulting, and Publix Supermarkets, the largest grocery chain in the US, is planning to deploy self-checkouts across its locations in 2005. Other US-based grocery stores such as Ahold�s Giant Food stores in Pennsylvania, are installing self-checkouts, as are smaller family-owned stores such as Sherm�s Thunderbird Markets in Oregon and Hiller�s Markets in Detroit. Grocers in Asia are also seeing the merits of self-checkouts, with Japan-based supermarket chain Okuwa, now redirecting clerks to the store floor.
January 22, 2005
Voice Usage to Rise in Self-Service
Sevenfold Increase Seen In Voice-Based Transaction Apps
Thu Jan 20, 4:42 PM ET
Global spending on voice-enabled technology for conducting self-service commercial transactions is expected to increase sevenfold by the end of the 2008, a market research firm said Thursday.
Annual revenues from the technology are projected to rise to $377 million from $56 million today, Datamonitor said. The most popular transactional voice technologies currently in use include account management, order processing, pay-as-you-go and reservations.
In account management, corporations are mostly using the technology for bill payment provisions, which are proving popular with telephone companies and utilities, Datamonitor said. Reservation applications are finding tremendous traction in the contact center-heavy travel and tourism industry.
Pay-as-you-go is a favorite among mobile carriers, which allow subscribers to add credit to a mobile telephone by using the human voice, the research firm said. Order management has perhaps the most mass-market potential by enabling users to access corporate voice portals and to order goods and services, particularly in the retail sector.
North America and Europe, the Middle-East and Africa are expected to account for 75 percent of the global market by 2008, Datamonitor said. Growth in Asia-Pacific is also expected to be strong, due to voice-business proliferation in Japan, China, Australia and New Zealand.
January 21, 2005
Self-Service and Better Usability
Inproving Usability is key to more transactions according to Forrester.
Self-Service Requires Better Usability
Wed Jan 19, 2:26 PM ET Business - NewsFactor
Kimberly Hill, www.crm-daily.com
Up to now, companies have seemed to follow the "if you build it they will come" approach to self-service tools. But a more apt motto might be "if they can use it, they will," according to recent data collected by Forrester Research.
Nearly 100 percent of the firms surveyed by Forrester expected to increase the number of transactions their customers could complete on their own this year, said Bruce Temkin. However, the vast majority said that improving the usability of their self-service tools remained the best way to do so.
The Shift Is On
All together, 80 percent of companies surveyed indicated that improved usability for self-service tools was either very effective or somewhat effective in helping them achieve the goal of moving customers to less-expensive channels.
Media, entertainment and leisure companies ranked highest in their desire to shift customers specifically to Web self-service; over 80 percent indicated that it was critical or very important. Utilities and telecommunications ranked second, with manufacturing a close third.
Web Self-Service Wins
When identifying which self-service channels were most important to them, companies leaned somewhat -- but not overwhelmingly -- toward the Web. For example, only 38 percent of telecommunications and utilities companies reported that moving companies to phone self-service tools was a critical priority, but another 50 percent indicated that it was somewhat important.
In media, leisure and entertainment, 56 percent of companies reported that moving customers to kiosk-based service was either very or somewhat important. Retail and wholesale trade came in second at 64 percent.
Proactive Marketing a Close Second
In addition to usability, companies ranked proactive marketing high on their list of successful tactics for moving customers to self-service channels. It is a problem that Forrester has highlighted for some time -- companies must make their customers aware of self-service tools before they can expect adoption.
In the case of banks, for example, tellers or telephone representatives can tell customers about new online banking or bill payment tools, Forrester's Catherine Graeber told CRM Daily. Then, the channels must begin to offer the services that the groups using them need.
For instance, younger people are those most likely to access online bill payment and banking. While they may not be highly profitable customers as yet, they soon will be, and cross-selling services, such as financial advice, would go a long way toward making the customer service offered by banks coherent, Graeber noted.
December 02, 2004
Self-service in Real Life
Self-service Needs a Few Bradleys [Computerworld]
Opinion by Virginia Robbins
NOVEMBER 15, 2004 (COMPUTERWORLD) - On my way home from work, I stopped at the garden center in my neighborhood home-improvement store to buy a few plants for my flower boxes. For less than $20, I found four beautiful red begonias that were perfect. The standard checkout lines were long, so I decided to use the self-service kiosk.
When I scanned the first plant, the kiosk barked, "Please scan item and place in plastic bag." I thought I had just done that, so I looked at the bar code carefully. It was sprinkled with just enough black dirt to make it unreadable. Needing an alternative to the sleeve of my silk suit and not finding any paper towels, I used one of the plastic bags provided at the kiosk to clean the label. Using a plastic bag to wipe damp dirt off of a plastic label on a plastic pot doesn't work very well. You end up generating static electricity, and the dirt becomes more attracted to the label.
Without any cashiers to provide the kind of assistance I got from Bradley, an airline employee who helped me catch a plane and make it home in time for dinner (as described in my last column; see QuickLink 49979), it took longer to pay for the begonias than it did to select them.
After that column appeared, many of you wrote to tell me about similar experiences. Paul Dearling also had an adventure in a home improvement store. The 1-inch spring he and his wife wanted to buy didn't have enough mass to trigger the kiosk sensor. He was left listening to a recorded voice instructing him to "please place the item in the bag" 14 times while his wife hunted down a cashier to cancel the transaction. But Paul went on to say that although the systems aren't perfect, he appreciates the faster checkout lines and enjoys the camaraderie he finds among customers.
I agree. When kiosks work, they're fantastic. A majority of Americans -- over 70% -- think so too. During a typical week, we all stop at the ATM to get cash or fill our cars with gas at the self-service pump. These automated transactions haven't quite cut out the human element, but in the past, we would have interacted with clerks, tellers or gas station attendants. Now the people we connect with are fellow customers.
We ask the person ahead of us if the brand of weed killer he's buying works well and the person behind if she thinks the colors we've selected match. Without help from someone like Bradley or some other type of assistance, our consumer experience is highly influenced by the information we gain in line and how well the kiosk is working.
There is no doubt that self-service technologies are here to stay. Companies can save too much money not to deploy them. An article called "You're Hired" in the Sept. 16 issue of The Economist stated that a standard supermarket kiosk can handle the workload of two and a half employees and that a telecommunications company spends 10 cents on a directory service transaction when it uses an interactive voice response system but $7 with a call center. It's the classic story of technology replacing people.
As the designers and implementers of this incredible cost-reducing technology, we need to remember the human element. Create enough frustration for a customer, and you lose a sale; frustrate that consumer a second time, and you may lose him for life. Remember to factor in the cost of the Bradleys as you implement and improve these technologies.
Virginia Robbins is CIO and managing director at Chela Education Financing in San Francisco. Contact her at [email protected].
Self-service kiosks in general
Post office latest to adopt self-service kiosks [Hampton Road article]
Hal and Beth Milgrim were a bit unsure when the postal clerk routed them away from the line and over to the new Automated Postal Centers at the Lynnhaven Station, but a few minutes later, the couple had mailed their package, purchased two sheets of stamps and were on their way out of the door with smiling faces.
The APCs, which began arriving in Hampton Roads in September, allow postal customers with debit and credit cards to do 80 percent of the tasks they would normally do at the counter with a clerk, including mailing and weighing packages at any class, buying insurance and delivery confirmation, and ZIP code lookup. In addition, they�re available as long as the lobby is open, which for many post offices is 24 hours a day.
Considering the Milgrims have so many family and friends in Florida and Maine, the couple expects the kiosks to be especially useful once they start mailing holiday gifts and the post office becomes a madhouse.
�I think it�s wonderful,� Hal Milgrim said. �I didn�t have to fight anyone in the line, and it was easy to use.�
Postal kiosks are among the newest in a rapidly growing field of self-service technology that reaches from movie ticket sales and utility payments to airport check-in and grocery store checkout. Self-checkout lanes, ticketing kiosks and other self-service machines in North America did nearly $128 billion in sales in 2003, an 80 percent increase over 2002, according to research by IHL Consulting Group.
The Tennessee retail technology consulting firm found that 15 to 40 percent of retail purchases are now made at self-checkout machines. And some airlines are seeing as many as 70 percent of their customers are no longer using traditional systems and are checking themselves into planes electronically.
The goal for the post office kiosks is $329 in business each day, and the local machines are already surpassing that, accounting for 2 percent of postal revenue. But there will be customer service associates assigned to each one through the end of the year to guide customers to them and offer assistance. The kiosks, which are in 11 area post offices, also send a message to the associates whenever there�s a technical problem.
�People are always nervous about using new things,� said Fran Sansone, a local customer relations coordinator with the postal service. �They�re hesitant about getting out of line and losing their place to use something they�re not sure about. It�s really easy to use, though, so it�s just a matter of becoming comfortable with it.�
Lawrence Dvorchik , chief operating officer for New York-based KioskCom.com , said that although there will always be people who aren�t interested in using the technology, many people actively seek out self-service options.
�Our society is much more comfortable with technology now,� said Dvorchik, whose New York company provides consulting services for and promotes self-service technology. �It�s a matter of being proactive in guiding the customers to those lines so they can experience it.
�Once they have a positive experience themselves, or see someone else use it with ease, they�re hooked, and they�ll continue to use them.�
Better acceptance of and decreased cost of technologies such as radio frequency identification and wireless fidelity and the development of touchscreen technology have helped propel the use of kiosks.
The future of the industry is almost limitless, experts say. The path has already been laid for hotel kiosks to be integrated with airline kiosks for quicker check-in, for biometrics to scan fingerprints and irises to identify users, for avatars, or talking electronic heads, to make the kiosk experience more human.
With new advances like these expanding the market and more companies embracing the technology, IHL estimates that self-service kiosk sales will increase by 73 percent in 2004 and 88 percent in 2005.
While many people think of the self-service technology as a low-cost replacement for hourly workers, Dvorchik said most stores use the employee time the machines save them and invest it in more needed customer service areas.
�They have more sales associates throughout the store to answer questions and help people,� said Dvorchik, who has been in the kiosk business since 1998. �That allows them to speed up the customer experience and upsell at the same time.�
At Harris Teeter, which has five locations in Hampton Roads, 31 percent of customers use the grocery chain�s U-Scan self-checkout lanes, spokeswoman Jennifer Panetta said. Home Depot has about a 30 percent usage rate as well, a fact that has exceeded the Atlanta home improvement company�s expectations, said spokesman Don Harrison.
�It�s been very well received, including by those people who don�t want to use it, because it shortens the lines at the manned checkout counters,� Harrison said. �And since 70 percent of our customers are do-it-yourselfers anyway, it�s a natural fit.�
Home Depot, which has eight local stores, rolled out its self-checkout pods two years ago, complete with a remote scan gun for those 90 pound bags of concrete and 5 gallon paint cans.
�No one likes to stand in line,� Harrison said. �Once you�ve come into the store and you�ve selected the items you want to purchase, your first priority at that point is to leave.�
Even that notorious wait at the Department of Motor Vehicles can be eliminated by logging in to the DMV�s Web site, using the self-service center during operating hours or taking advantage of the 24-hour extraTeller in the lobby. In 2003, 12,667 vehicle registrations were renewed through the extraTellers, and 1,004 people used it to renew their driver�s license, said spokeswoman Marcia Meredith.
The kiosk�s touchscreen technology allows users to scan the bar code on a renewal notice and quickly make any necessary payments with a credit or debit card. Documents are mailed out within three days, but the kiosk receipt serves as temporary proof.
�People who don�t have Internet at home can access the services through our facilities,� Meredith said. �We want to provide a plethora of options that fit the lifestyles of our customers, and provide flexibility and convenience to them.�
Reach Benita Newton at 446-2667 or [email protected].
November 24, 2004
Stored Value Trends
Nice article on Touchpoints on SVS systems
STORED VALUE CARDS:
A SCAN OF CURRENT TRENDS AND FUTURE OPPORTUNITIES
Executive Summary
The stored value card (SVC) market has mushroomed in the last few years in terms of
both the number of providers and the number of customers. However, most SVCs
offer relatively limited functionality and do not provide a platform for savings, asset
building, or building credit. The Center for Financial Services Innovation (CFSI) sees
opportunities to marry the functionality of stored value cards with opportunities to
save and build assets, transforming SVCs into powerful alternatives to traditional bank
accounts. This report serves to describe and highlight some of those opportunities.
�Open-loop� SVC systems offer consumers the ability to utilize their cards for
multiple purposes and at multiple points of sale. This report discusses the potential
that open-loop SVCs have to serve as cash and check alternatives for otherwise
underbanked consumers. It also provides insight into important industry innovations
and trends, including pricing, marketing, remittance features, bill payment, consumer
protections, future savings options, rewards features and credit-building components.
Key findings of the report include:
� Different types of functionality are rarely integrated into one product. This is an
important innovation for the future of SVCs.
� Products distributed by banks and credit unions are more likely than other
cards to have consumer protections, lower pricing, and more obvious transitions
into other financial products and services.
� Some SVC products incorporate credit-building features by reporting accounts
to credit bureaus. Additionally, some SVC providers are beginning to explore
savings features to go along with their cards.
� SVC providers are exploring the extension of small credit to consumers.
Additional work is necessary to move the SVC market forward. CFSI believes that the
marriage of the convenient transactional model of SVCs and the long-term process of
building assets provides an exciting opportunity for innovation and partnership.
Introduction
In the wake of dramatic technological advancements over the last decade, the financial services
industry has developed a number of inventive applications that have the potential to improve the
structure and delivery of retail products for unbanked consumers. One of the most innovative is
the stored value card (SVC), a prepaid debit card that mimics a checking account, but without
checks. They offer consumers who cannot qualify for or do not want a traditional bank account a
safe and efficient way to store funds, make purchases, pay bills � and possibly save and build
credit. The most common application of SVCs is the payroll card, which enables employers to
pay their unbanked workers via direct deposit.
At least 10 million American households�disproportionately poor, minority, lower income and
young�are unbanked. Additional households conduct most of their financial transactions
outside of banks even though they may have a savings or checking account. Yet having a
relationship with the financial services system can minimize the cost of financial transactions
and help turn income into savings, assets and wealth. SVCs could be a valuable financial tool for
these consumers for several reasons:
� SVCs generally lack the identification and credit requirements that effectively bar millions of
individuals from opening traditional bank accounts.
� SVCs can be purchased and reloaded at a growing number of locations other than bank
branches, such as check cashers and other retailers.
� SVCs can provide immediate availability of funds at a cost that is, in some cases, lower than
some other alternatives for unbanked consumers.
� SVCs are prepaid and thus nearly impossible to overdraft, reducing the likelihood of
unexpected fees.
The SVC market has mushroomed in the last few years in terms of both the number of providers
and the number of customers. However, most SVCs offer relatively limited functionality and do
not provide a platform for savings, asset building, or building credit. The Center for Financial
Services Innovation (CFSI) sees an opportunity to marry the functionality of stored value cards
with opportunities to save and build assets, transforming SVCs into powerful alternatives to
traditional bank accounts. This report serves to describe and highlight some of those
opportunities. The report has three main components. First, it gives a brief overview of SVCs,
the size of the market, and how they work. Second, the report serves as an informal survey of
stored value card products currently being offered. Third, it discusses ways in which SVCs
could be used to help consumers build assets and describes specific product offerings that have
taken a first step in that direction.
What are SVCs and How Do They Work?
Overview of Card Structure
Like traditional debit cards, stored value cards utilize magnetic stripe technology to store
information and track funds. However, SVCs differ from account-based debit cards by being
prepaid, which limits the risk of overdrafts while providing nearly immediate liquidity for
consumers. Early uses of SVCs in the United States included public transportation, public
assistance payments, and child support payments. Many unbanked consumers have been using
SVCs to access public benefits for years. For instance, in Illinois, welfare recipients have been
receiving their benefits electronically since 1996. Moreover, in 1996, the Debt Collection
Improvement Act (DCIA) was passed to require the use of electronic funds transfer (EFT) for
most Federal payments, with the exception of tax refunds, starting January 2, 1999.1 SVCs today
take several forms, including gift and phone cards, payroll cards, and prepaid debit cards. SVCs
are an increasingly popular instrument for one-time uses such as life insurance payments and
moving expenses.
SVC systems operate in two ways. One is the �closed-loop� system, which can be used only for
the issuer�s products or for limited purposes, such as prepaid gift cards through retailers like Old
Navy or many prepaid phone cards. �Open-loop� systems offer consumers the ability to utilize
their cards for multiple purposes and at multiple points of sale, such as making purchases at a
variety of stores or paying bills.
�Branded� cards have a MasterCard or Visa logo and utilize signature-based technology to allow
the consumer to transact business anywhere that those brands are accepted, as well as through
ATM and point of sale (POS) machines. �Non-branded cards� use PIN-based technology and
enable transactions only through POS or ATM networks. Non-branded cards require the use of a
PIN; signature-based transactions are not available.
Stored value cards use accounts to manage funds in real time through host computer systems.
The accounts are held in a single concentrator account with different subaccounts for each card.
Depending on how the issuing financial institution treats the accounts (some are �pooled�
accounts and some, for accounting purposes, are actual bank accounts held by the individual
consumer), SVCs may or may not carry FDIC insurance. The issue of FDIC insurance for SVCs
is a point of some controversy, and it will be discussed in greater detail below.
This report will cover examples of open-loop SVCs, which come closest to resembling
traditional bank accounts. Consumers can make deposits onto the cards and withdraw cash or
pay bills at a later date; in some cases, they can have funds directly debited on a recurring basis.
Open-loop SVCs can be grouped into three categories: payroll-only cards, which can be used
only for direct deposit of paychecks or, in some cases, other automated clearinghouse (ACH)
deposits, such as Social Security Payments; reloadable payroll cards, which serve primarily as
direct deposit cards for payroll checks but offer consumers other ways to reload the cards; and
reloadable debit cards, which consumers can reload in a variety of ways at a range of locations.
For the most part, these products are offered in a �silo� style. In other words, SVCs do not
currently function in a way that allows a single card to function across channels. Major players
in the industry, such as MasterCard, currently segregate SVCs into different lines of business.
For example, they consider �consumer-funded� (reloadable prepaid cards) and �business-toemployee�
(payroll cards) as different products. The functionality of different types of SVCs is
rarely integrated into one product. This is an important innovation for SVCs to become true
substitutes for bank accounts and broadly accepted by consumers.
Description of Important Actors
The SVC market includes hundreds of product providers, with new ones emerging frequently.
Given the various functions involved in offering SVCs�card issuance, transaction processing,
funds management, customer service, recordkeeping�sorting out roles and responsibilities can
be complicated. For instance, several banks have their own SVC programs in which they use
third-party transaction processors, but many of them also serve as issuers for other non-bank
SVC programs, which may use different transaction processors. A few SVC providers are
vertically integrated, handling nearly all of the functions internally, while others outsource
everything except sales and marketing. The majority of SVC providers outsource the transaction
processing to one of the many firms that have developed special software platforms for running
SVCs.
While numerous companies are now engaged in the provision of SVCs, some firms stand out.
Major players in the market today include:
� Bank providers/issuers: BANKFIRST, Bank of America, Citibank, and JP Morgan Chase
� Providers of reloadable prepaid debit cards: NetSpend and Next Estate
� SVC processors: Metavante, StarSystems, WildCard and Galileo
� Providers of back-end services for SVCs, including ATM and POS processing,: Pulse*
� Payroll firms: Paychex and Comdata
An increasing number of companies are attempting to compete in this market space. It is entirely
possible that, over time, those prominent today may be displaced in the future by new entrants.
Moreover, other relative unknowns are likely to emerge as the market sorts itself into better
defined mass-market and niche product markets.
The distinction between products that are distributed by financial institutions and those
distributed by non-bank firms is an important one. Products distributed by banks and credit
unions are more likely to have additional consumer protections, lower pricing (because fewer
actors are involved), and more obvious transitions into other financial products and services.
These issues will be discussed in further detail below.
* Pulse also offers its own SVC product.
Legal and Regulatory Concerns
As a new product with few comparables, SVCs raise several complex legal and regulatory
concerns. The issue of whether SVCs are considered depository accounts is a timely one that is
currently under review by the Federal Deposit Insurance Corporation (FDIC). If funds stored on
SVCs are considered deposits, FDIC insurance could then apply. If a financial institution pools
the SVC accounts and does not provide individual �sub-accounts� to cardholders, FDIC
insurance is not available on an individual customer basis. But if a financial institution offers the
SVC as an individual bank account-like product, �pass-through� FDIC insurance might apply. A
scan of the SVC universe finds that payroll cards appear to be more likely to offer FDIC
insurance than reloadable debit cards.
Banks that issue SVCs can voluntarily provide disclosures to that describe consumer
protections.2 The Office of the Comptroller of the Currency (OCC), the bank regulator for
national banks, has recently issued guidance to its member banks on proper disclosures of
consumer protections for SVCs.3 But, ultimately, it is still unclear whether SVCs are subject to
Regulation E, which covers all electronic financial transactions and requires that a record be
provided for each transaction. Consumer advocates argue that if consumers are going to use
SVCs as substitutes for bank accounts, then the cards should carry the same protections, and Reg
E should therefore apply. Some SVC providers welcome the expansion of FDIC insurance to
SVCs and are already operating as if their products are considered deposits. On the other hand,
some industry representatives argue that SVCs should not be compared to bank accounts�that
they are in fact more aptly compared to cash, and for that reason Reg E is not appropriate. They
worry that, if funds placed on these cards are in fact considered deposits by federal regulators,
additional costly infrastructure and regulatory oversight might be required. This could change the
current economic model for SVCs and make them a less attractive business opportunity.
Moreover, as concerns around terrorism and money laundering mounted following September
11, 2001, financial institutions came under pressure to keep and report accurate records proving
their customers� identities. Section 326 of the USA PATRIOT Act requires financial institutions
to be more diligent in documenting customer identification, which has had significant impact on
enrollment processes and management of SVC programs. Most SVC providers do not currently
require that customers provide Social Security Numbers if their cards are PIN-based.
Considering that some underbanked consumers cite privacy as a primary concern, the reduced
identification requirements for PIN-based SVCs may help encourage customer acceptance.� At
the same time, Visa and MasterCard require Social Security Numbers for signature-based SVCs,
an important change in the industry following the PATRIOT Act. Another emerging issue
around the PATRIOT Act is that some SVC products allow consumers to give second cards to
� ITIN stands for Individual Taxpayer Identification Number. It is a number that the IRS provides to workers who do not
have Social Security Numbers in order to enable them to pay federal and state income taxes. Many financial institutions
have begun accepting ITINs in order to open bank accounts. Though many immigrants do not have Social Security
Numbers, the PATRIOT Act allows for the acceptance of ITINs in their place.
family members in other countries as a way to transfer money, and it can be difficult to verify the
identity of individuals living outside the U.S.
Another important legal issue is specific to payroll cards and underscores the importance of
consumer protections for these cards. Many states mandate that an employer cannot demand that
workers receive their pay in a specific manner; payroll cards must be offered as an option rather
than a requirement.4 In other words, consumers in some states have their choice in payment
systems protected�they cannot be required to accept a payroll card if they do not have a bank
account. State laws differ greatly on this issue, yet many payroll card products are structured to
be offered nationwide.
Size of the Market
The SVC market has exploded in recent years, with the number of cards and providers in the
market growing at a breakneck pace. MasterCard claims to have more than 200 SVC programs
of different types with 100 issuers, and the company has seen double-digit increases in
relationships with third parties and SVC processors in the last few years.5 One research firm
relates that in the early years of SVC usage, transaction volumes grew 350% between 1993 and
1997, from $600 million to $3 billion.6 Though this volume was low in comparison to that for
other types of cards, it represented the largest increase in usage of any type of plastic payment at
the time, with a 50% increase in volume every year.7 As a point of comparison, during this same
time period, debit card volume increased by over 40% and overall plastic payment volume
doubled.8
It is difficult to ascertain the current size of the SVC market in a way that segregates closed-loop
and open-loop processes. Industry estimates�projected by some to be over $2 trillion�tend to
combine gift card volume with more functional transaction-oriented SVCs and are difficult to
verify. Estimates of the size of the payroll card market abound. According to one study, the
number of payroll cards in circulation doubled between 2002 and 2003 to over 2.2 million
cards.9 A spokesman for a major provider of stored value payroll cards estimates that about two
million U.S. employees currently use the cards. Celent Communications reports that 10% of
unbanked American workers used payroll cards in 2002, and the company estimates that the
portion of unbanked families using these cards could rise to 25% by 2006.10 Another research
firm, Financial Insights, forecasts that payroll cards will be worth $143 billion in transactions by
2007.11 Yet another industry expert estimates that payroll cards have the potential to serve 150
million consumers in the US.12
These figures may mask the loss of revenue from dormant cards and the high dropout rate of
SVC users who, in some cases, stop using the card soon after receiving it. Reasons for this trend
are unclear. Two possibilities are that some consumers find they prefer to deal with cash and
that others incur too many fees to make the cards reasonable for them. As consumers stop using
their cards, SVC providers stop receiving fee and transaction revenue but continue to incur
expenses associated with keeping the cards on the system.
It is important to note that use of payroll cards extends beyond the unbanked. Analysts estimate
that the number of payroll card users could rise to almost 7 million by 2006, with as many as
10% of these households holding bank accounts in addition to the payroll cards.13 Moreover,
employers are becoming creative with moments of opportunity for distribution. For example, UHaul,
which pays about 17% of its 17,000 employees through Bank of America�s CashPay
program, offers the card as a company benefit and recruitment tool.14
Another factor in estimating the size of the SVC market is employee turnover. As employees
switch jobs, large percentages of SVC users drop out of the market because most SVCs are not
designed to be truly portable. An accurate analysis of the size of the SVC market should combine
both the number of active cards in the market and transaction volumes.
A Survey of the SVC Landscape
In order to discern trends in the SVC arena, CFSI carried out a broad overview of the industry by
conducting interviews and studying websites, marketing materials, and research on various SVCs
and the companies that process, issue, and distribute them. This research, which took place
during the second quarter of 2004, is by no means exhaustive, as new products are literally being
announced every week. Rather, CFSI focused most heavily on trends in the industry that have
the potential to turn SVCs into the true equivalent of a bank account, in terms of both
functionality and linkages to other financial opportunities.
For the purpose of surveying the landscape, CFSI analyzed SVCs by the three categories
described above: payroll-only cards, reloadable payroll cards, and reloadable debit cards. One
challenge is sorting through the dizzying array of products. Frequently, one SVC provider will
offer multiple cards, each with different structures and pricing. For instance, some payroll card
providers may negotiate different pricing structures and card features with each employer and
offer another pricing structure to customers who sign up for the product through the Internet.
Pricing, functionality, and special features inevitably vary greatly, even when the cards are
provided by the same company. While this report highlights a few specific SVC products, it
primarily attempts to provide an overview of how most cards are structured and a description of
general trends and innovations. A list of some of the products examined is included in the
Appendix.
Pricing
SVC providers levy a variety of fees. It is important to note that, with increasing competition in
the marketplace, prices for SVCs seem to be coming down, albeit slowly. Some of the fees that
consumers might pay to sign up for and use SVCs include:
� Entrance and/or shipping fees
� Annual fees
� Monthly fees
� ATM fees
� Point of Sale (POS) fees
� Reload fees
� Remittance fees
� Inactivity fees
� Overdraft fees�
The following chart highlights the range of fees found in a scan of SVC products.
Chart 1: Pricing Structures for SVCs
Fee Type Low Fee High Fee Median Fee
Entrance Fee $0 $39.95 $19.97
Shipping Fee $0 $19.95 $9.97
Annual Fee $0 $99.95 $49.97
Monthly Fee $0 $9.95 $4.97
ATM Fee� $0.99 $3.95 $2.47
POS Fee $0 $2 $1
Chart 1 shows that monthly fees for SVCs range from $0 to $9.95. By comparison,
Bankrate.com conducted a survey of checking accounts in spring 2003 and discovered that the
average monthly fee for a non-interest bearing checking account in the country�s 25 largest
markets was about $6.15 Payroll-only cards usually do not carry monthly or annual fees for the
consumer, as the employer tends to cover those costs either by paying a fee to join the program
or as part of its larger relationship with the bank that operates its payroll accounts or its payroll
processing company. Some reloadable debit cards also have no monthly or annual fees. One
company, eViva, has proposed selling advertising space on its cards in order to waive or reduce
customer fees.
Another upfront cost of SVCs is the entrance or shipping fee. It is unclear how firms decide to
charge a shipping or entrance fee, or how the charges are differentiated. In cases where either a
shipping or entrance fee is levied, it might be a matter of definition. However, in other cases,
both charges are levied, significantly increasing the upfront cost for consumers. Typically,
companies that charge entrance fees do not charge annual fees.
Consumers pay for transactions when using SVCs. ATM transactions range from $1 to $3.95,
though some cards allow up to four free ATM transactions per month. Signature-based cards
� Though SVCs should technically not include overdraft charges since they are prepaid, it is possible to overdraft. If a consumer makes a signature-based purchase that clears before an automatic monthly fee is deducted, or if there is a lag time for direct deposit of a paycheck, an overdraft might occur. Overdraft charges for the SVCs surveyed in this scan are about $25.
� The high end of the ATM fee pricing structure represents international ATM transactions. The highest fee for domestic ATM transactions of the products surveyed was $2.50.
often levy a fee of $0.40 to $2 on point of sale (POS) transactions, while some products include
free POS transactions. BankRate.com�s 2003 survey shows that, while most banks do not charge
for ATM transactions conducted in the bank�s ATM network, the average �foreign ATM� charge
was $1.40 that year.16 Other fees that consumers might pay for SVCs include reloading fees and
overdraft charges (for signature-based cards, if transactions are processed before deposits clear).
Some cards offer consumers the option of paying higher monthly fees in order to eliminate
transaction-based fees, such as POS or ATM charges. Reloading fees vary greatly. ACH deposit
reloads are free with most cards. Reloads at Money Gram and Western Union agents, in person,
through the mail, and by wire transfer normally cost between $3 and $10.
A few companies offer consumers the option of receiving monthly statements. FDIC-insured
products are more likely to offer consumers free statements and balance inquiry options.
Consumers might also pay fees for balance inquiries, though often these are free if the inquiries
are conducted online or via phone. Customers can access answers to frequently asked questions,
submit an inquiry, or speak to a company representative to receive more information.
It is difficult to ascertain the exact costs of SVCs. Even within a specific card system, there
might be a variety of fee structures based on geography, community partners, or other factors.
Pricing also depends heavily on usage patterns. The following chart sets forth two hypothetical
pricing scenarios based on the fees included in Chart 1.
Chart 2: Comparison of Two SVC Pricing Scenarios
Scenario One-Low Fee Scenario Two-High Fee
Annual Fee $0 $29.95
Monthly Fee $0 $4.95
Entrance Fee $25 $14.95
Shipping Fee $0 $19.95
ATM Fees 3/mo. Free, then $1.50 each $1/ each
POS Fees Free $0.50/each
Reload fee $0 (ACH only) $5
Yearly total $60 $280 (first year)
In both scenarios, we assume that consumers make five ATM transactions and two POS
transactions per month. In scenario one, which is at the low end of the pricing scale at
approximately $60/year, the consumer avoids most fixed fees and is not charged for card reloads,
as the card is primarily ACH-based. At the high end, a consumer with the same transaction habits
might receive a reloadable debit card that charges a variety of fixed fees and transaction fees,
including a reload fee of $5. If this consumer loads the card once a month, he would pay
approximately $250 to use the SVC for the first year. These scenarios do not take into account
the fact that consumers might be charged twice for using ATMs�once by the SVC provider and
once by the machine owner if the consumer did not use an in-network machine.
When comparing SVCs to basic checking account costs, it is important to keep in mind the
recent increase in �free checking� programs, which do not have monthly fees but may carry
ATM, POS, and other fees, such as average $25 non-sufficient funds fees and $25 bounced
check fees. It is difficult to ascertain if SVCs are more or less expensive for consumers than
using basic bank accounts or check cashing services. The Office of the Comptroller of the
Currency (OCC) estimates that a typical consumer making basic transactions would incur costs
of $270 per year at a check casher, assuming that consumer cashed two $400 checks per month
and required five money orders to pay bills (monthly fees and ATM/POS charges would not
apply in this scenario).17 Clearly, depending on the card pricing structure and the consumer�s
usage pattern, an SVC could be a highly expensive option, perhaps even more costly than using a
check casher for basic transactions. In other cases, however, an SVC with a lower pricing
structure could be cheaper for certain consumers than using a check casher (or a bank account, if
overdraft charges or others are levied).
Marketing and Outreach
Payroll-only cards are typically distributed through participating employers and are primarily
marketed to unbanked employees, although it is not uncommon for employees with existing bank
accounts to sign up for a payroll card. A few payroll-only providers also offer their product
directly to consumers, who sign up on their own to receive their payroll via the card.
Reloadable payroll cards primarily handle payroll or ACH deposits and are often distributed
through participating employers, but they offer consumers the extra functionality of reloading the
cards with additional deposits. Many of these cards are reloadable via money order, wire
transfers, Western Union Quick Collect, and mailed deposits, with fees of $3 to $10 per reload.
Some card providers are piloting reload capabilities through local retail stores, which would
dramatically increase the functionality of SVCs.
Reloadable prepaid debit cards are not directly marketed and distributed through employers.
Reload capabilities mirror the reloadable payroll cards in many cases. Reloads might also be
available via phone, Internet, or check cashing outlets.
Several SVCs are designed to appeal to immigrants, often Latinos. For example, the La Raza
97.9 Personal Advantage Media MasterCard, which is currently being distributed through the
Internet, will soon be marketed over the radio by Spanish Broadcasting System and Direct Card
Services** with incentives such as free credit reports, vouchers for air travel, and discounts on
prescriptions. Two other new cards, the MagicCash and Rush cards, are being marketed directly
to consumers �primarily African-Americans�via mass media. Issued by Bank of America,
MagicCash cards will use the well-known persona of Earvin �Magic� Johnson in addition to a
large advertising budget to get the word out to urban, unbanked customers. Though the cards
** Direct Card Services offers merchant banking services and is a partially-owned subsidiary of Direct Response Financial
Services, Inc., which provides payment and technology options for companies looking to increase their credit card business
transactions.
have received significant press coverage, at the time of this writing the cards were not available;
the company expected to begin issuing cards in summer of 2004. Rush Cards employ the highprofile
hip-hop personality Russell Simmons as spokesperson to market the product. UniRush
Financial LLC, the company that distributes the Rush Card, is a joint venture between Rush
Communications and Cincinnati-based Unifund Corporation. The cards are marketed to
consumers with troubled credit histories and past histories of unpaid debt. Issued by M&T Bank,
the Rush Card is reloadable at Money Gram locations and via money orders and wire transfers.
Offering SVCs at the point when a customer receives a tax refund is also a relatively new option.
In these cases, the cardholder provides the account number and routing number associated with
the SVC on the tax return in order to directly deposit refunds onto the card. Both Jackson Hewitt
and H&R Block experimented with new SVC offerings during the 2004 tax season. Jackson
Hewitt partnered with Russell Simmons to private-label the Rush Card and make it available at
all of its 4,500 locations. The card allows customers who opt for loan programs or other quick
refund options the ability to receive their refunds on a prepaid debit card. H&R Block partnered
with Bank of America to provide a private-label Visa-branded SVC on a pilot basis in
Washington, D.C., El Paso, TX, and Fresno, CA. The cards were marketed to customers who
wanted quick access to their refunds and who had no bank accounts. The cards, which allow
customers to access their refunds as soon as they are available from the IRS, (usually within 8-15
days) remain open and are available for deposit of next year�s tax refund. Tax preparation fees
are deducted from the refund amount on the prepaid card. H&R Block is considering making the
cards reloadable for non-refund transactions.
Remittance Features
Several companies are beginning to tie their SVC products to remittance products that enable
consumers to send money to friends and family in other countries. Like SVCs, the remittance
market is growing and changing rapidly. According to the Inter-American Development Bank,
remittances are the largest source of foreign investment in Latin America. Latinos living outside
of their home countries sent $38 billion home in 2003, including $13 billion to Mexico alone.18
Until recently, the remittance market has been dominated by wire transfer companies such as
Western Union and MoneyGram. However, banks, credit unions, and others have started to offer
remittance products, expanding competition and reducing costs for consumers.
A significant number of SVCs offer remittances. This feature allows U.S. cardholders to transfer
funds to authorized family members in Mexico, China, or other countries. SVC-based remittance
features are structured in at least two ways. Sometimes, dual cards are issued to customers, and
one of the cards is sent to family in another country to access funds from the sender�s �account�
via ATMs. Some cards allow cardholders to designate �subaccount� holders in other countries
for the purposes of transferring money. In these cases, the subaccount holder has access only to
the money that the primary account holder designates to share.
According to Western Union�s website, the charge to send $500 from California to family
members in Mexico is $14.99 for delivery within minutes using a U.S.-based credit or debit card,
and $36 to send funds from a personal checking account for receipt in five days. SVCs that offer
remittance features also charge fees, though the fee structure might be less obvious than in a wire
transfer situation. In general, family members receiving money from U.S. residents will incur an
ATM fee. There are exceptions to this rule, particularly among the few U.S. financial institutions
that have formal relationships with banks overseas. If remittance features are set up in the dualcard
format, where a consumer receives two cards and sends one to family overseas, an
international ATM charge of up to $3.95 might be deducted from the cardholder�s balance when
the family member withdraws cash. In some cases, these card-to-card transfers are free, and in
other cases they might cost up to $10. In addition, wire transfer exchange rates are often high,
while ATMs normally incorporate the interbank exchange rates, which are significantly lower.
But ATMs might be much less ubiquitous in other countries than Western Union or MoneyGram
offices.
Credit-Building Component
In its scan of the SVC universe, CFSI found three products that offer consumers the ability to
build a credit history.
� indiGOcard (reports to Experian)
� Eufora Credit Builder (reports to TransUnion)
� NetSpend All Access MasterCard (reports to one of the three credit bureaus)
These products utilize the credit-building component as a marketing and recruitment tool for the
cards and prominently advertise this feature in their literature and websites. Because the cards
are marketed primarily to unbanked customers, they set themselves apart as offering an
additional benefit that could help consumers ultimately buy a house or car or rent an apartment.
These SVC issuers report accounts in good standing to one of the credit bureaus. In the case of
the indiGOcard, which is an FDIC-insured account, the consumer receives credit for having a
deposit account. In other cases, monthly fees paid by the customer are reported to the bureaus
and treated similarly to utility payments. Consumers cannot generate negative credit by misusing
the card, as nonpayment results in closure of the account. It is unclear whether these programs
will, in actuality, improve a customer�s credit score, and if so, by how much. These programs
normally require a Social Security Number. However, Experian has recently begun accepting
Individual Tax Identification Numbers (ITINs) as substitutes for Social Security Numbers to
provide immigrants with credit-building opportunities. This new development in the SVC
industry is a promising trend.
Overdraft Protection or Payday Advance Alternatives
SVC providers are beginning to mimic another trend in the financial services industry: providing
extensions of small amounts of credit to consumers. Unbanked and underbanked consumers can
find themselves in situations where they need a small personal loan or sum of money to tide
them over until the next paycheck. Most financial institutions do not provide loans as small as
$100 or $300, and many consumers use payday loans or find other ways to access cash in an
emergency. Payday loan stores might charge between $15 and $30 per $100 borrowed. If we
assume a finance charge of $20 per $100, a $300 loan costs $60 at a payday lender.
A few companies are attempting to provide a payday advance or overdraft protection feature tied
to an SVC. One issued a press release describing a program, currently in the planning stages,
which would allow consumers to borrow up to $500 against the next direct deposit of their
paycheck. The fee for this service was not disclosed.19 Another firm that CFSI interviewed is
piloting what it calls an �overdraft protection� feature. In this case, consumers pay a $15 fee to
receive a $100 advance from their next direct deposit. Typically, overdraft protection is thought
of as a feature that protects consumers when checks they have written do not clear. Given that
SVCs do not utilize checks, this overdraft protection looks and feels more like a payday advance
or small line of credit.
The provision of overdraft protection or payday advances raises several related concerns. It is
unclear whether these services should be considered extensions of credit from a regulatory
perspective and therefore subject to corresponding disclosures and regulations. Member agencies
of the Federal Financial Institutions Examination Council (FFIEC) have requested comments on
this issue. These products can make it difficult to differentiate between available funds and those
the financial institution will advance for a fee. Finally, the ultimate benefit to the consumer is
disputed, particularly given the costs. Some argue that low-income consumers should be able to
access small credit and that the costs are reasonable; others argue that the costs are prohibitive.
Additional Features of Interest
1. Consumer protections: Some of the cards examined for this report include FDIC insurance
that is passed through to the consumer. These include Power eCards, DirectoCards, Stratus
ATM cards, and indiGOcards. It is difficult to tell which cards are covered by Regulation E,
as many of the cards do not mention this outright in their marketing materials. Exceptions
exist in the DirectoCards and Power eCards, which specifically tout coverage by Regulation
E. Also, branded cards can offer consumers the protection of Zero Liability programs, which
limit consumer liability for fraudulent signature-based purchases.��
2. Bill payment: Many SVCs offer some sort of bill pay option, especially branded cards that
enable signature-based transactions. Because many SVC users are unbanked, the
�� For more information on how these programs work, see
http://www.usa.visa.com/personal/secure_with_visa/zero_liability.html?it=h2_/index.html
functionality of paying bills without using checking accounts or money orders is important.
Often, consumers can use an SVC to pay any bill that can be funded through direct debit. A
few cards are offering free bill pay, while most charge a nominal fee, between $0.50 and $3.
Further research and innovation could be valuable in this area, as most bill pay options for
SVC users are online or in-person. Additional options, such as self-service bill pay at kiosks
in retail locations, could provide additional functionality for unbanked consumers.20
3. Rewards: Credit cards have long offered reward programs to consumers, with debit cards
beginning to follow suit. Now, SVCs have begun to explore the possibility of providing
loyal customers with rewards or �points� for using the cards. The Starbucks� Duetto Card,
while not reloadable, is an example of an SVC reward program. The card, issued by Bank
One, combines retail incentives for Starbucks customers with general credit card usage.
Consumers use the credit card for general purposes and accumulate points. These points are
then translated into dollar amounts and added to the SVC portion of the card, which allows
customers to buy Starbucks products at its retail locations. The Duetto Card is the first such
�dual-track� card on the market.
In addition, the Wired Plastic card offers reward points for every MasterCard purchase for
use towards products such as prepaid wireless and Internet and long distance calling cards
that are offered on Wired Plastic�s website. Finally, at least one company interviewed for this
report was exploring the possibility of offering customers a rebate or bonus for maintaining a
higher balance on the SVC.
4. Saving: One feature that is lacking in most SVCs is the ability for cardholders to save and
build assets. In the past, Directo offered a savings component as part of the bundled services
offered with its card program, but the company suspended it in part because few customers
were using the feature. Particularly in a low interest-rate environment, consumers would pay
more in fees to transfer funds to savings than they would earn in interest. Linkages with
savings accounts, tax refunds (such as the SVC programs offered by Jackson Hewitt and
H&R Block), IDAs, or other savings vehicles through an issuing financial institution,
coupled with financial education programs, are possibilities that deserve further exploration.
Conclusion
Stored value cards are emerging as potentially powerful tools for consumers to engage in a
variety of financial transactions with greater ease. SVC providers are coming to recognize that
no �one-size-fits-all� approach exists for reaching underserved markets. The SVC industry is
evolving very rapidly; new players are entering the market frequently, and technology continues
to improve functionality for SVC users. There is great potential for SVCs to be a significant step
for unbanked and underbanked consumers who need a platform on which to manage their
money. However, the addition of an asset or credit-building component is a vital area that the
SVC market has yet to explore in great depth. New opportunities in this area would be beneficial
for the consumer and the provider alike, as the consumer could gain access to longer-term
financial opportunities, and the provider could engender customer loyalty, cross-selling
opportunities, and ultimately greater profits. In the end, CFSI believes that the marriage of the
convenient transactional model of SVCs and the long-term process of building assets provides an
exciting opportunity for innovation and partnership.
Authored by: Katy Jacob
1 See http://fms.treas.gov/eft/regulations.html for more information. Subsequent implementing regulations included waiver provisions that establish the circumstances under which waivers to the DCIA are available.
2 Frumkin, S., Reeves, R. and Wides, B. October 2003. �Payroll Cards: An Innovative Product for Reaching the Unbanked
and Underbanked,� Office of the Comptroller of the Currency Community Development Newsletter.
3 Office of the Comptroller of the Currency Advisory Letter AL 2004-6. Payroll Card Systems. May 6, 2004.
4 Wiley, E. �Evolution of Payroll; Debit Card System Offers a Checkless Option,� The Daily Oklahoman. March 30, 2004.
5 Martin, Z. �New Markets for Stored Value Cards,� American Banker. April 2, 2004.
6 Packaged Facts. 1998. The U.S. Market for Plastic Payment Cards. pp. 74, 76. (This represents all SVCs, including
prepaid phone cards.)
7 Packaged Facts. 1998. p. 113.
8 Packaged Facts 1998 p.7.
9 All, A. �The Channel Shuffle,� ATM Marketplace.com. April 7, 2004.
10 Smith, E. �New Pay System in the Cards for Some Companies,� Akron Beacon Journal. March 3, 2004.
11 McPherson, A. 2003. Synopsis of Payroll Cards and Benefit Cards: An Opportunity for Banks. Financial Insights.
12 Chen 2004.
13 Lewis 2004.
14 Smith 2004.
15 Bankrate.com. 2003. Checking Study Spring 2003.
16 Ibid.
17 Frumkin et al 2003.
18 Glaister, D. �Emigrants Provide Lifeline to Latin America.� The Guardian. March 31, 2004.
19 Dalrada, Inc. Press Release. Dalrada Financial Corporation Launches �Payday Advance� Program Benefit Added to
Debit Cards. April 27, 2004.
20 Intelecard News Online. 2004. �PDS Files Patent.� www.intelecard.com.
Appendix
Following is a list of several of the most interesting cards that CFSI studied for this report. Notable card
features are discussed here. Most cards offer signature-based functionality (MasterCard or Visa). CFSI
looked into numerous other SVCs, but we chose cards with interesting functionality to mention in this
appendix.
Reloadable Debit Cards
Card Name Notable Feature
Eufora�s Credit Builder: � Credit-builder program allows consumers to build credit by having
monthly fees reported to credit bureaus. POS transactions free.
e-Viva card: � Remittance feature offered. Reloadable via phone and other
venues, including, in the future, Coinstar kiosks. Solicits
advertisers to offset card costs.
H&R Block Tax Refund Card: � Provides tax refund recipients with SVCs for access to their
refunds. POS transactions free.
Jackson Hewitt Cash Card: � Provides tax refund recipients with SVCs for access to their
refunds.
La Raza�s 97.9 Personal
Advantage Media MasterCard:
� Offers incentives to unbanked listeners of this popular Latino
radio station in California.
MagicCash Card: � Will be marketed via mass media, using Magic Johnson as
spokesperson.
NetSpend�s All Access
MasterCard:
� Program allows customers to build a credit history by reporting
monthly payments to credit bureaus. Remittance feature provided.
Next Estate�s My MasterCard � (Next Estate Communications Truth MasterCard). Customers can
buy and reload cards at retail locations, such as grocery stores,
discount stores and pharmacies.
Pronto Banco Card: � Remittance feature offered. Reloadable at retail and grocery store
locations. PIN-only platform.
Rush Card: � Marketed via mass media, utilizing Russell Simmons as
spokesperson. Offers 2 free paper checks per month.
Payroll-only Cards
Card Name Notable Feature
CashPay Card � Remittance feature through SafeSend product (Bank of
America).
DirectoCash and DirectoPlus: � FDIC-insured, Reg E applies. Remittance feature available. This
is a PIN-only platform that is moving to a Visa platform.
Power eCard: � FDIC insured, Reg E applies.
Reloadable Payroll Cards
Card Name Notable Feature
indiGOcard: � FDIC insured. POS transactions free.
Stratus ATM Card: � 4 free ATM transactions/mo. FDIC insured. PIN-only platform.
Wired Plastic Card: � Loadable at IPP retail and other locations.
October 20, 2004
All About Wal-Mart
Nice report on all things Wal-Mart
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| Wal-Mart: Its place in the retail world (Part I) | ||
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Wal-Mart has emerged from the battle of discount retailers as the undisputed leader of the retail industry, taking the top spot on STORES Magazine's most recent list of Top 100 retailers. The company brought in net sales of $256.3 billion in fiscal 2004, according to its annual report, and is frequently cited as the world's largest private employer. Wal-Mart's growth has not come without controversy, particularly over its economic impact and labor policies. Regardless, Wal-Mart continues to forge new territory in retail practices and technology, is a guiding force in the U.S. economy, can affect the fortunes of countless suppliers and is often a microcosm for issues facing the entire industry.
The first part of this two-part NRF Special Report focuses on Wal-Mart's business strategies, its impact on the retail landscape, issues concerning its suppliers, and recent company performance. Part II of this Special Report will run on Thursday, Sept. 23 and will address public opinion, labor and legal issues, competition and international trends. | ||
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 | Business Strategy
Wal-Mart's Supercenter strategy continues to evolve: Although there has been backlash against big-box stores in many urban areas, Wal-Mart's Supercenters are being welcomed by smaller communities where shopping choices are limited and jobs are scarce. The smaller towns are eager to benefit from the extra tax revenue the stores will generate. Los Angeles Times (Abstract text) (9/10)  |
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| Perception and Impact
Wal-Mart CEO confronts image issues: Facing resistance to new stores in several communities, as well as highly-publicized labor lawsuits, Wal-Mart CEO H. Lee Scott Jr. recently spoke about improving the chain's reputation by promoting the positive changes that have been made under his leadership. USA TODAY/Reuters (9/8) |
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 | Audio interview: The BBC talks with Wal-Mart CEO H. Lee Scott Jr. about the company's growth, criticisms and effect on the U.S. job market. (Audio player required.)
BBC (9/2)
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| Supplier Relations
With its unprecedented size, Wal-Mart has a great deal of control on its suppliers prices and technology. Inc.com provides an in-depth, step-by-step guide on how to become a Wal-Mart supplier. Inc.com (11/1) |
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| Company Performance
Wal-Mart recently posted a downward revision of its sales forecast, but separately, Wal-Mart CEO H. Lee Scott Jr. has said the company should rebound in time for the holiday season. National Public Radio discusses how this sales revision could impact the presidential election. National Public Radio (RealPlayer required) (9/9) |
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| The News
Access an extensive collection of articles about Wal-Mart from SmartBrief's news archive. To register for this free service, simply type in the e-mail address at which you receive SmartBrief and create a password. Sign up now. |
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| Real Estate
Wal-Mart has faced both opposition and support for its store expansion plans, depending on the locale, political climate and economic impact. As a result, it has had to adapt its approach to changing circumstances. |
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| Wal-Mart redevelops existing urban sites as resistance to new building remains: With a growing wave of bans on new big-box developments around the country, Wal-Mart is turning to an alternative strategy of redeveloping existing retail sites that have been abandoned by other developers, experts say. In the Atlanta area, the retail giant is working to develop three urban stores, each about 225,000 square feet, at sites once occupied by other businesses.
GlobeSt.com (9/2)
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| Dayton area could be fertile ground for Wal-Mart grocery business: Despite resistance to Wal-Mart Supercenters in Los Angeles and Chicago neighborhoods, among others, the company is said to be planning to add three of the multipurpose stores to the existing seven in the Dayton, Ohio, area. With the national expansion of these Supercenters, Wal-Mart has become the world's largest grocery store chain.
American City Business Journals/Dayton, Ohio (free registration) (8/29)
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| Wal-Mart could reconsider Chicago store if ordinance adopted: A so-called "big-box" ordinance being considered by the Chicago City Council to guarantee wage levels and certain benefits for employees of large-format retailers has caused Wal-Mart executives to put on hold plans to pursue a second Chicago store, and possibly reconsider city-approved plans for the first one on the West Side. ''We want to be part of this [West Side] community,'' spokeswomen Mia Masten said. ''But if an owners 'big-box' ordinance is passed we will have to reconsider that proposal as well.''
The Decatur Daily (Ala.)/Associated Press (9/1),
ABC7 (Chicago) (8/31)
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Given its sheer size, when Wal-Mart adopts a technology -- like RFID -- it has a significant effect on the entire supply chain. |
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| Suppliers prepare for RFID deadline: Wal-Mart has set a deadline of January 2005 for its top suppliers to begin using RFID tags with their products. One consulting group says suppliers may feel the need to rush together a plan to meet the deadline, but ultimately they will be able realize ROI.
BPM Today/NewsFactor Network (9/8)
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| Profile: Wal-Mart's CIO driving retail industry tech changes: BusinessWeek reports that Wal-Mart CIO Linda Dillman is setting the stage for retail technology. She is said to be partly responsible for this year's jump in retail industry spending on technology, as she implements such cost-saving systems as UCCnet -- technical standards that already have cut Wal-Mart's new-product data-entry time from two weeks to about two days.
BusinessWeek (5/12)
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| Wal-Mart tests store delivery of online purchases: The test program offers online customers the opportunity to have certain products shipped to a nearby Wal-Mart location, where the customer can then pick them up.
The Dallas Morning News (free registration) (8/18)
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| Merchandising
From music to fruits and vegetables, Wal-Mart can push the revenue dial for entire industry sectors with how it merchandises its products and the policies it sets for their display. Nevertheless, Wal-Mart faces its own set of challenges in introducing new product lines to its customers. |
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| PBS series: Wal-Mart's impact on entertainment choices: PBS' Online NewsHour explores Wal-Mart's role as a gatekeeper of family values. Since the retailer sells vast quantities of music and movies, musicians and movie companies sometimes offer special censored versions of controversial work to sell exclusively at Wal-Mart. Without these versions, entertainers may lose up to 10% of their sales.
PBS (8/20)
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| Wal-Mart TV Network steps up in-store advertising: Wal-Mart TV Network is expanding its in-store presence by adding monitors to stores, upgrading to plasma and liquid-crystal display sets and placing them at eye level in areas where shoppers tend to linger. The TV network, which was launched in 1999, is already seen by about 133 million viewers in a four-week period, which rivals the four major broadcast networks in audience reach, according to Nielsen Media Research.
The Wall Street Journal (subscription required) (9/22)
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| Time rolls out women's magazine exclusively at Wal-Mart: Time Inc. introduced its All You magazine, targeted at value-oriented shoppers and covering topics from home improvement to relationships, with free issues at Wal-Mart. Wal-Mart accounts for 15% of all U.S. newsstand space and has 100 million shoppers weekly.
New York Daily News (8/13),
USA TODAY (3/29),
Financial Times (London) (subscription required) (3/29)
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| Wal-Mart rethinks clothing strategy: The retailer's fashion line, known as George, has not been a big hit, according to analysts and observers who say that has more to do with how it's being presented to shoppers than the actual product. Wal-Mart contends sales are ahead of plan this year, but the company is working on new apparel displays and has hired a consultant to address its lagging fashion issues.
The Sun (Baltimore)/The Wall Street Journal (free registration) (7/19)
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| Looking ahead to the 2004 toy season: Last year's holiday shopping season saw Wal-Mart using toys as a loss leader, followed by Chapter 11 filings by FAO and K-B Toys. STORES Magazine says the lack of a must-have toy and a legal battle between Toys "R" Us and Amazon.com could damage the 2004 toy season.
STORES Magazine (8/2004)
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| Analysis: Examining Wal-Mart's economic impact
There are a host of differing opinions about Wal-Mart's impact on the the U.S. economy. While some call its low-price policy "the greatest thing that ever happened to low-income Americans," others question its economic impact and resulting symbolism, saying the company's low-wage entry-level jobs may offer little chance of advancement into the middle class. One industry observer says Wal-Mart could easily reach $500 billion in revenues in the next four to five years, as it moves into urban and global markets. Knowledge@Wharton (free registration) (4/8) |
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| Analysis: Can Wal-Mart reconcile its dual image?
BusinessWeek writer Amy Tsao notes that Wal-Mart evokes two different reactions from consumers -- that of "the big and friendly" retailer helping the "little-guy consumer," and that of an "unfeeling giant putting the squeeze on its little-guy employees." Tsao says Wal-Mart could learn a lot from Nike, which saw sales decline after allegations that the company used overseas sweatshop labor, only to recover by spending money on repairing its image and setting up a corporate responsibility department. BusinessWeek (1/28) |
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| Wal-Mart launches California ad campaign
Seeking to improve its reputation in the state that has resisted its expansion, Wal-Mart published an open letter in 15 newspapers to "set the record straight." The ads address the company's average wages and expansion plans for the state. Wal-Mart has said it plans to open 40 Supercenters in the state. FOXNews.com (9/24), Los Angeles Times (free registration) (9/24) |
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| Suppliers go the extra mile for Wal-Mart
Financial Times discusses how suppliers such as Rubbermaid, Gillette and Mattel have gone to extraordinary lengths to maintain a good relationship with Wal-Mart, even opening satellite offices by the retailer's Bentonville, Ark., headquarters. Financial Times (London) (subscription required) (7/6) |
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| As power shifts from supplier to retailer, Levi's learns to adjust
At its height, Levi Strauss could choose its own styles of jeans and where it would sell them. But retailers have gained more clout in recent years, so when Levi wanted to sell to Wal-Mart, it brought in a sales executive with experience selling to the retailer and had to overhaul its operations system. While some department stores expressed concern the company's decision to sell to Wal-Mart would take away their own customer base, Levi convinced them the Wal-Mart deal would lead to better overall service. The Wall Street Journal (subscription required) (6/17) |
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| PBS series: Inside a Wal-Mart distribution center
PBS' Online NewsHour speaks with Wal-Mart Executive Vice President for Logistics Rollin Ford about the technology the company uses to keep its warehouses and selling floors stocked with inventory. Click here to watch the segment on Real Player. PBS (8/20) |
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| September sales appear to be on track
After a slow start for back-to-school sales, Wal-Mart has maintained its September sales forecast. The company said a late Labor Day holiday postponed many people's shopping. Yahoo!/Reuters (9/18) |
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| Study: Wal-Mart, Target rank high in customer service
Ease of locating products, lighting, store layout and clearly marked prices contribute to a satisfying shopping experience, BIGresearch found. "Obviously price is key to determining where people choose to shop. But after that, it's customer service," says BIGresearch's Phil Rist. Poor service may cause shoppers to switch to another store. CNNmoney (9/7) |
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| STORES announces Top 100 specialty retailers
The retail trade magazine notes that its list of leading specialty shops, which range from books to music to apparel, all count Wal-Mart as a top competitor. Best Buy leads the list, followed by Gap, Staples, Office Depot and Toys "R" Us. STORES Magazine (8/2004) |
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| Wal-Mart: Challenges facing growth (Part II) | ||
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As Wal-Mart looks to retain its hold on the top spot in retailing, the company is facing a variety of challenges -- resistance in certain new markets, major labor lawsuits and a sentiment among critics that Wal-Mart may do as much harm as good for the U.S. and global economies. The second part of this two-part NRF Special Report focuses on public opinion, labor and legal issues, competition and international trends. Part I of this Special Report, which focused on Wal-Mart's influence on the retail landscape, ran on Tuesday, Sept. 28. | ||
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| Perspectives Benefits and risks: One major criticism of Wal-Mart is that it threatens existing small businesses and chains when it opens in a new area. There are vastly differing views on the benefits and risks Wal-Mart brings to a new community. Washington Post business columnist Steven Pearlstein writes he's "uncomfortable with the idea that this productivity revolution requires squeezing full-time workers," but adds that the burden is on traditional grocery chains, for example, to be innovative and find new ways to stand out, rather than compete with Wal-Mart on price. What's inescapable, writes Nelson Lichtenstein, who directs the University of California-Santa Barbara's Center for the Study of Work, Labor and Democracy, is that people in cities and towns will find themselves asking the same question: "How will Wal-Mart alter life in our community?" Good for the industry?: Mass Market Retailers writes Wal-Mart's benefits are significant. "Wal-Mart has transformed the performance and prospects of American suppliers by challenging them to improve beyond their perceived capacity to improve." Wal-Mart is atop Fortune's list of the most admired companies for the second year in a row. | ||||||||||||||||||||||||||||||||||||||||||||||
| Labor and legal issues A class-action sexual discrimination lawsuit and a federal investigation into the use of illegal aliens as cleaning contractors are two of the more highly publicized cases of Wal-Mart's labor practices coming under intense scrutiny. Some of the retailer's critics say an even more basic issue is the company's opposition to unions which they claim keeps wages low and working conditions difficult. Wal-Mart has countered that its labor practices are fair and lawful and that workers operate best when in a position to negotiate directly with management. Joseph Hansen, international president of the United Food & Commercial Workers union, spoke with the Detroit Free Press and discussed the union's attempt to organize Wal-Mart employees. Hansen concedes Wal-Mart offers low prices, but he worries about the effects the retailer has on the economy, including lowering wages and providing minimal health care coverage. "The UFCW sees Wal-Mart as not just a problem for the UFCW. We see it as a problem for all the workers in America." | ||||||||||||||||||||||||||||||||||||||||||||||
| Competition Studies from Mississippi and Iowa suggest independent businesses do suffer when competing with Wal-Mart, but the Grand Forks Herald notes there is still hope when the "900-pound gorilla of the retail world" comes to town. One economics professor offers tips on retail survival in the Wal-Mart world. Food retailers can offer a specialized butcher, while other businesses rely on one-day sales and improved customer service to retain customers. Grand Forks Herald (N.D.) (9/5) | ||||||||||||||||||||||||||||||||||||||||||||||
| International With its acquisitions of Asda in Britain and Seiyu in Japan, Wal-Mart's reach is truly global. Also, the company has been focusing on Asian growth as well. A recent Chinese rule that required foreign retailers to partner with local firms has been scrapped as part of China's commitment to liberalization required by its entry into the World Trade Organization. The move will make it easier for foreign companies such as Wal-Mart, but analysts say the government will still look for ways to help domestic and state-owned companies keep market share. FoodNavigator (3/19) | ||||||||||||||||||||||||||||||||||||||||||||||
| The News Access an extensive collection of articles about Wal-Mart from SmartBrief's news archive. To register for this free service, simply type in the e-mail address at which you receive SmartBrief and create a password. Sign up now. | ||||||||||||||||||||||||||||||||||||||||||||||
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| Commentary: Will its move to urban areas change Wal-Mart? Washington Post business columnist Steven Pearlstein writes Wal-Mart reached its current position by providing inexpensive goods in rural areas where costs are lower. But as the company looks to open in more urban markets, it is facing more pressure from unions, costs are increasing and quality may be as important as price. Even some suppliers have noticed the difference, Pearlstein writes, and have had success resisting Wal-Mart's demands for lower prices. Pittsburgh Post-Gazette (9/12) | ||||||||||
| Analysis: Does Wal-Mart deserve its "punching bag" status? Wal-Mart is so big and successful that many groups, such as labor unions blame the company for manufacturers moving jobs overseas, where the labor is cheaper. But some believe this "punching bag" status is misplaced. "It is not the purpose of Wal-Mart to provide 'public goods' like clean air and clean water, and make sure that everyone has a well-paying job," says a Bernard Sands analyst. The Christian Science Monitor (2/23) | ||||||||||
| Opinion: "Would you work at Wal-Mart?" Daniel Weintraub spoke to applicants at a Wal-Mart in Northern California, wondering why so many people wanted jobs at the controversial retailer. He found many of the applicants had been recommended by friends or family members who worked for Wal-Mart, and many of them also seemed content with the company's wages, benefits and opportunities for advancement. Alameda Times-Star (Calif.) (9/23) | ||||||||||
| Opinion: Wal-Mart will emerge from legal troubles even stronger Michael Bergdahl, a former Wal-Mart corporate employee and author of "What I Learned From Sam Walton: How to Compete and Thrive in a Wal-Mart World," writes the recent allegations against the retailer of discrimination indicate the company has a large legal target on its back. Bergdahl writes the Wal-Mart he worked at valued diversity in management, but initiatives can be lost in execution. Still, Bergdahl concludes Wal-Mart will emerge from its recent legal troubles more focused and stronger. Retail Merchandiser (9/1) | ||||||||||
| Big-box development One issue that has galvanized opposition in some communities to Wal-Mart is its plans to build Supercenters. | ||||||||||
| Opinion: Big boxes fuel American worker productivity: A social sciences professor points out that European workers were more productive than their American counterparts until the mid-1990s, when American productivity rose a shocking 5.7%. He says that most of the rise in productivity is attributed to new stores such as Wal-Mart and Best Buy, "big boxes" sprouting up off highways and in suburbs. Financial Times (London) (subscription required) (8/19) | ||||||||||
| Radio Roundtable: Wal-Mart goes to the polls: A group of business writers discuss the pros and cons of Wal-Mart in the communities it serves, as well as ballot-box measures aimed at halting the retailer's growth. Click here to listen to the discussion (Audio player required). National Public Radio (RealPlayer required) (4/14) | ||||||||||
| Analysis: Los Angeles wants big-box stores to provide cost/benefit reports: The city is looking to pass an ordinance that would require big-box stores to assess the economic impact of their existence in a community, including potential business displacement, job creation or loss, open-space effects and impact on city revenue. Opponents contend that the measure is designed to impede growth of stores such as Wal-Mart and Costco. The Christian Science Monitor (8/12) | ||||||||||
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| Judge grants class-action status to Wal-Mart sex discrimination case A San Francisco federal judge granted class-action status to a sexual discrimination case against Wal-Mart that could now involve up to 1.6 million female current and former employees. Wal-Mart denied it favored men over women in its employment practices and said it would appeal the judge's ruling, which it added "has absolutely nothing to do with the merits of the case." The appeal could mean it will be at least a year before any trial begins. Click here to watch a video from NBC on the judge's ruling. MSNBC (6/23), The Washington Post (free registration) (6/23), The Wall Street Journal (subscription required) (6/23) | ||||||||||
| Update: Appeals court mulls class certification in Wal-Mart suit: A federal judge has suspended the discovery phase of a discrimination suit against Wal-Mart to give an appeals court time to decide whether the suit can continue as a class action. Wal-Mart says the size of the class is "unprecedented, unmanageable and unconstitutional." The New York Times/Bloomberg (free registration) (9/28), The Wall Street Journal (subscription required) (9/28) | ||||||||||
| Cleaning crew case may be settled Wal-Mart said earlier this month it is in talks with the government over settling an investigation about the alleged use of illegal workers as cleaning crews. Last October, federal agents raided 61 Wal-Marts as well as corporate headquarters in search of evidence of illegal workers, which could bring a $10,000 fine per worker. No details of the potential settlement were revealed. The Washington Post (free registration) (9/4) | ||||||||||
| Fortune goes behind the effort to unionize Wal-Mart Fortune magazine spends 10 days with United Commercial Food Workers union organizers trying to bring unions to Wal-Mart. Their tactics range from staking out parking lots, knocking on doors and even entering the stores undercover. Wal-Mart maintains it is "pro-associate, not anti-union," and did not comment on the individual matters discussed in the Fortune story. Despite not having a single unionized store after five years of trying, the union says it will keep trying for the sake of organized labor's survival. Fortune (5/17) | ||||||||||
| Analysis: Wal-Mart to introduce new wage system According to a BusinessWeek report citing Wal-Mart employees and analysts, the retail giant is preparing to roll out changes to its pay system. The system would establish different pay classes and set annual raises at flat rates, not percentages. Analyst Robert Buchanan speculates the company, which declined to discuss the new plan, may be using the new pay scale to address labor concerns, but Stan Fortune, a UFCW organizer, worries the plan hurts veteran employees. BusinessWeek (6/3) | ||||||||||
| Wal-Mart institutes background checks Wal-Mart now requires a criminal background check on all potential new hires to Wal-Mart and Sam's Club stores. Company officials say the move adds another "level of security" to its hiring process. ABCNEWS/Associated Press (8/12), The Wall Street Journal (subscription required) (8/12) | ||||||||||
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| The man who stands up to Wal-Mart Wal-Mart may be all the rage of the retail world, but Costco president James D. Sinegal isn't willing to concede anything just yet. Costco has grown to a Fortune 50 company during Sinegal's 20 years on the job, and is lauded for its low markups, high employee wages and generous merchandise exchange policy. Fortune (subscription required) (11/10) | ||||||||||
| Analysis: Sears banking on its "Grand" plan Sears, Roebuck and Co. plans to operate 15 of its Sears Grand stores by the end of next year, which CBS MarketWatch describes as "Bed Bath & Beyond meets 7-Eleven and Pep Boys, with a lot of other stuff thrown in." Sears CEO Alan Lacy says the format's food offering is bringing customers in, and the company is using in-store customer kiosks to help differentiate its service from competitors Wal-Mart and Target. CBS MarketWatch (free registration) (8/23) | ||||||||||
| NPR report: The town that survived Wal-Mart National Public Radio looks at the downtown business district in Viroqua, Wisc., which has managed to coexist and thrive, even with the competition of Wal-Mart. Click here to listen to the report. (Audio player required.) National Public Radio (RealPlayer required) (6/4) | ||||||||||
| Kroger Marketplace concept set to take on big discounters To further compete against big-box discount chains, Kroger, the largest grocery chain in the U.S., recently announced it will soon open Kroger Marketplace stores and will include such non-grocery items as linens, lawn chairs and cooking pans, along with traditional grocery items. "One-stop shopping is an attractive concept to a lot of consumers, and the lines of retail are blurring," one industry representative said. "There is no such thing as an average customer or an average supermarket today." The Kansas City Star (Mo.) (free registration) (7/12) | ||||||||||
| Save-A-Lot looks to expand using Wal-Mart model Despite having a fraction of the sales Wal-Mart has, Supervalu is drawing attention for its fast growth, discount prices and combined food and general merchandise. One difference between Save-A-Lot and Wal-Mart, maintains the company's CEO, is smaller, "easier to shop" stores. Star Tribune (Minneapolis-St. Paul) (free registration) (4/16) | ||||||||||
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| Is Wal-Mart eyeing Russia? Wal-Mart said it did send a team to check out expansion opportunities in Russia, but would not comment on speculation that it plans to open a supermarket in St. Petersburg next year. Reuters (9/16) | ||||||||||
| Mexican Wal-Mart helps rural residents, but draws protest Wal-Mart has become Mexico's biggest retailer by acquiring several other chains, but some Mexicans are protesting its latest plans for a Bodega Aurrera store in Teotihuacan because of its proximity to ancient pyramids. Wal-Mart says the store will be inconspicuous and the company will respect "Mexican culture and traditions." The New York Times (free registration) (9/28), The Miami Herald (free registration) (9/6) | ||||||||||
| Report: Wal-Mart, Goldman Sachs may team to snap up Japanese retailer Wal-Mart has expressed interest in acquiring Daiei to expand its presence in the Japanese market, and the retailer may get some help from Goldman Sachs Group, according to industry sources. Reports indicate the investment bank may invest in some of Daiei's businesses if Wal-Mart buys the general merchandising stores. Investors of debt-ridden Daiei reportedly want help from a corporate turnaround agency to figure out how to handle the retailer's assets. The Wall Street Journal (subscription required) (9/10) | ||||||||||
| Wal-Mart unit takes top clothing retailer spot in Britain Buoyed by its George clothing brand, Asda, a supermarket unit of Wal-Mart, now holds a 9.4% share of the retail clothing market in Britain, which passes former top slot holder Marks & Spencer. Asda's George clothing is sold in 240 of the supermarket's 266 British stores and in five stand-alone outlets. The New York Times/Agence France-Presse (free registration) (8/22) | ||||||||||
| Wal-Mart eyes expansion throughout Europe Wal-Mart CEO Lee Scott says the retailer wants to open stores across Europe, calling every country there a potential market. Wal-Mart purchased British supermarket chain Asda nearly five years ago, and some expansion stores could carry that brand, Scott said, but new acquisitions could also be part of the company's Europe strategy. Financial Times (London) (subscription required) (5/25) | ||||||||||
| Analysis: Why is Wal-Mart successful in Britain, but not in Germany? Wal-Mart has lost money in Germany each year since 1997, while in Britain, the retailer's sales have grown 10% annually. The difference in performance is due to a tough German retail market where prices are regulated, labor laws are not flexible and local discounters, such as Aldi and Lidl, are well-established. BusinessWeek (10/6) | ||||||||||
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October 18, 2004
Payphones to Music Stations
BT Putting Music On the Streets
Times Online - Newspaper Edition
BT’s latest gig is payphones that masquerade as jukeboxes. Under plans now being drawn up, BT will offer a facility at payphones that allows users to download songs while on the move.
The plan, aimed at curbing rapidly falling revenues in the group’s payphone division, would see BT link up with Apple’s iTunes or another content provider to transform phone boxes across Britain into music kiosks.
Consumers out shopping or on their way to work could pay to tap into a database of songs for iPods or other portable music players they could download and play on the go. The revenue would be split between the content provider and BT. Nice.
The group confirmed to The Times that it was in talks with �various parties�, although it refused to disclose which ones. Cool.
The proposal comes after fears in BT that Ofcom, the regulator, will not agree to relax the historic agreement under which the company is forced to pay for the upkeep and maintenance of Britain�s payphones.With the boom in mobile phones, the former telecoms monopoly is facing mounting losses in providing payphones. Sixty per cent of Britain�s street phone boxes are loss-making and the number of calls made from them has fallen by half.
BT has admitted that it is reviewing whether it can disconnect 8,000 unprofitable street phones from its 100,000 strong portfolio.
In its submission to Ofcom, which is reviewing the sector, BT has lobbied for a relaxation of the rules and demanded that mobile operators should pay towards the upkeep of the boxes.
If Ofcom refuses to agree to that plan when it reports back next month, BT will have to find new ways of generating cash from phone boxes.
One idea that has already proved a success is providing internet access in the boxes. In some areas BT has also linked with local authorities to enable them to provide electronic access to their services in phone boxes.
A spokesman for BT said: �There are discussions going on at the moment (about the music kiosks) and there is something in the pipeline.�
Meanwhile, the group has announced that it is set to launch trials on a new Google TV �video on demand� service to enable domestic broadband customers to click into a huge archive of film and television programmes.
And that rocks, dude.
KNO - KioskNews.Org: BT putting music on the streets
October 15, 2004
Dell and Plasma
Dell entered the plasma television market Wednesday market, trying to break into a fiercely competitive market with a price that one analyst called disruptive.
Although Dell executives previously indicated their intention of entering the flat-panel television business, the company disclosed their first models and pricing plans at a press conference Wednesday morning at the DigitalLife show here in New York. Dell also unveiled an LCD TV, a pair of photo printers, and the "Dell DJ", a small hard-drive-based MP3 player that resembles the Apple iPod Mini.
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For Dell, however, the key might be the $3,499 price the company intends to charge for its new 42-inch plasma display, the W4200HD.
"It's a great price, it's a disruptive price," said Stephen Baker, director of industry analysis for retail analyst firm NPD Techworld, in an interview following the Dell launch. "As you know, Gateway did this when they entered the market, and Dell's evidently trying to do this on a product selling below $5,000", the most popular price range for these products, he said.
As the self-proclaimed leader in the flat-panel monitor business, Dell commands the volume pricing leverage that is allowing the company to offer these prices, said Mike George, general manager for the consumer business for Dell. "The price points are unbelievable; so is the quality," he said. "I believe that if you take any of our products and stack them against any other product, we'll come out ahead."
For now, the key will be how Dell lets consumers know that it is a television vendor. To do this, Dell is adding more and more kiosks, which highlight the "Dell experience" in malls and kiosks. Dell has put in place 80 of the new kiosks, with four � in Philadelphia, Los Angeles, Houston and Chicago � being converted over to highlight the new "digital home" products, George said.
Although the digital-television marketplace is crowded, NPD's Baker said the time is ripe to enter. HDTV has previously been the market for a few high-end suppliers. In some sense, Baker said, Dell's presence is like a high-end Honda Accord: it offers all the benefits of a luxury Jaguar or Mercedes without the high price tag. "It's brand value without the brand costs," Baker said.
Dell's new plasma displays will be available in November. However, for "reasons that I don't want to get into, according to George, the displays will only be shipped to customers in the continental U.S., not Hawaii or Alaska. Plans to offer the displays and to customers outside the country are in the works, George said.
Dell will also offer approximately six installation offers, including a $169 basic set-up option as well as higher-priced, more full-featured plans.
Dell's new products include:
The 42-inch W4200HD. The television supports 1024x768 resolution and includes dual integrated analog tuners and a dual analog/digital tuner.
The 42-inch W4200ED is a standard-definition plasma display capable of 852 x 480 resolution. Priced at $2,299, the display also includes dual tuners and can serve as a PC monitor. Both the W4200ED and the W4200HD ship with detachable 20-watt speakers.
The W1900 19-inch LCD TV, priced at $899. The display provides 1280 x 768 resolutions (a 15:9 aspect ratio) and a full suite of PC and LCD connectors.
The Dell Photo Printer 540. The small $189 printer (3.2-inches by 7.8 inches by 5.3 inches) is designed to be portable and contains a 2.5-inch LCD, USB port, 5-in-1 card reader and PictBridge port.
The Dell Photo All-In-One 942 printer, priced at $149. Initially, the printer will be limited to sales in the United States. It can print, copy, fax, and print 19 pages a minute in black and white and 14 ppm in color. The available print resolution was not available.
Dell Breaks Into Plasma TV Market
October 14, 2004
Google Search
Google launched their new desktop technology. I have installed it and it is very good and has helped already. desktop.google.com
More
America Online is rumored to be developing a desktop search application. So are Yahoo and Ask Jeeves. And Google has beaten them all to market. The company this morning uncrated Google Desktop Search, a thin-client app that allows Windows users (C'mon guys, how bout a little love for OS X?) to search e-mail in Microsoft Outlook and Outlook Express (not Gmail??), chat threads in AOL Instant Messenger, and Microsoft Office documents, all via a Web browser. It's a slick little application -- one that clearly shows Google marshalling its forces to challenge Microsoft's ownership of the computer desktop.
Microsoft too is working on improving its search utility. The company's perpetually-delayed Longhorn version of Windows will someday offer a better PC file search. Someday. "Microsoft has to be worried,'' said Jupiter Research senior analyst Joe Wilcox. "If Microsoft can do the research and catch up, then anything can happen. ... Microsoft can improve search in two years. But if people are already using Google, it will be hard to get them to change."
Danny Sullivan, a search industry pundit and editor of SearchEngineWatch.com, agreed noting that Google's got a bit more than first-mover advantage going for it. "They've not only beat their rivals to the punch, they've also changed the rules," Sullivan told News.com. "They're saying, 'We're not making search part of the operating system, we're making the desktop part of Google."
October 13, 2004
Useful Resources
AME Info is the "ultimate" Middle East business resource. Good mix on technology.
http://www.ameinfo.com
Self-service Lessons
The verdict is in. Managing information in a paperless environment has proven to streamline transactions, reduce waste, and improve service levels. Yet as organizations adopt self-service processes for everything from finance to human resources (HR), they're learning some interesting lessons about how to ensure a successful adoption�and the unforeseen benefits that can occur along the way.
The verdict is in. Managing information in a paperless environment has proven to streamline transactions, reduce waste, and improve service levels. Yet as organizations adopt self-service processes for everything from finance to human resources (HR), they're learning some interesting lessons about how to ensure a successful adoption�and the unforeseen benefits that can occur along the way.
Self-service: Helping businesses help themselves - AME Info FN
October 04, 2004
Embedded OS for Verticals
The Redmond software vendor says it will ship by mid-2005 what could be the first of a number of vertically-focused versions of Windows Embedded.
Just as it is doing with its Windows client software, Microsoft is developing customized variants of its Windows Embedded operating system for specific markets.
The first of what could be a full line of Windows Embedded variants will be Windows Embedded for Point of Service, company officials said Monday. Microsoft is currently testing the new flavor of its Windows Embedded product in conjunction with more than 30 device makers and application vendors.
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Microsoft plans to ship Windows Embedded for Point of Service by mid-2005. The company is expected to show off the latest build of the system at its private retail and hospitality developers conference in Redmond this week. The Windows Embedded for Point of Service product is part of Microsoft's grand "Smarter Retailing Initiative" strategy, which it unveiled earlier this year.
Microsoft offers two different embedded Windows flavors: Windows XP and Windows CE. Windows XP Embedded, a subset of Windows XP, is typically integrated into retail point-of-sale terminals, thin clients and advanced set-top boxes. Windows CE is a real-time embedded operating system typically used in small-footprint devices.
Windows Embedded for Point of Service is designed to make retail peripherals � scanners, receipt printers, cash drawers and magnetic-stripe readers � to "plug and play" seamlessly with Windows Embedded.
"Point of sale isn't just about cash registers," said Scott Horn, a senior director with Microsoft's mobile and embedded devices division. "It's also about self-service kiosks, self-service check-out systems and ATMs.
"This (Windows Embedded for Point of Service) product was driven by the cost of integrating peripherals," Horn continued. "If and when plug-and-play needs emerge in other vertical markets, we could see other (similar) Windows Embedded versions."
Embedded XP, CE Updates Expected Next Week
Microsoft to Provide Mid-Size Customers With RFID Support
Microsoft Targets Second RFID Pilot at SMBs (eWEEK)
IBM, Microsoft and Oracle Tailor Middleware to RFID (eWEEK)
RFID's Vertical Buildup Reflects Industry Challenges (eWEEK)
Windows Embedded for Point of Service will be built on top of the Windows XP Embedded with Service Pack 2 (SP2) code. Microsoft has been beta testing XP Embedded SP2 since earlier this summer. On Monday, Microsoft made a technical preview release of this code available to beta testers. Company officials said to expect the final version of XP Embedded SP2 to ship before the end of calendar 2004.
Among the partners with whom Microsoft is testing Windows Embedded for Point of Service are Altiris, APG Cash Drawer, BSquare Corp., Fujitsu Transaction Solutions; Micros Systems, Seiko Epson, Tatung and Ultimate Technology.
Microsoft to Offer New Windows Flavor for Retail Market
September 30, 2004
KIosks & CRM
 Will Frustrated Store Managers Revolt Against Corporate CRM? |
Will Frustrated Store Managers Revolt Against Corporate CRM?
September 28, 2004
By Evan Schuman
Frustrated by what some see as IT executives hoarding CRM information, retail store managers are starting to do an end run around corporate with their own customer-information-gathering systems.
One result of this retail technology revolt are smart store kiosks, which today do a lot more than display electronic brochures. As the technology has become much more portable, these stand-alone machines�loaded with tons of hard-disk space and RAM and no Internet connection in sight�are allowing store management to gather much of their own information, which they may never get around to sharing with corporate IT.
This is a trend that seemed to get its start in the car-dealer segment, with its tradition of dealers switching to another carmaker and therefore making corporate hesitant to share too much information. But it now seems to be creeping into more traditional retail segments, and consultants watching the trend see it as the logical result of store manager frustration.
Why is corporate IT hoarding CRM data? Read Evan Schuman's view.
What's the nature of this frustration? The store managers have been asked to support and administer quite a few corporate-dictated CRM (customer relationship management) programs. And yet, they complain, they see little usable information delivered back to the stores, and what does come back is often little, late and not addressing the questions the store managers�as opposed to IT executives at headquarters�want answered.
Store managers "are being asked to do a lot of things at the store level, such as signing customers up for loyalty programs and performing updates to keep the data clean," said Catharine Harding, vice president of retail at sales optimization software firm Blue Martini Software. "They are feeling a lot of frustration that they don't get to see the benefits."
Tom Byrnes, director for marketing for interactive retail at kiosk-maker Planar Systems, agreed. "It is getting very difficult for people in the front lines [store management] to be able to access the kind of data they need to improve the customer experience," he said.
To read more about why some retail CIOs are more hesitant than prudence requires, click here.
Harding said a small part of the blame can be directed at the very origins of the typical CRM system, which was never designed to be used in the way many retail operations are now using them. They were designed to analyze things like how a quarter of a million ad mailings are doing and whether the campaign response rate could be improved somehow. Store managers, on the other hand, are more focused on things like identifying their store's top customers and their preferences.
A larger chunk of the blame for this disconnect can be given to IT procedures and methodologies, although not necessarily to the senior IT executives themselves, Harding said. "I recently talked with two store managers, who told me what they have to go through to get reports" that are store-relevant, she said. "It was an arcane system to request and to join certain kinds of data."
Next page: Don't blame IT yet. If you want to blame corporate managers for the frustration, Harding said, don't look at IT: Look at marketing. "The central marketing department. That's where they feel, 'God forbid, the store sent out their own campaign and it wasn't corporate branding.'" Marketers also often fear that store managers might saturate customers with direct mail and contacts "because we're not controlling the store e-mails."
Another market observer is Margo Zenk, technical director and senior partner for Matrix Consultants, a marketing firm that specializes in kiosks. One of her clients is $21 billion car/motorcycle vendor Suzuki. Suzuki's store managers didn't want to share information with the area's other store managers, let alone corporate IT or marketing. "They're not into sharing any information," she said.
To read about how 7-Eleven discovered the essential nature of sharing information with store managers, click here.
In those environments, today's kiosks are a good fit. Unlike an in-store PC with a Web connection, the kiosks have hard disks and memory sufficient to seamlessly run very high-end animations, the kind of multimedia that would either be too cumbersome for download or streaming. The devices can also be placed anywhere, including parking lots, and can show elaborate product demonstrations.
Most importantly, many kiosks today are two-way, which can turn them into information-gathering and sometimes even CRM units.
Consider $11 billion Nike, which bills itself as the world's leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories. But Nike is also becoming a significant retailer, with 15 Niketowns, more than 80 Nike Factory Stores and two stores intended to attract active woman called NIKEgoddess Boutiques.
At Niketowns, customers are encouraged to design their own footwear on the kiosk. The sneaker is then created and delivered to that customer. Hence, it gathers a ton of customer preference information and can connect to a specific customer, who willingly provides full contact information. Is it a true retail CRM system? Well, if the shoe fits �
"Kiosks are not necessarily just Web on a stick," said Planar's Byrnes, whose company makes those kiosks for Nike. "The new kiosks are much more single-purposed, much more product-specific."
Kiosks aren't the only non-traditional retail tools today. To read more about retailers using consumer cell phones and PDAs for checkout, click here.
Byrnes spoke of the kiosk trend as a natural result of two other trends: Products are becoming much more complicated and sometimes sophisticated; and retail sales reps are becoming younger, less experienced and less sophisticated.
"American retail, by and large, is run by teenagers," Byrnes said, adding that teenagers contribute greatly to retail's very high employee turnover rate. Those factors force store management to reduce product differentiation points to whatever can be squeezed into a few bullet points on an index card, Byrnes argues, while increasingly complicated products demand the opposite.
"It remains a fact of retailing that almost 75 percent of all purchase decisions are made at the point of purchase in a bricks and mortar environment," so any sales assistance needs to happen on-site, and Byrnes concludes that that means kiosks.
Another trend is consumer acceptance with self-service, whether it's in the form of retail self-checkout, electronic ticket machines at airports or the ever-present ATM. "The marketplace is already headed in one direction. Customer frustration is very high. Americans are quite content to be in a largely self-service environment," Byrnes said.
Retail Center Editor Evan Schuman can be reached at [email protected].
Will Frustrated Store Managers Revolt Against Corporate CRM?
September 29, 2004
Plastic versus Cash
Experts say the use of debit, credit and prepaid cards has eclipsed cash for the first time in history, and they expect the trend to continue. Americans are using their plastic for big ticket items as well as small purchases like gas or a cup of coffee.
Plastic takes charge over cash
"With cards, we no longer have to worry about lost, stolen, counterfeit, returned ... or fraudulent checks."
By Dan Thanh Dang
Sun Staff
Originally published September 29, 2004
Janice Simmons hates cash.
The 45-year-old Elkridge mother of two teenage sons rarely carries money in her purse anymore - cash is too easy to lose, get stolen and last, but not least, spend.
"Cash has legs," Simmons says. "It just wants to go everywhere but in your pocket. I just don't like to have it on me."
In fact, Simmons, who also forgoes writing checks by paying her bills online, could go entirely paperless if not for those few remaining souls who don't take plastic: "There are times when you do need cash - like when my boys ask me for $5."
Thanks to consumers like Simmons, plastic recently outpaced paper as the preferred mode of payment at the nation's checkout lines for the first time ever, and experts say it will soon be commonplace to pay for nearly everything from Big Macs to mortgages with a card rather than cash or checks.
Paper steadily has been losing out to the various forms of plastic - credit, debit or prepaid cards - and last year, the balance tipped: Cards were used for 53 percent of store purchases, while cash or checks were handed over for 47 percent of them, according to the most recent Study of Consumer Payment Preferences.
It used to be that consumers had only three payment options: cash, check or credit card. But these days, companies are heavily promoting the use of the newer debit and prepaid cards, which look like credit cards but act like cash in that users don't incur debt or interest charges.
Television ads have long featured comedian Jerry Seinfeld demonstrating the benefits of using his American Express at gas stations and supermarkets, but lately he's been joined by George Steinbrenner, allegedly preserving his sore check-writing hand by instead using a Visa check card to pay the stadium utility bill and players' salaries.
Card companies are aggressively soliciting industries that have traditionally accepted only cash or checks - such as parking garages, insurance companies and fast food restaurants - to start taking their cards.
Different uses
As a result, consumers, who once reserved their cards for big ticket items like kitchen appliances and summer vacation trips, now use them for things big, small and in-between.
Planning to see the new martial arts epic Hero? Go online and purchase advance tickets with your bank card. Time to pay your monthly rent? Forget the mail and bill it to your credit card. Need a quick fix of caffeine? Just whip out your prepaid Starbucks card.
Simmons uses her Visa debit card to pay for gas at the Exxon station and the occasional lunch at Panera Bread. Just recently, she used the card at Giant to buy seafood and salad fixings for dinner and at McDonald's to buy her sons a quick meal.
"It's so much easier," she says.
Card companies love people like Simmons. They're hoping she and others like her will lead the way toward a cashless society someday. While that's still far in the future, the average American household owns from 7 to 13 payment cards, including credit, debit and store cards.
By 2007, the majority of payments - not just for in-store goods and services, but also bills like mortgages, medical fees and car payments - will be made with a card rather than cash or checks, speculates The Nilson Report, the leading publication covering consumer payments systems worldwide.
Consumers increasingly are comfortable using cards, and the companies that issue them have been working with businesses and government agencies to create new ways of transferring money via plastic rather than paper.
Use at schools
For example, students at the University of San Diego and Northwestern University who used to hit up their parents for a check can now use their student identification badges to tap into an account set up to pay for books, snacks and other incidentals. Tax filers, instead of waiting for a check, can receive their refunds on prepaid cards.
Businesses like U-Haul and Stanley Steemer have converted employee paychecks into electronic cards that can be re-loaded each pay date. Government agencies similarly have transferred child support and unemployment payments to cards. Maryland began using reloadable electronic cards for child support payments about two years ago.
The cards help save businesses and government hundreds of thousands of dollars in postage and check costs.
Each year, 4 million paychecks are damaged, lost or stolen each year and reissuing them costs U.S. businesses $48 million, according to the American Payroll Association.
Avoiding those costs has lured many companies and states toward using electronic payment cards.
"Electronic delivery is much more reliable," says Craig R. Goellner, director of Colorado's child support enforcement agency, which began offering electronic cards to clients three years ago. "There's a lot of overhead costs associated with checks. With cards, we no longer have to worry about lost, stolen, counterfeit, returned, undeliverable or fraudulent checks."
The cards also help offer new options for people, who don't have a bank to turn to.
Maria Smith of Taneytown can attest to that.
Every time her daughter's father makes a child support payment, the money is automatically loaded onto Smith's CashPay card, which she can use much like a credit or debit card. Smith does not have a bank account.
CashPay Visa to shop
Smith uses her CashPay Visa card to shop at the local Wal-Mart, order dinner, buy groceries or purchase gas. Recently, she used the card as collateral to rent a car during a family trip in Tennessee.
"It's my only card so I wouldn't have been able to rent a car without it," says Smith, who works at a medical center in Frederick. "Not having a bank account was really difficult. I had to pay a fee to cash my checks. ... This card has made my life so much easier. I can use it anywhere."
The CashPay program also allows clients like Smith to load their own paychecks and tax refunds onto card as well, says the cash-averse Simmons, who manages the program.
Industry experts are predicting that most local, state and federal agencies will eventually convert to electronic payment cards over the next few years. And retailers are increasingly happy to accept them.
The powerhouse McDonald's joined the movement recently when it started encouraging customers in television ads to use their cards in its stores.
Other fast food restaurantsare accepting cards these days, as well as many utilities, some insurance companies and even vending machines.
Businesses that start accepting cards quickly learn something that studies have shown: "When people use credit, they spend more than they do when they use checks or cash," says Paul M. Dottle, senior vice president of retail and emerging industries at American Express.
And that is exactly what worries some consumer credit watchdogs - those who spend beyond their means now will find it easier to do so. Consumer debt topped $2 trillion this year, according to the Federal Reserve Board.
Credit card 'worry'
"Debit cards don't concern us as much because you're spending money like cash," says Howell Edwards, vice president of InCharge Institute of America, a national nonprofit organization devoted to personal finance education and credit counseling. "It's the credit cards that we worry about. Charging used to be restricted to big ticket items.
"Now you see people in the line at McDonald's, and they're buying $4 worth of food, and they're charging it," Edwards says. "When you start using credit for everything, it can be very easy for things to go out of control."
The problem, he says, is that $4 worth of food could end up costing you $8 in the long run.
If you use your card without paying it off every month, the debt you carry can easily snowball.
For example, if you have an outstanding balance of $2,000, with an 18.5 percent interest rate and you make low minimum monthly payments, it would take over 11 years to pay off the debt. It will also cost you an additional $1,934 for interest, almost doubling the cost of your original purchase.
Still, credit card companies continue to sweeten the deal by offering rewards - a rebate point for every dollar charged, frequent flier miles - to encourage heavy usage.
The key, says one consumer, is card discipline.
Racking up rewards
Eren Koont, a Silver Spring resident, has earned cookware, DVDs and gift certificates from Amazon.com, The Gap and Crate & Barrel for using his credit cards. But he makes sure those gifts are really free by paying off his monthly bills to avoid interest and late fees.
"I'd say, 80 percent of the time, I use a card," says Koont, a product manager for Texas Instruments and part-time graduate student at University of Maryland. "I use my Amazon card to pay for groceries, eating out and my tuition. That's about $7,500 a semester."
Consumers like Koont delight in finding new ways to rack up rewards with their credit cards. A favorite: to charge your rent, as upscale apartment buildings like the Munsey and the Standard in downtown Baltimore allow.
But don't count out the greenbacks just yet. There are some things that paper money will always buy.
"People like anonymity," says David Robertson, publisher of the Nilson Report. "You can get that with a cash transaction when you're settling a wager between friends, taking part in the office pool, or it could be for something unsavory.
"There will always be a need for currency."
--------------------------------------------------------------------------------
The way of plastic
When did plastic become so complicated? The old charge card has mutated into several variants. Although they look identical, they work quite differently. Here's how:
Credit cards: With these, purchases and cash advances are made against a line of credit, for which you are billed at the end of a monthly cycle. If you don't pay off the balance, you're charged interest on outstanding debt and a late fee if you don't pay off the monthly minimum.
Debit cards: Often called ATM or check cards, these allow you to withdraw money from your bank account as cash from the automated teller machine or to pay for store purchases.
Prepaid cards: These are loaded with a specific amount of money that you draw from with each purchase or cash withdrawal until you hit zero.
baltimoresun.com - Plastic takes charge over cash
September 28, 2004
In-Store Advertising
Wall Street Journal -- Wal-Mart TV Network steps up in-store advertising: Wal-Mart TV Network is expanding its in-store presence by adding monitors to stores, upgrading to plasma and liquid-crystal display sets and placing them at eye level in areas where shoppers tend to linger. The TV network, which was launched in 1999, is already seen by about 133 million viewers in a four-week period, which rivals the four major broadcast networks in audience reach, according to Nielsen Media Research.
September 27, 2004
Starbuck Strategies
Starbucks is also set to put CD burners in 45 stores later this year, allowing customers to sample online music and make their own albums.
Grande Plans
Yes, it can seem like there's a Starbucks on every corner, but Howard Schultz says his company is just warming up. A look at how he's rewriting the rules of retailing
Photo Illustration by James Porto for Newsweek
Caffeine nation: America's new Main Street?
By Brad Stone
NewsweekOct. 4 issue - You can't go near the City Centre mall in downtown Seattle without seeing the coquettish mermaid logo of a certain international coffee company. There's a Starbucks kiosk just inside the mall entrance. Not a hundred yards away, another Starbucks is perched near the elevators to the 44-floor office tower. Up a short escalator, there's a third Starbucks. Why does a midsize shopping center need a trio of identical coffee shops? "If we only had one, customers would have to wait, or they would walk away," says Chris Hougland, who manages two of the cafes.
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The satirical online newspaper The Onion was more prophetic than it realized with a 1998 headline: NEW STARBUCKS OPENS IN REST ROOM OF EXISTING STARBUCKS. Back then the coffee chain had 1,778 stores and seemed to be nearing almost comic ubiquity in some parts of the country. Today the company that weaned us away from the free mud in the office kitchen and hooked us on $3 tall double caramel macchiatos (with nonfat milk, please) has 5,945 stores in the United States and 2,392 more overseas and in Canada. While it may seem that there's already a Starbucks on every corner, chairman Howard Schultz says the company is just getting started. His previous goal of 10,000 stores in the United States, set in 2002, now appears "light," he says, and the company plans to double the current number of domestic stores to nearly 12,000. To meet that target, Starbucks will speed up its rollout of drive-throughs and kiosks at airports and supermarkets. And it will continue challenging one of the prime tenets of retail: don't locate your new stores close to your old ones. Don't be fooled: the key to its success is not the taste of its coffee. "The two things that made them great are real estate and making sure that no one has a bad experience in their stores," says CIBC World Markets analyst John Glass.
Starbucks' unconventional approach to real estate goes back to an impulse decision by Schultz more than 15 years ago. In 1988 he visited the company's first international store, in downtown Vancouver, B.C., and saw what every retailer dreams about: a busy store. But he also saw customers twitching in long lines as they waited for their coffee. He startled his real-estate broker by suggesting they expand to the vacant lot directly across the intersection. "It wasn't a different neighborhood but it had a different vibe," Schultz recalls. He sensed that each side of the street had its own traffic pattern, and that customers are reluctant to alter their routines or delay their day for a cup o' joe they consider a luxury.
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Starbucks' real-estate team has developed Schultz's instincts into profitable science. The company's furious addition of new stores fuels its booming bottom line and caffeinated stock price, up 1,500 percent in the past decade. Company execs say there's still plenty of room for expansion, even in seemingly saturated metropolitan areas like Seattle, where there's a cafe for every 12,000 people. (In Boston, they repeatedly point out, there is one Dunkin' Donuts franchise for every 8,000.) They're also looking to cities like Baltimore and St. Louis, with few gourmet coffee outlets, and to the long stretches of highway where travelers seek familiar respites. "I think there are very few places we are not going to be able to go," says Schultz.
Starbucks execs are guarded about how they decide exactly where to locate a new store. But real-estate brokers who follow the company's moves say it goes beyond just looking at traffic patterns, demographics and what other coffee shops are nearby. Patrick Duffy, the president of Florida retail-real-estate firm Colliers Arnold, says Starbucks brokers take to an extreme an old McDonald's maxim: "You want to put your sugar along the trail of ants. And you never want to make the trail turn." Schultz says that every year for the past five years, one third of all existing stores were "cannibalized" by new stores built in close proximity, a sign of its eagerness to make its $2-per-cup-of-coffee lifestyle as accessible as possible. Profits typically rose in the region afterward, no doubt because more people get hooked on its blend of beans. More stores also accommodates today's version of the hallowed coffee break, reduced to a quick dash out of the office by the modern obsession with worker productivity.
Another way it intends to keep fueling its growth is to move customers through its lines more quickly. While Starbucks execs love to talk about their stores' gentle environs as a "third place" besides home and work, it turns out that only 30 percent of customers actually use the tables and couches (many to write their novels, no doubt). Everyone else grabs their java to go. So one third of new stores will now offer drive-throughs. But the company wants to avoid what it calls "fast-food signals." In a month-old Starbucks drive-through prototype on Mercer Island, a Seattle suburb, wooden canopies cover a faux-brick driveway lined on both sides by flower gardens. You won't find that at McDonald's.
When it's not furiously opening new locations or trying speed up lines, the company is brewing new ideas to get customers to dig deeper into their wallets. On each floor of Starbucks headquarters in an old Sears & Roebuck warehouse south of downtown Seattle, highly caffeinated employees tout new plans for food (ovens for hot sandwiches will enter 90 stores later this year) and new drinks such as coffee liqueurs and this year's holiday offering: pumpkin spice lattes.
The most unorthodox plan caters not to taste buds but to eardrums. This month the company's HearMusic subsidiary, which it acquired in 1999, had the No. 2 record in the country with the Ray Charles duet CD "Genius Loves Company," whose release coincided with the musician's death. Schultz says the best-seller showed that Starbucks reaches a music-loving adult audience which feels intimidated by retail outlets and ignored by radio. He plans to release more CDs with other legendary artists and even some new, undiscovered singers in the coming months. Starbucks is also set to put CD burners in 45 stores later this year, allowing customers to sample online music and make their own albums.
Analysts and even most rivals sit in awe of Starbucks, offering only a few criticisms and concerns. As the company lets supermarkets, bookstores and airports run more of its stores, it risks losing control of the customer experience. Then there's the possibility, perhaps remote, that Americans will one day adopt an Atkins-style aversion to caffeine. Of course, these aren't possibilities that keep Schultz and his colleagues up at night. Only a double, nonfat, extra-foam latte after dinner could do that.
September 23, 2004
digital audio players
Sales of portable digital audio players like Apple Computer Inc.'s trendy iPod are booming and are expected to generate $58 billion in revenue worldwide by 2008, according to a research report released Tuesday.
Sales of portable digital audio players like Apple Computer Inc.'s trendy iPod are booming and are expected to generate $58 billion in revenue worldwide by 2008, according to a research report released Tuesday.
The report, from research firm IDC of Framingham, Mass., is another indication of how portable MP3 players -- introduced in late 1998 -- have evolved from a niche technology gadget into a mainstream consumer device, said Susan Kevorkian, an IDC senior analyst.
Apple Computer has captured more than 50 percent of the digital player market with its iPods. These use small internal hard drives to store thousands of songs. But the Cupertino computer-maker may have to adjust its focus because prices for digital audio players that use flash-memory cards are falling, Kevorkian said.
"Although Apple will continue to have a leading position in the portable jukebox market, they may eventually offer a flash-based iPod branded player as well,'' she said.
The report said revenue from digital audio players is expected to reach $7 billion by the end of 2004, up from $4.4 billion in 2003. The category also includes portable CD players that are designed to play CDs with songs recorded in the compressed MP3 audio format.
By the end of June, Apple Computer had sold more than 3.7 million iPod and iPod Mini players since they were introduced in 2001.
Apple has been most successful in North America, where it has tied marketing of the iPod to its online iTunes Music Store.
However, Kevorkian said, smaller-capacity flash-based MP3 players remain more popular overseas, particularly in regions of Asia where "they are used more as a fashion accessory.'' More 22 million flash players are expected to be sold worldwide by the end of 2004, compared with a projected 8 million hard- drive players.
Kevorkian also said declining wholesale costs of flash-memory cards should bring average sales prices of flash-based MP3 players down from $117 in 2003 to $98 in 2008. Meanwhile, average prices of hard-drive players should decline from $304 last year to $171 in 2008.
More than 20 million combination CD-MP3 players will be sold this year, but that number is expected to rise only modestly in the next few years.
However, Kevorkian said, regular CD players won't disappear quickly because the CD remains the core distribution medium for the recording industry, "and we don't expect that to change overnight.''
http://www.sfgate.com/
September 21, 2004
Self-service Risk and Rewards
Self-service technologies, such as websites and kiosks, bring both risks and rewards -- The Economist
SO YOU want to withdraw cash from your bank account? Do it yourself. Want to install a broadband internet connection? Do it yourself. Need a boarding card issued for your flight? Do it yourself. Thanks to the proliferation of websites, kiosks and automated phone systems, you can also track packages, manage your finances, switch phone tariffs, organise your own holiday (juggling offers from different websites), and select your own theatre seats while buying tickets. These are all tasks that used to involve human interaction. But now they have been subsumed into the self-service economy (see article).
Many people complain about companies outsourcing work to low-wage economies: but how many notice that firms are increasingly outsourcing work to their own customers? In theory, companies can save money by replacing human workers with automated self-service systems, while customers gain more choice and control and get quicker service. There is even talk of self-service doing for the service sector what mass production did for manufacturing, by enabling the delivery of services cheaply and on a massive scale. Surely the expansion of self-service into more and more areas is to be welcomed?
Touch-tone torment
Not necessarily. When it is done well, self-service can benefit both companies and customers alike. But when done badly�who has not found themselves trapped in a series of endless touch-tone menus?�it can infuriate and alienate customers. In their desire to cut costs, many companies deliberately make it difficult to get through to a human operator; yet their phone or web-based self-service systems do not always allow for every eventuality.
Deus ex machinima?
Sep 16th 2004
You're hired
Sep 16th 2004
The internet
E-commerce
In areas where self-service is only just starting to take hold, this is less of a problem: fuming customers can, after all, always take their business elsewhere. But if every bank were to adopt impenetrable self-service systems, disgruntled customers would no longer be able to express their discontent by voting with their feet. Such a scenario ought to provide an opportunity for some firms to differentiate themselves: some banks, for example, already promise that their telephone-banking services always offer the option of talking to a human operator. But in return for guaranteed access to humans, many firms will simply charge more.
As a result, people who prefer not to use self-service systems (such as the elderly) will be forced to pay higher prices. This is already happening: many travel firms offer discounts to customers who book online. Buy your tickets the old-fashioned way and you must pay more. Firms are, in effect, introducing penalty charges to persuade customers to use self-service systems. Some customers might resent this.
Another objection to self-service is that while it saves companies money, it does not always save their customers time. In the best cases, it does, of course: checking yourself in at the airport or tracking your own packages on a shipping firm's website can be quicker than queueing or making a phone call. But as more and more tasks are unloaded on to customers, they may start to yearn for the (largely mythical) days of old-fashioned service. Again, this ought to provide an opportunity for specialists (such as travel agents) who can offer a convenient, one-stop-shop service.
All of this suggests that there are limits to how far self-service can be taken. Companies that go too far down the self-service route or do it ineptly are likely to find themselves being punished. Instead, a balance between self-service and conventional forms of service is required. Companies ought to offer customers a choice, and should encourage the use of self-service, for those customers that want it, through service quality, not coercion. Self-service works best when customers decide to use a well designed system of their own volition; it infuriates most when they are forced to use a bad system. Above all, self-service is no substitute for good service.
http://www.economist.com/opinion/displayStory.cfm?story_id=3196309
September 15, 2004
Research reports
Francie/Summit Issues New Retail Kiosk Report
New Kiosk Industry Sector Report � Retail Now Available!
09-13-2004 --
Kiosks are being deployed in record numbers�especially in the retail sector�so we are happy to announce the publication of the Fourth Edition of Summit Research Associates' popular Kiosk Industry Sector Report � Retail. The 100-page report contains a number of charts including: the leading reasons why retail kiosks are deployed, the most popular types of peripherals used on retail kiosks, the average cost of a retail kiosk by world region, the average length of time a customer uses these types of kiosks and the average number of users per day.
This report contains 12 Case Studies, with special emphasis on the hottest areas in retail kiosks today: digital photography, music and DVD previews, Quick-Serve Restaurant ordering, Digital Signage and Ringtone downloads. Several popular product information kiosks are also evaluated. Case Studies include Mazda�s Interactive Showroom, RedDotNet, Home Depot�s ColorSmart by BEHR� and the US Postal Service�s Automated
Postal Center. Because the trend-setting Asia-Pacific region represents an area starting to show impressive kiosk growth, we have included four kiosks tested there � one each from Singapore and Korea and two from Hong Kong.
Every Case Study is measured against Summit�s Kiosk Evaluation Checklist, which presents a quick overview of each kiosk project. It includes descriptions of the locations within the store, the enclosure, signage, attract loop, user interface, peripherals, and any special features that make this kiosk stand out. This is followed by a detailed�and honest evaluation of the retail kiosk. For the first time, each Case Study includes a photograph of the enclosure and at least two screenshots of the software interface
Table of Contents
I. Report Organization
II. Introduction, Projections and Trends
III. Survey Results
Reasons to Deploy Retail Kiosks
Number of Retail Kiosk Users per Day
Number of Retail Kiosks
Average Cost per Retail Kiosk
Average Cost per Retail Kiosk by World Region
Average Length of Time Spent at the Kiosk
Usage Patterns
Payment Types
Peripherals Used
Leading Pointing Devices
Service Providers
Consumables Replenishment
IV. Retail Kiosk Case Studies
Automated Postal Center
Broadway Circuit Cinemas
ColorSmart by BEHR
Faucet & Shower Products Kiosk
Mazda Interactive Showroom
McDonald�s My McD
Nokia Download Station
Photomoa
quickPIX
RedDotNet
Royal Farms Royal Express
Touch�N-Go
V. Conclusion
The Table of Figures features 57 charts and photographs.
The report is available as a PDF for USD $795.00. A CD-ROM version is available at no additional cost. We have also prepared an extensive two-hour PowerPoint workshop on retail kiosks featuring the projects and trends highlighted in this report along with many other examples. Available on CD-ROM, it normally sells for $495.00, but if it is purchased along with the report, the price drops to $195.00, including shipping and handling. (Once you have received the CD, we will set up a mutually agreeable time to conduct the workshop via teleconference.)
Limited and unlimited site licenses are available; contact us for details. Major credit cards (Visa, MasterCard and American Express) are accepted. Ordering is easy; simply email, fax or phone us your credit card number, expiration date and complete address for invoicing purposes. Your order will be sent promptly. Purchase orders and wire transfers may also be used for payment.
For details or to order the report and/or workshop, please contact Marta Mendelsohn, Director of Research and Marketing: [email protected] or visit our website at www.summit-res.com
Source: Summit Research Associates
August 19, 2004
Trends and Stats
Personal media player market to grow 700% this year
19/08/2004 by Leigh Phillips
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Following the current market trends of offering and supporting digital content, while facilitating portability, the handheld audio/video player market is poised to grow
consistently over the next five years, according to a new report from market research group In-Stat/MDR. The analysts project that this segment will experience 700 per cent growth in 2004, and an overall CAGR of 179 per cent through 2008.
The first of these devices emerged in 2003, and by the end of that year; consumers were already somewhat familiar with them. In a late 2003 survey from the same research group, nearly 30 per cent of respondents indicated they were familiar with these devices. Also known as personal media players (PMPs) or personal video players (PVPs), most of these handheld devices include audio, video and imaging functionality. Additionally, some also offer the ability to act as a portable personal video recorder (PVR), recording directly from the TV to the device. PMPs support a variety of data formats, although they offer varying levels of native codec support.
Recent devices have had high price tags and are most useful to consumers who already have a lot of their own content. One of the critical needs for success in this product segment is the availability of content. Today, consumers have some content of their own, but many in the industry feel that the real value of these products will emerge from widespread use of downloadable video content.
This year these products will primarily attract PC-savvy early-adopters. However, most companies are targeting three types of users: the commuter, the traveller, and people wanting to entertain their children. The researchers believe that, overall, this is a viable market segment, but it may take a while to develop to the scale that many electronics manufacturers desire.
Most of today's devices are using a 4.6cm or 6.6cm, 20GB drive. Capacity will increase as access to content increases and component prices decrease.
The majority of today's products are either based on Microsoft's Portable Media Centre (PMC) platform or on a Linux platform. The analysts expect that PMC devices will represent about 25 per cent of shipments this year.
Most current or upcoming products will be priced in the �300 to �500 range. The ASP is not expected to decrease very quickly over the forecasted period.
Some PMP products are PC-centric, while others do not require the use of the PC. This differentiation may sway some users in their choice of devices.
Digital Media Europe: News - Personal media player market to grow 700% this year - report
August 09, 2004
Multichannel
Best Buy Gives Customers What They Want
When told that one analyst recently dubbed his company the "poster boy" for effective multichannel selling, BestBuy.com Senior Vice President and General Manager John Thompson sounded genuinely taken aback. "Wow," he says. "Really, all we've been doing is giving our customers what they want."
Granted, with 611 stores and a brand solidified through years of slavish devotion to consumers, Best Buy boasts significantly more in the way of resources than most of its peers (the company generated $20.9 billion in sales in 2003). But, as other well-regarded bricks-and-mortar operations have learned (see under "Depot, Home"), in-store dominance does not guarantee multichannel success. And with its partnership with eBay finally made public, Best Buy seems primed to hold onto its leadership position in the space.
BestBuy.com was launched in 1999, offering little more than a store locator and basic company information. To hear Thompson tell it, the company quickly became aware that tech-savvy customers wanted more. "Selling on the site was a given. The challenge was doing it right, giving customers choices in terms of delivery and services that aren't always practiced in a big-box environment," he recalls.
Thompson freely admits that Best Buy experienced a few bumps on the way to effect a multichannel presence. The online world required a commitment to customer analytics that, despite the company's progressive approach to CRM, wasn't where it had to be. Too, there was concern about the flexibility of merchandising strategies. Separately, the company worried that fraud-wary customers would need significant assurance before committing to online purchasing.
"Most companies are very methodical about how technology is developed and deployed. But in this space, you have to find a different rhythm to test products and offers quickly," Thompson says. "It's a very responsive environment. You learn faster about your customers, and you have to apply that knowledge faster."
Best Buy soon overhauled its Web site and turned to the kiosks that had been deployed by other retailers with only sporadic success. The in-store kiosks, which allow consumers to order any item that Best Buy sells (with guaranteed fast delivery), addressed the potential disappointment of out-of-stock items. "After you look at an item in one of our stores, you can go home and talk to your partner about it before ordering online. Or you can get educated on something at home, and then go to the store and buy it," Thompson says. Indeed, recent research revealed that nearly half of the company's customers visited BestBuy.com before making an in-store purchase.
As for the partnership with eBay in March, Best Buy formally unveiled two outlets on the auction site. Through the arrangement, the company is hoping to increase sales margins on older and inventory items that previously had been handed over to liquidators. While analysts viewed the move as a response to increased sales of consumer-electronics products by mass merchants like Wal-Mart, Best Buy sees it as merely another option for consumers.
"Organizations that have catalogue or order businesses, like Staples, they just use the Internet to do what they'd always done," Thompson says. "For us, we started from scratch, so it's gratifying to be recognized for doing this well."
Best Buy Gives Customers What They Want
August 03, 2004
Retail - Specialty Store
The definitive ranking of the nation�s biggest specialty chains
Top 100 Specialty Store Retailers
The definitive ranking of the nation�s biggest specialty chains
By David P. Schulz
Things are looking good for specialty store retailers, some of which are building on positive performance in 2003, others of which are in the midst of a rebound. The nation�s economy seems to be providing a favorable climate for specialty stores to prosper.
The STORES Magazine Top 100 Specialty Store Retailers are a diverse bunch, representing more than 20 different merchandise categories and orientations, depending upon how you slice and dice the classifications and mark-on policies. However diverse they are, they have one thing in common: They all have Wal-Mart as a competitor.
Wal-Mart�s supercenters, traditional discount stores and Sam�s Club warehouses carry wares in every specialty segment represented on the Top 100 Specialty Store Retailers chart. Wal-Mart�s devastation of toy retailing has been well-documented, with chains such as Kiddie City, Zany Brainy and Noodle Kadoodle now only a memory, FAO and K-B Toys in bankruptcy, and Toys �R� Us weakened and retreating from the �toy supermarket� model Charles Lazarus crafted so painstakingly.
Fine jewelry, costume jewelry, engagement/bridal jewelry, fashion jewelry or quality watches � Wal-Mart has it all, competing with Tiffany, Zale, Berkshire Hathaway�s Borsheim�s and Ben Bridge, and Kay, Sterling and the other chains that constitute London-based Signet Group�s U.S. business.
Sam�s Club has become a behemoth among sellers of popular book titles, while records, tapes, DVD movies, computer games and every other form of recorded entertainment is on Wal-Mart�s shelves (not to mention what can be downloaded at walmart.com).
Why did Best Buy sell its Musicland group for no money? Why was Trans World Entertainment able to fish Wherehouse Entertainment and CD World out of bankruptcy court? The answer to both questions is Wal-Mart (albeit with a little help from the Internet).
Apparel. Surely the price-appealing clothing that Wal-Mart offers doesn�t draw customers away from the likes of Talbots or AnnTaylor or Retail Brand Alliance�s Brooks Brothers or Men�s Wearhouse, does it? Maybe not, but Wal-Mart�s share of the apparel market is growing faster than the overall apparel market, so that money has to be coming from somewhere.
So even if a Talbots shopper or a Brooks Brothers shopper doesn�t drop a dime in a Wal-Mart format, the apparel retailers positioned between them and Wal-Mart are losing customer dollars and they may find it easier to get high-end consumers to trade down rather than try to pry away shoppers who prefer Wal-Mart prices and one-stop-shopping convenience.
For the time being, however, retailers of all stripes are just happy that apparel sales, particularly women�s wear, have bounced back from the slow growth/no growth pattern of the last couple of years.
The STORES Top 100 Specialty Store Retailers generated an aggregate of $260.9 billion in revenues during 2003, up 9.2 percent from $239.4 billion the year before. Apparel retailers are the single largest group represented on the chart, occupying nearly a third of the positions. All types of clothing sellers are included, ranging from off-pricers like Ross Stores and niche retailers like Pacific Sunwear of California, Chico�s FAS, Urban Outfitters and Wilsons the Leather Experts, to ubiquitous chains like Limited�s divisions, Gap�s trinity and multi-channel operations such as L.L. Bean and Coldwater Creek.
On the flip side of the coin are retailers which are the sole representatives of their industry segment, such as General Nutrition Centers in the health and beauty care category, Guitar Center in musical instruments and West Marine in boat and yachting supplies and accessories.
Even with all the havoc that Wal-Mart has wreaked, there is a lot of stability in the specialty arena, particularly at the top of the Top 100 chart. This year�s top 10, reading down from No. 1, are Best Buy, Gap, Staples, Office Depot, Toys �R� Us, Circuit City, Limited, CCA Global Partners, CompUSA and Barnes & Noble. The first seven retailers hold the same positions they did last year. CompUSA, the computer and accessories specialist climbed up a notch following its acquisition of West Coast-based Good Guys. Bookseller Barnes & Noble slipped from ninth to 10th, while automotive aftermarket specialist AutoZone dropped three notches, from No. 8 last year to No. 11 on the current chart.
A rising tide, they say, lifts all boats, and retailers are anticipating a big lift from the nation�s rising economy. Economists and other forecasters are certainly out there boosting the bright prospects. In a survey of 55 economists published last month, The Wall Street Journal said the consensus was that the gross domestic product -- the broadest measure of economic activity -- is forecast to grow at a brisk 4.4 percent pace in the third quarter, followed by 4.2 percent growth in the last three months of 2004.
Consumer confidence in June reached its highest level in two years, according to the New York-based Conference Board, whose index of consumer sentiment jumped to 101.9 from 93.1 in May. �Looking ahead, consumers expect the economy to continue to grow at a healthy clip and to continue to generate additional jobs,� said Lynn Franco, director of the research center at the Conference Board.
A few days earlier, the University of Michigan�s survey of consumer sentiment also exceeded expectations, prompting Michael Niemira, an economist with the International Council of Shopping Centers, to observe, �Retail sales in 2004 are likely to have their strongest performance since the boom year of 1999.�
Consumer spending accounts for approximately two-thirds of all U.S. economic activity, and in its June beige book, the Federal Reserve reports that its 12 districts confirmed the growth trend. The Chicago, Minneapolis and San Francisco districts highlighted increases in consumer spending; the Cleveland region noted that retail sales had stabilized, and the Boston, New York, Philadelphia, Richmond and Atlanta districts all reported increases in retail sales.
Amid this rosy scenario and widespread optimism were forecasts of slowing sales increases at mass merchants such as Wal-Mart and Target, both of which cut short their near-term sales forecasts. One industry observer who sees this as possibly being a good omen for specialty stores is Richard D. Hastings, retail analyst at Bernard Sands. �The risk for Wal Mart is that consumers, if liquid enough, will go to alternative retailers.�
Among specialty store retailers, Best Buy is King of the Hill by a wide margin. The company�s nearly $25 billion in revenues is roughly 55 percent higher than runner-up Gap�s sales of $15.9 billion, and two-and-a-half times larger than its closest consumer electronics rival, No. 6 Circuit City. But Best Buy doesn�t compete only against other specialty chains. And its $25 billion volume is only one-tenth of what Wal-Mart does worldwide.
To stay in the game, Best Buy has developed a strategy that deals with the reality of a bigger rival with deeper pockets, but one that also allows Best Buy to build on its strengths. On the one hand, Best Buy is outsourcing human resources and information technology so it can reallocate assets to its core functions. In a complementary move, Best Buy has been rethinking what it sells and how it sells, so that its brand is unique in the retail arena.
�If we do nothing,� says Brad Anderson, Best Buy�s chief executive, �Wal-Mart will surpass us by the simple fact they are adding more stores than we are each year.� To illustrate the point: Best Buy plans to open a total of 73 stores in the U.S. and Canada during the current fiscal year, ending next February. These stores will add about 2.2 million sq. ft. of space. By comparison, or in contrast, Wal-Mart �recycles� 8 million sq. ft. of �excess� store space annually. And with Wal-Mart�s supply-chain driven economy of scale and lower cost structure, it makes little sense, Anderson adds, �trying to chase the customer out of Wal-Mart.�
Best Buy has long been a fast-moving performer in a retail segment that is known for its mercurial changes and new product-driven cycles. Best Buy was riding high five years ago when home computers and Internet access were hot, before slumping with the burst of the dot-com bubble. It has rebounded on the surge of flat-screen and plasma television sales, as well as that of digital products, using a knowledgeable sales force to educate consumers about the advanced technology.
As consumer demand for digital electronics has grown, Best Buy has prospered. At the same time, however, prices have dropped and mass-market retailers have expanded into digital wares. Wal-Mart, for example, has seen its share of the consumer electronics market increase from 9 percent in 2000 to 13 percent last year, according to a study by Wall Street firm Morgan Stanley.
Looking to extricate Best Buy from the cyclical pattern of its recent past, Anderson has re-oriented the company�s marketing and merchandising. A major step was the acquisition last year of the Geek Squad, specialists who make house calls to install or troubleshoot electronic goods. Geeks are also being deployed in stores for the carry-in trade.
As the prices of digital products commoditize, further drawing discounters into the field, Best Buy is moving to sell electronics by the houseful rather than one item at a time. The company has been lining up home builders and remodeling contractors to wire, or re-wire as the case may be, residences for the digital age -- be it audio, video, computer, communications or any combination thereof.
While Best Buy has been exercising its leadership role as the specialty store chart topper for four years now, there is also a lot of activity at the bottom end of the chart, where newcomers Hot Topic and Urban Outfitters have scrambled into the Top 100.
Hot Topic targets teenagers with music- and pop-culture-themed goods of the type typically found at concert venues. Urban Outfitters has come out of Philadelphia with a two-chain strategy. The eponymous unit caters to post-teen women who haven�t yet settled into careers. Anthropologie can be found in lifestyle shopping environments populated by 30- to 45-year-olds with money to spend.
Also at the bottom of the chart is May Department Stores� bridal specialty group, which includes David�s Bridal, Afterhours formal wear and Priscilla of Boston. St. Louis-based May has been aggressive in growing the operation via acquisition and the group should move up in the rankings next year. Likely to head in the opposite direction is Minneapolis-based Wilsons the Leather Experts, which is suffering from over-expansion and has closed more than a hundred stores in the last year.
Bubbling under the Top 100 and in position to gain ranking are Wet Seal, Conn�s and Mothers Work. Wet Seal would be making a re-appearance after shedding its ill-advised Zutopia acquisition and shuffling top management for much of the past 12 months. Conn�s is a newly-public company headquartered in Beaumont, Texas, that has distinguished itself in the highly competitive consumer electronics and home appliance field. Philadelphia-based Mothers Work has carved out a tri-level approach to maternity wear with its A Pea in the Pod chain at the upper end, Mimi Maternity offering mid-price points, and Motherhood Maternity aimed at a more price-sensitive clientele.
STORES - August: Top 100 Specialty Store Retailers
July 30, 2004
$128 Billion in 2003 Self-Service Transactions
Consumer Demand to near $1.3 Trillion by 2007
FRANKLIN, Tenn.--(BUSINESS WIRE)--July 27, 2004--When it comes to paying for goods and services, consumers are taking matters into their own hands. North American consumers transacted nearly $128 billion in sales using self-checkout lanes, ticketing kiosks and other self-service machines in 2003, an increase of 80 percent from the previous year, reports a new research study conducted by IHL Consulting Group.
What's more, the revenue generated by self-service transactions should continue this pace of growth in the coming years, said Greg Buzek, president of IHL Consulting Group, an analyst firm and consultancy that serves retailers and retail technology vendors.
"We expect to see expenditures made at self-service kiosks to rise by about 73 percent this year and 88 percent in 2005," Buzek said.
Demand for self-checkout systems should push the dollar value of transactions to near $1.3 trillion by 2007, Buzek said.
"Consumers have become much more savvy. Their time has also become more valuable and limited, and self-checkout is one way they can speed along their buying experience," Buzek said. "Retailers and other businesses are finding that self-service kiosks can significantly increase customer loyalty, as well as customer satisfaction."
In the market study, 2004 North American Self-Service Kiosks, IHL examined the increasing use of four types of self-service kiosks where payment is accepted: self-checkout systems, ticketing kiosks, check-in kiosks, and food ordering kiosks. Of the nearly $128 billion spent at these machines in 2003, about $61 billion was attributable to credit, debit and smart cards.
"Kiosks are fundamentally changing the way consumers do business," Buzek said. "Among retailers, we are seeing anywhere from 15 percent to 40 percent of all purchases are made at self-checkout machines. Usage is even more impressive at airports, where some airlines estimate that up to 70 percent of passengers are avoiding the traditional check-in process and instead using self-check machines."
The report covers self-service kiosks in the United States and Canada, detailing the number and type of kiosks shipped historically. It also provides forecasts for each type of kiosk, both in terms of units shipped and revenue transacted. In addition, the report highlights best practices and best-in-class machines for each class of kiosk.
IHL Consulting Group is an independent business-consulting firm headquartered in Franklin, Tenn., that provides market analysis and business consulting services for retailers and information technology companies that focus on the retail industry.
For more information, see www.ihlservices.com, call 615-591-2785 or send e-mail to [email protected].
For press contacts and interviews, contact Roy Miller at (972) 716-4070 x235, or via e-mail at [email protected].
July 08, 2004
Signs of Recovery article
High tech kiosks show signs of recovery
07-06-2004 --
By DENISE DEVEAU
After months of false starts and languishing returns, the Canadian self-service kiosk industry seems to be making a comeback.
Following an 18-month slump, the market for high-tech kiosks showed a cautious upswing last year, according to a report from Summit Research Associates Inc., and the numbers are looking good for this year. Some players reported up to a fourfold increase in business in 2003 compared with the previous year, it said, and more than 250,000 kiosks are expected to be installed in North American stores and public areas by 2005.
Digital photography kiosks, airline check-ins and retail self-checkout are among the applications Summit credits with helping to "jump-start the kiosk industry once again." Several Canadian developers and enclosure manufacturers are leading the charge in key areas, according to Summit president Francie Mendelsohn, who says Canadian companies are "pushing the envelope."
"There are absolutely some leaders in Canada, both in terms of innovation and market share," Ms. Mendelsohn said. "The Kiosk Factory's Famous Players [system] is still one of the best there is. TouchPoint saw the need for digital photography [kiosks] early in the game. For sheer drop-dead impressive [interface development], you need look no further than St. Clair Technologies. And bill payment is turning into a very lucrative market for Info Touch."
The success of these companies lies in the ability to find a profitable business case.
Hamed Shahbazi is chairman and chief executive officer of Info Touch Technologies Corp. of Burnaby, B.C., a specialist in financial transaction software and payment services for electronic kiosks. He says in recent months, the company has focused less on new sales and more on maximizing recurring revenue by attacking an overlooked but profitable market: Convenience store chains.
Since reformulating the business plan, Info Touch has landed contracts with Circle K Corp. and Exxon Mobil Corp., as well as Alimentation Couche-Tard Inc. (which purchased Circle K in December, 2003) for deployment of its ZapLink E-Services Program for Mac's Stores in Canada. Info Touch's 2003 revenue was triple its 2002 numbers.
Kiosk Factory in Toronto, a software developer whose $5-million Famous Players project ranks as one of the largest kiosk jobs in Canadian history (not including the rollout of automated banking machines), reports it is showing a dramatic increase in revenue this year. Says company president Julian Brown: "Kiosks were dramatically oversold and estimates were inflated. Designs looked fantastic, but there was no concern for basic ergonomics. A lot forgot to address the fact, is the thing useful? Does it render a business process more efficient?"
He says despite the market saturation, kiosk ticketing has been a solid revenue generator with a strong business case. The Famous Players system, for example, accounts for $500-million a year in revenue at a cost of approximately 2 cents per transaction.
"That's about one-fifth of what it costs to have a teenager in a glass box," Mr. Brown said.
One of the longest-standing Canadian players in the kiosk biz (20 years and counting), interactive application developer St. Clair Interactive Communications Inc. of Toronto, says it recorded its highest gross margin ever in 2003, although it won't go into specifics. President Doug Peter credits the recovery to some major inroads in Europe, as well as moving "further upstream" with remote management and content management applications.
The killer app, he says, is multi-channel software that allows users to have one application driving the kiosk, as well as other customer-facing devices (handheld, display screens, price checks).
"As far as we know there are only two in the world that can do this � us and IBM," he said.
Canada is well positioned to capitalize on the improving market for kiosks from the point of view of expertise, market watchers note.
As Ms. Mendelsohn says: "I have long wondered why is there so much talent in Canada that doesn't seem to be here in the U.S. One of the strengths is back-end management and interfaces. Others [outside Canada] are now getting into the same thing � but late."
Source: www.globetechnology.com
June 30, 2004
Starbucks and Music Burn
Thinking Outside The Cup in-depth article on Starbucks..http://www.fastcompany.com/magazine/84/starbucks_1.html
June 15, 2004
Patents
Coinstar get new patents.
Coinstar Gets New Patent
Bellevue, Wash. - June 14
The U.S. Patent Office gave Bellevue, Wash.-based Coinstar a new patent governing coin-counting machines equipped with communications functions for transmitting various types of transaction information to remote locations. Under the patent, number 6,736,251, remote locations include financial institutions that receive deposits from Coinstar coin-counting machines, as well as service centers that receive notification when a machine is full or requires service.
June 10, 2004
Grocery Self-Service
Trends: Supermarket-checkout clerks are going the way of the bank teller - available if you want one, avoidable if you don't.
Thursday, June 10, 2004
More groceries check out self-service
Customers' changing shopping habits feed popularity, study says
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Supermarket-checkout clerks are going the way of the bank teller - available if you want one, avoidable if you don't.
Self-checkout machines, which let customers scan, bag and pay for their own groceries, offer shoppers a chance to avoid the lines at the checkout stands.
"This is like an ATM for them. It's quicker and easier," said Jennifer Panetta, a spokeswoman for the six-state Harris Teeter chain, based in Matthews, N.C. "They are in pretty much all our stores."
About one-quarter of grocery chains are trying them now, with about 34,000 machines in use in stores in 2003, said market analyst Greg Buzek, the president of IHL Consulting Group in Franklin, Tenn.
Buzek, who wrote a report on the equipment, predicts that by 2007 there will be 244,000 self-checkout machines in stores and that almost every chain will have some of them.
"The way we shop has changed quite a bit in the last 15 years," he said. "But the checkout lane hasn't changed all that much."
For example, shoppers have been shifting from grocery carts to plastic baskets and adding short stops to the big weekly grocery purchase. More than half of supermarket customers bring fewer than 15 items to the register, and self-checkout is ideal for them, according to Buzek's report.
Express lanes were set up to speed these customers through, but self-checkout can be even faster, Buzek said. A space that could fit one or two lanes can handle four to six self-checkout machines, reducing the chance of getting stuck in a line. "There's usually nobody in line at self-checkout," Buzek said.
Customers take longer than a clerk to ring up and bag groceries, but the shoppers do not seem to notice that, the report said. Because the customer is keeping busy scanning and bagging instead of waiting while the clerk does the work, time seems to pass faster.
"I think this is faster if you know what you are doing," said Khatool Reha of Reston, Va., as she dropped a couple of cans of spaghetti into a plastic bag at a Harris Teeter store.
When she buys more, "I just go over there," said Reha, motioning toward the staffed lanes.
For retailers, the use of self-checkout can reduce staffing at the front of the store. One staffer typically is the only employee needed to assist customers at the self-checkout lanes.
Buzek said that there also is less theft at a self-checkout counter.
Wal-Mart has self-checkout in about 840 of its more than 3,000 stores and is putting the equipment into all of its new stores as they open, said Gus Whitcomb, a spokesman for the chain in Bentonville, Ark.
Whitcomb said that Wal-Mart customers have put just about everything through the scanners - even ready-to-assemble desks in "a big gigantic box." Other stores, such as The Home Depot hardware chain, also have been using self-checkout.
Not every food-store chain is leaping to the technology.
Publix Super Markets, based in Lakeland, Fla., has about 800 stores, mostly in Florida, but only about 10 have self-checkout, and seven were already in stores that the chain bought in Tennessee, said Brenda Reid, a Publix spokeswoman.
Publix stores where the manager sees a demand for self-checkout can get it, she said, but "nobody is beating down our doors."
http://www.journalnow.com
June 08, 2004
Retail
Home Depot eyes China expansion
Home improvement leader hopes to build stores in fast-growing, fragmented market, names Asia chief.
June 7, 2004: 3:15 PM EDT
ATLANTA (Reuters) - Home improvement industry leader Home Depot Inc. Monday said it would establish a business unit in China to look at building and acquiring stores in that fast-growing Asian market.
The company named Bill Patterson, who had headed its Central store division since 2002, as president of Home Depot Asia.
Patterson said Home Depot, which has more than 1,500 stores in the United States and Puerto Rico, may approach the China expansion as it did with Mexico, where it acquired a chain of stores in 2001 and later built from the ground up. The company has about 40 Mexico stores and more than 100 in Canada.
"That strategy is one that has served us very well and is applicable to how we would look at China, a combination of different ways to enter the market," Patterson said.
He said Home Depot was focusing on China's estimated $50 billion home improvement sector because it is fragmented with limited competition. Home Depot opened two purchasing offices in China in 2002 to expand sales of imported products.
Patterson said Europe, which Home Depot is also eyeing for growth, is a mature market where it was difficult to find sites to build stores.
Keith Davis, an analyst with investment management firm Farr Miller Washington, said the China operation could help convince skeptical investors that Home Depot can grow even though its stores are approaching saturation in the United States.
"It's going to take a long time to see any effects to the bottom line from an expansion into China, but in the more near term it will hopefully alleviate some concerns about opportunities for growth going forward," Davis said.
Home Depot (HD: up $0.58 to $35.91, Research, Estimates) shares gained 1.5 percent in late-afternoon trading on the New York Stock Exchange.
Home Depot eyes China growth, names Asia chief - Jun. 7, 2004
June 02, 2004
Self-Service Transactions
Self-Checkout Transactions to Surpass $330 Billion Annually in North America by 2007, Says IHL
FRANKLIN, Tenn. (June 2, 2004) - Self-checkout systems will generate transactions worth $70 billion in 2004, according to a new study from IHL Consulting Group. The �2004 North American Self-Checkout Systems Market Study� also forecasts that the value of these transactions will increase to over $330 billion by 2007 as many more systems are deployed in the next few years.
�We live in an age where self-sufficiency often reigns supreme and time is at a premium,� said Greg Buzek, president of IHL Consulting Group, an analyst firm and consultancy that serves retailers and retail technology vendors. �New self-service technologies are emerging that will revolutionize the way we shop for goods and services. From grocery stores/supercenters to home improvement stores to department stores, self-service technologies are speeding the checkout process for customers.�
Some key insights from the report include:
* In stores currently using self-checkout systems, as much as 40% of the total number of transactions now go through the self-checkout, allowing retailers to provide more customer assistance within the aisles to help customer find products.
* More and more retail segments are adopting self-checkout. The Home Depot now has more than 3,200 lanes installed.
May 25, 2004
DVD Rentals
Vending Machines Grow Up -- Washington Post 27jul03
JOSHUA PARTLOW / Washington Post 27jul03
If the portobello-and-goat-cheese sandwich doesn't drop at the Redbox vending machines that McDonald's has sprinkled around the Washington area, shaking the box isn't possible, and shooting it won't help. The average machine is 18 feet wide, weighs several tons and has a bulletproof glass facade.
In fact, if there is any problem with the more-than-130-item, 24-hour automated convenience stores -- if, say, the interior temperature rises above 40 degrees, the coin dispenser runs low or the tampons sell out -- the machine will e-mail and page the McDonald's support staff operating out of an office in Bethesda, before the customer can even finish cursing.
"In the future you will not find any
more video stores."
Vending Machines Grow Up: Candy Bars And Soda Make Way For Movies, Live Bait And Even Prescription Drugs JOSHUA PARTLOW / Washington Post 27jul03
"Our central server receives updates from each machine constantly. We're always processing data, analyzing sales, transactions, credit card matters, controlling inventory. . . . These machines are live all the time," said Mark McGuire, a director of business development at McDonald's.
Automatic vending has come a long way since Thomas Adams's coin-operated Tutti-Frutti gum machines were installed in New York railroad stations in 1888. McDonald's Redbox test project, started in January of last year under the name TikTok Easy Shop, has grown to include four unmanned convenience stores and seven DVD-only dispensers. These kiosks, among the first automated convenience stores in the United States, are the latest example of vending technology's continued expansion into broader retail realms. Other companies have sprung up selling such products as clothing, prescription drugs and live bait, all without on-site employees.
"I think automated convenience stores are of great significance," said Michael L. Kasavana, a Michigan State University professor who teaches a course on vending and whose position is endowed by the National Automatic Merchandising Association. "The industry trend toward wireless and cashless operations saves labor costs and allows you to have remote oversight of unmanned points of sale. From an industry standpoint, that's a great advance." Over the past decade, nationwide vending-industry sales have risen nearly 40 percent, to $24.3 billion, according to the 2002 report by Automatic Merchandiser magazine.
Those in the convenience-store industry say these robotic kiosks could succeed by being able to avoid the lower profit margins, rising labor costs, and higher real estate prices that have plagued traditional convenience stores. In 2002, per-store profits fell by 27.9 percent to $20,400 per store, the lowest level in a decade, while operating expenses rose $13,200 per store, according to the National Association of Convenience Stores (NACS).
"Redbox looks to minimize costs and still provide the convenience," said NACS spokesman Jeff Lenard. "If you're able to make a smaller footprint by not only the size of the store but taking away the parking spaces, it can dramatically reduce costs." McDonald's would not release information about costs, but other industry professionals said savings would depend on operating a larger number of such stores because of the high cost of investing in the technology.
'So Awesome'
On a recent Tuesday night, reaction among customers crowded around the Adams Morgan Redbox ranged from wonder to skepticism. "This is definitely great. That thing's awesome. So awesome," said Dan Walbillig, 12, who was down from New York visiting his aunt, as he watched the robotic arm snatch his $1.25 Snickers bar. "In this town it makes sense -- there's nothing open at night," said his aunt, Laurie Walbillig.
First-time customer Jeff Smith, 29, succumbed to the convenience of the Redbox against his better judgment.
"Y'all watching, right, make sure I don't get ripped off," said Smith, a lawyer, as he tentatively released his $20 bill into the Redbox and hoped that a disposable camera and $7.50 in change would come back to him. "I'd never support this thing normally because it's putting people out of work, but it's my birthday and I need a camera." Smith got his camera, and change.
Despite the automatic feel, several people micromanage the Redbox behind the scenes. A small core team works out of the corporate office and about 20 people are involved in maintenance, stocking and other tasks, McGuire said. One of those people, food consultant Laurence Cartoux, 41, manages the fresh foods, which are made three days a week at Izzy's deli in Bethesda. Cartoux, who studied food science in France, developed the menu, which includes her grandmother's recipe for carrot-cumin soup, and other exotic items, including almond couscous salad. The fresh foods have been the best sellers at the Redbox so far, McGuire says.
"When you talk about vending machines, people's reactions are negative. The food is not good, they're always out of products, the products are not fresh -- those types of things," Cartoux said. "I wanted to put in the machine high-quality products. . . . We have a brie-and-turkey sandwich, grilled chicken marinated with olive oil and provencal herbs. It's excellent."
McDonald's would not release sales information but said the machines have exceeded expectations. At locations like Adams Morgan, nights and weekends are the busiest times, while a new machine at the train station at the Baltimore-Washington International Airport does steady sales during the day. Jim Peiffer, manager of commercial development for the Maryland Transit Administration, said McDonald's paid a $15,000 fee for the one-year test, and customers seem to be accepting the technology.
"It's been a little bit demystified by now. At first our passengers didn't know quite what to make of it," Peiffer said. "I think the theory's good; it makes sense for a transit location, where it's much more efficient than to pay someone to man a stand for long, long hours."
The McDonald's experiment got off to a rocky start when the first test box, on Georgia Avenue in Northwest Washington, opened in January 2002. Performance was hampered by repeated glitches in the machine, called a Shop 2000, which costs about $80,000 and was designed by Automated Distribution Technologies of Exton, Pa.
"We found very quickly that the business was there but the technology didn't work," McGuire said. "I literally had to sleep outside the machine and baby-sit it on weekend nights to make sure that anytime people wanted to use the machine it would work."
Since then McDonald's has changed the name from TikTok to Redbox, and it now uses kiosks designed by Belgium-based New Distribution Systems NV, an industry pioneer founded in 1994 that operates 170 automated convenience stores in nine European countries. Chief executive Jo Robrechts would not comment on the McDonald's contract but said the average "Shop 24" store costs $90,000. European sales have risen rapidly, Robrechts said, with average revenue in the first year of a store around $115,000 and rising to $200,000 by the fifth year. Robrechts sees great potential for sales in the United States.
"A market where you already have a convenience culture is the most suitable market to enter with this type of store," he said. "The consumer is already accustomed to demanding immediate response to his consumer needs."
Divine Origins
Vending machines have a long history of innovative applications. Greek mathematician Hero described what some consider the first vending machine in 215 B.C., a coin-operated device that dispensed holy water in Egyptian temples. A contraption with a beveled-glass front in the 1890s called the Auto Doctor sold cold tablets and cough troches. In 1902, the Horn and Hardart Baking Co. introduced the Automat, the now-fabled restaurant that dispensed such foods as lemon pie and macaroni with a few coins and the pull of a knob. The onslaught of fast-food restaurants such as McDonald's, which streamlined food preparation, hastened the demise of the Automat.
More recently, concepts like the automated convenience store have caught on more quickly outside the United States. Timothy Sanford, editor of Vending Times, a trade publication, said that vending has had a clear niche in some Western European countries, where stores traditionally close earlier than those in the United States do, and in Japan, where urban real estate prices can be high. In Japan there are more than 5 million vending machines selling products including underwear, fresh vegetables, rice, alcohol and video games.
"You've got lots of people in the United States willing to run a convenience store and stay open all night. So it's been very difficult to find a reason why to apply automation to the industry," he said. "The logic of this current movement was that we have the opportunity to make more efficient use of space in an urban environment."
Some local residents have not fully embraced the idea of 24-hour mechanical capitalism. When the McDonald's box plopped down in Adams Morgan last August, several community members criticized the machine's aesthetics and said it might hurt small businesses.
"On one hand you have immigrant entrepreneurs running convenience stores doing their best to improve their lives," said Josh Gibson, vice chairman of the Adams Morgan Advisory Neighborhood Commission, "on the other hand you have the multinational corporation with its hyper-hygienic vending machine." Gibson, who lives two blocks from the Redbox, says the machines discourage personal interaction. "It's saying 'you don't need to go into that little corner store that makes you feel uncomfortable; just put your money into this robot-shop.' "
The automated convenience world is not limited to McDonald's. After hatching the plan in 1986 and putting in $9 million, entrepreneur Mike Rivalto opened SmartMart in May, a 450-square-foot unmanned store in Memphis. Customers drive up to the converted storage container and, using a touch screen, can choose from about 1,800 items, including beer and cigarettes. SmartMart uses video surveillance to record the face and license plate of each customer, and if problems arise, customer service is available by means of videoconferencing.
"Nowadays Mom works, Dad works, the kids don't play in the yard -- they're loaded into the Suburban and hauled all over the city to band practice and soccer games. Everybody is overscheduled," Rivalto said. "If there's anything that you can do to make somebody's life a little simpler, keep the kids strapped in the car seat, and pick up eight or 10 items for dinner without leaving the car, people will love it."
Novel Applications
Other companies, like Vending Concepts Inc. of Des Moines, have taken vending fresh products to a new level. The company converted a soda machine into a live-bait dispenser. Gary Harsel, a sales rep for the company and owner of Gary's Live Bait and Tackle in Birdsboro, Pa., said there are more than 3,000 such machines operating nationwide. He owns 12 of them and sells minnows, nightcrawlers and mealworms -- among other tasty treats -- for about $2 a cup.
"I tried leeches, but we don't have much of a walleye fishery around here, so they don't sell very well," he said.
For Ken Rosenblum, a former emergency-room physician in Minneapolis, not being able to get medication for his 5-year-old son's ear infection in the middle of the night was the impetus for developing a 24-hour prescription-drug vending machine. His company, Mendota Healthcare Inc., developed InstyMeds in 2001, a free-standing unit that's being tested in four emergency rooms. Rosenblum, who hopes to roll out about 1,000 machines across the country next year, says that after a doctor prescribes medication on a handheld electronic device, the patient can get a voucher with a security code to insert into the machine. Instymeds authorizes billing and insurance information over the Internet. The idea caught on quickly at the first test site in suburban Minneapolis, Rosenblum said.
"I thought people would have needed a fair amount of time to get used to the technology, but after 12 weeks, 60 percent of patients were choosing to receive medications from the InstyMeds dispenser despite the fact that there are three pharmacies within less than a block," he said.
Back at the newest Redbox on Rockville Pike, where the machine went into operation in late June, Micha Barnea, 43, who manages the DVD machines McDonald's has in 10 locations, was stocking new releases. To rent a DVD, which costs $2.97 for three nights, one can pay only by credit card. Late fees are charged automatically. Barnea pulled the facade forward and stepped inside the guts of the movie section of the Redbox. It didn't matter which thin metal slot he placed each DVD in, because a small robotic box soon traveled up the DVD rack, scanning a bar code on each movie to identify the title and its location for later retrieval.
Barnea has visions of a vending-only world.
"I have a dream to produce a better machine than any other one. Everything is moving toward automation," Barnea said. "In the future you will not find any more video stores."
May 14, 2004
Retail
Store wars: How retail ecommerce executives can win the battle for the last aisle
Store wars: How retail ecommerce executives can win the battle for the last aisle
BY Alex Richardson 02 May 2004
Editor's note: This article originally appeared in the May/June issue of Kiosk magazine.
Over the next two years, leading ecommerce executives in retail will see a growing need to implement in-store digital merchandising strategies in order to gain sustainable competitive advantages and improve profitability.
With the exception of Amazon.com, most leading banks and retailers have beaten the dot-coms at their own game. An estimated 200 consumer ecommerce sites folded in the past five years including well-known names such as ToySmart, eLuxury, Toys.Com, NetGrocer, and Webvan, just to name just a few.
Shoppers now have the ability to easily order most goods from their home computer; yet nearly half the U.S. population continues to visit a Wal-Mart or grocery store once per week.
Why? One could argue that it's difficult to order ground beef and bagels online; however, I suspect that it's a result of consumers' basic need for convenience-the immediate gratification that comes from doing business with trusted retail brands. Branded stores provide consumers a safe, "trusted" way to purchase goods.
The fact is it's becoming impossible for ecommerce executives to continue to ignore the traditional storefront--especially considering the union of numerous in-store self-service applications such as web ordering, in-store pick-up and self-service check out.
Stores within a store--60,000 SKUs in six square feet
The battle for the "last aisle" is one of the biggest challenges facing ecommerce and retail executives in the next 36 months. Previously, retail consumers have demonstrated an insatiable desire for convenience and time-savings.
I believe that the "store within a store" will grow dramatically. Banks (which typically spend about $1 million to construct a new branch) have practiced the "store within a store" approach for many years using ATMs and mini-branches inside of grocery stores.
Other successful examples include the Behr Paints kiosks, located in Home Depot stores. Using these kiosks customers instantly find the right paint color for their home. And at 7-Eleven stores, customers can use VCOM ATM kiosks to pay bills, order flowers, cash checks or buy lottery tickets.
Think merchandising
Initially, many retailers think about kiosk technology in terms of hardware first, and then, the software. They begin with "What type of kiosk or display monitor do I need?" or "How will the unit be branded?" From my experience, this type of thinking leads to a failed kiosk pilot or roll-out.
A good exercise to help you make a paradigm shift is to stop pretending that you are an IT expert. Stick with what you know best-merchandising.
The rule of thumb is to think like a consumer when launching digital applications. When merchandising, what retail aspects would you consider? Would you create a men's department"? Where would you place women's shoes? Would you place men's socks adjacent to men's shoes or create a general sock department? Where would you place the loyalty program or gift cards? How will your customers pay for their merchandise?
Create a customer showcase, not a technology showcase
Another obstacle to success is the typical urge to create complex hardware/software solutions that push "technology sizzle" as the main project goal. As with other technology industries, smart people are often attracted by the glitz of IT and focus on technological showcases that demonstrate the high levels of their intelligence.
Marketing leaders must rally together to ensure affordable and scalable solutions that clearly demonstrate ROI in a matter of months, not years. A good strategy for making sure that your kiosk project transforms from a small pilot to a large scale rollout is to first focus on "making it work" and then put on the glitz as a last step. Digital merchandising applications are intended to improve the consumer experience and promote brands. To accomplish this, it must work effectively, 24 hours per day, 365 days a year.
ROI is important
In general, the best way to improve customer service is to hire great people and train them well. And, it's no secret that within the retail industry, employee turnover is high. This in turn, costs the industry billions of dollars in recruiting, screening, and training.
ROI via labor savings, especially during a time of high employee turnover, combined with the reduced cost of ecommerce hardware and software can support your burden of proof for the investment in ecommerce.
Ecommerce 101--the four basic elements of a successful retail ecommerce application
* Attraction: This is the ability to quickly demonstrate to the consumer how the application solves problems.
* Interaction: How the application helps consumers find the answer to their problem. Interaction also involves the cross and up-selling of more profitable goods and services
* Transaction is the way the application is used to make the cash register ring. For example, leveraging the consumer e-mail addresses to send promotions or product information.
* Satisfaction: Can the retailer's application fulfill the promises? Will it be delivered in store or at the consumer's home? Is it a secure and private transaction? Does the application work?
Self-service is the best service
In our industry, as well as in other facets of life, success, or failure, can be determined by how well you help consumers solve simple problems through the basic self service model.
Ecommerce leaders who help customers solve problems and provide convenience will be the winners in 2004 and beyond.
Alex Richardson is Managing Director of Karter Capital Advisor, a new Venture Capital firm focused on helping emerging technology companies accelerate their plans for success. Alex is also Founder, Director and former CEO of Netkey, Inc.
April 29, 2004
Automation and Personal Lives
Businesses see self-service automation as a way to increase efficiency and boost profits. Self-service automation is showing up in many industries including airpost, banks and restaurants. Hear NPR's Bob Edwards and Charles Fishman of Fast Company magazine. Morning Edition Audio
April 23, 2004
Gift Registry and Multichannel
Multi-channel gift registries are emerging as strong tools for building long-term customer loyalty
Multi-channel gift registries can give a boost to loyalty
Multi-channel gift registries are emerging as strong tools for building long-term customer loyalty, says Neil Stern, senior partner with Chicago-based retail consultants McMillan/Doolittle. �This is a challenge to retailers, but it brings great customer loyalty benefits,� he tells InternetRetailer.com.
Stern notes that more retailers are looking at gift registries as a way to attract customers at an early age--whether they�re a young couple who has registered for wedding gifts or young friends or relatives who purchase through a registry--then continue to build relationships with them through continued e-mail contact and special offers. �It�s a great way to build loyalty over the long term,� he says.
Among retailers moving aggressively into using gift registries as part of loyalty strategies, he adds, are Macy�s and France-based department store chain Galeries Lafayette. "It provides us with an opportunity to establish lifelong relationships with young, new couples, as well as deepen our relationships with their extended friends and families,� says Eric Renard, CIO of Galeries Lafayette, which expects to launch a multi-channel gift registry later this year.
Stern adds that plans for a national multi-channel gift registry coincide with Federated Department Stores Inc.�s effort to build a consistent national presence. �It�s a big motivator behind Federated�s move to create Macy�s as a national brand,� he says.
Gift registries used as part of a customer loyalty strategy work best in a multi-channel environment spread across a nationwide market, so merchants can take advantage of dispersed networks of gift-buying friends and relatives and the increasing desire of consumers to shop through multiple channels, Stern says. �If a gift registry is not integrated across channels, the retailer can start to lose consumers as gift registry customers,� he says. �Customers are shopping across all channels, so retailers need to meet their customers wherever they want to experience the brand.�
A major challenge in launching a multi-channel gift registry, he adds, is deploying a system to support it across multiple channels. �Retailers are hunting for ones that work, whether they�re from outside providers or built in-house,� he says.
InternetRetailer.com - Daily News for Thursday, April 22, 2004
April 14, 2004
Hotels Fight Back
Hotels are looking to take back some of the market share that online travel sites grabbed in the lean years
By Tony Kontzer, Mary Hayes, InformationWeek
April 12, 2004
URL: http://www.informationweek.com/story/showArticle.jhtml?articleID=18900967
Later this year, if Hilton Hotels Corp.'s plan goes as expected, travelers won't see room rates posted on travel sites such as Hotels.com or Expedia lower than what Hilton advertises on its own Web site. "You don't let the customer see a rate less than a rate you sell yourself," Hilton CIO Tim Harvey says. "At that point, you lose trust of the brand, and whoever is selling the room gains that trust."
But customer loyalty isn't the only thing hotel chains and operators stand to lose to the growth in third-party online bookings. In an era when consumers are more likely to make travel plans based on the best rates on the Internet rather than what a particular hotel brand has to offer, hotels have found their relationships with third-party sites have resulted in inflexible pricing practices and lost profits. While third-party sites helped the hotel industry through a tough economy"and continue to provide a valuable service by booking rooms that otherwise would go unoccupied"many say now is the time to establish more-favorable dynamics. "Everyone in the hotel industry is ready to get control of their inventories again," says Andrew Jordan, executive VP of sales and marketing and chief marketing officer at hotel chain Wyndham International.
 When an online site beats you on price, "you lose trust of the brand," Hilton CIO Harvey says. Photo by Sacha Lecca |
Online travel sites present a complicated dilemma, one hotels are addressing in two ways: by creating incentive programs and improving brand Web sites to get customers to buy direct, and by changing how they do business with the third parties. It appears the third-party sites are more than willing to cooperate. By year's end, Expedia and Hotels.com, both owned by IAC/InterActiveCorp, and Travelocity, owned by Sabre Holdings Corp., plan to implement XML-based connections to Hilton, Outrigger Hotels & Resorts, and several more hotel chains that will completely reverse how business is conducted between the parties. Those efforts stand to have a huge impact on the industry: Expedia, Hotels.com, and Travelocity make up 74% of hotel sales by third-party Web sites, according to travel-research firm PhoCusWright.
These efforts can't come soon enough for hotel companies. While the industry remained profitable even during the economic downturn"earning room profits of more than $16 billion in 2001, $14 billion in 2002, and back to $16 billion last year, according to Smith Travel Research"it has been steadily losing money to online travel sites. The hotel industry missed out on $962 million in bottom-line profits last year, about 6% of the industry's estimated profits, Smith Travel says. Those profits would have gone to the brands if they had sold the rooms directly to travelers. The biggest losers are chain-owned hotels, because franchises and smaller operators benefit from the marketing muscle of online travel sites, Smith Travel analyst Jan Freitag says.
The new XML-based connections will help make it possible to have parity in prices between what customers see at hotel brand sites and what they find at third-party sites. And while third-party sites may not be able to underprice hotel chains, they'll benefit from more-immediate access to a hotel's inventory and availability. Both parties will benefit from lower costs and improved communications regarding room bookings. "This is a huge strategic focus for us," says Spencer Rascoff, VP of lodging for Expedia and Hotels.com. "Our hotel partners are lining up at the door to get in on it." In 2002, Expedia acquired Newtrade Technologies Inc., which is building the connectivity platform based on technology standards in the travel industry.
Most hotels currently agree to provide a certain number of hotel rooms to third-party sites over a specific time frame for a set rate, such as $100 for every room sold. The deal is structured so that the rate the hotel offers at its site at the time"say, $120 per night"is the same rate the third-party site offers to its customers, allowing the online partner to retain $20 of the total room revenue. When the third-party site gets a booking, it notifies a hotel by E-mail or fax or, in some instances, via an extranet that automatically updates the hotel's inventory.
The problem is that none of these approaches allows back-and-forth communication between a third-party site and a chain's central reservation system, its revenue- or yield-management system (which uses analytics to determine the most a hotel can charge for a room), or an individual property's management system. So if rooms are filling quickly and a hotel's yield-management system indicates the rate should be increased to $140 a night for the given time period, the result is that the third-party site starts beating the branded site on price. That disparity exists until one of the parties notices the difference and acts on it.
The systems that Expedia, Hotels.com, and Travelocity are developing for later this year will let hotels use XML connections to push out pricing and inventory updates directly to third-party sites as soon as they happen. "So when changes are made to published rates, it's very easy to adjust so there's no lag between retail rates and the changing of online rates," says Josh Feuerstein, VP of hotels at Travelocity. "It does make price parity easier to chase."
Improved business-to-business connections aren't the only way hotels are fighting to take back control of bookings. Most of the major chains offer lowest-rate guarantees: If a customer finds a lower rate at a third-party site, the hotel will match that rate and, in some instances, throw in perks such as a late checkout or an additional discount of, say, 20% on top of the third-party rate. At Hilton, the company's Hilton Honors members who book rooms online earn points for discounts and perks such as frequent-flier miles only if they book at Hilton's site. Last year, Hilton deployed a $50 million hotel-management system, called OnQ, that lets any of its 2,000 hotels, which include the DoubleTree and Hampton Inn brands, view the history of a customer's relationship with the company. In the past few years, the share of online bookings Hilton records through its sites rose from 70% to 80%. "Fifteen months after we started going down this road, we feel third-party business is relatively modest, which is where we really need it to be," says Bala Subramanian, senior VP of electronic distribution for Hilton.
Hilton last month began feeding into its OnQ system information it collects about prices of its rooms on third-party sites and about competitors' prices. Previously, revenue management was determined using only internal information about future bookings. "Now we consider what's being loaded into third parties as well," CIO Harvey says.
Wyndham in recent months has worked to make booking rooms on its site easier so customers don't leave for other sites. It added servers to support more bookings and ensure fast transactions, and it changed the way it displays rates online to provide more detailed options. Wyndham also installed systems that comb third-party sites for its rates and uses that information to update its revenue-management system.
"The ability to read and react is much richer than it was a year ago," executive VP Jordan says. Members of Wyndham's ByRequest loyalty program who book at Wyndham sites get perks such as free long distance, photocopying, faxing, and Internet access. For nonmembers, Wyndham dangles free rounds of golf, free breakfasts, and airline miles. Online bookings through Wyndham sites have doubled within the past year, Jordan says.
To gain back control of rooms, hotel franchisers need to get their franchisees on board. Many franchisees have come to depend on the extra marketing prowess provided by third-party sites. But Carlson Hotels Worldwide, for example, is looking to put in place processes that will allow it to make more decisions on behalf of its franchisees, such as negotiating companywide relationships with third parties that are more favorable than what franchisees have been able to negotiate on their own.
In 2001, suffering from the dot-com bust, Carlson franchisee Radisson Hotel Fisherman's Wharf in San Francisco started a relationship with Expedia and Hotels.com. But the hotel has been shifting its focus away from third-party sites to wholesalers and group sales, which take a smaller cut than third-party sites. "We were a bit unbalanced before," says Yair Eldar, the hotel's general manager. "We were selling rooms too cheaply." But when Carlson negotiates more-favorable rates, Eldar says, its use of third-party sites may start to rise again.
In their own defense, online sites say they generate their own customer loyalty. "Customers want to see all the choices out there," says Travelocity's Feuerstein. "They want to go to one place that gives them a fantastic selection and has an objective store of information about hotels. That's one thing that will never change"people like selection."
The hotel industry's relationship with third-party sites is changing, but there's no indication it will end. "They serve a purpose," says Tim Stanley, CIO at hotel and casino chain Harrah's Entertainment Inc. "If you have excess inventory, they're a great way to sell it. But you don't want to lock up inventory [with third-party sites] that you can sell otherwise." The trick for hotels in the coming months will be to achieve the right balance between the two.
April 08, 2004
Business News
Dave & Buster's getting back in the game
Earnings growth a sign that things are looking better after tough 2003
Dave & Buster's getting back in the game
Earnings growth a sign that things are looking better after tough 2003
08:55 AM CDT on Thursday, April 8, 2004
By KAREN ROBINSON-JACOBS / The Dallas Morning News
Buster Corley, half of the duo who founded the Dave & Buster's restaurant chain, has been in serious need of some good news.
It was just over a year ago that skittish investors, leery of a burdensome debt load and sagging sales at the restaurant-and-entertainment chain, had sheared nearly 40 percent off the company's share price.
The Dallas-based chain faced uprisings from two investor groups � one backing a replacement slate of board members and another that sought to force a sale of the company. Growth was halted. Jobs were cut.
"Simply put, 2003 was filled with great challenges," said Mr. Corley, 53, the chief executive of Dave & Buster's Inc. "It was the single most challenging year of my life."
On Wednesday, the company got to deliver a bullish earnings report that was "a whole lot funner" to dish out, said Dave Corriveau, 52, president of the company.
Dave & Buster's reported net income for its fiscal fourth quarter more than doubled to $7 million, or 46 cents a share, from the year-ago period, beating analysts' estimates by a nickel. For the full year, net income was $11 million, or 80 cents a share, compared with a net loss of $1.7 million, or 13 cents, in 2002.
While revenue fell for the year by 2.9 percent, to $362.8 million, the report was seen as a welcome tiding. That, and the company's plans to add branches, drove shares in Dave & Buster's up $2.11, or 14.1 percent, to close at $17.06 on the New York Stock Exchange.
"Much of the heavy lifting has been done," said Bob Labick, senior equity analyst with CJS Securities, who rates the company an "outperform" with a price target of $18. "They've gotten a lot [of the problems] behind them and now they're poised to reap the benefits of an improving economy."
Analysts attribute at least some of the company's past difficulties to the nation's fiscal woes.
The Dave & Buster's concept, launched in 1982 in Dallas, is essentially a casual-dining restaurant attached to a game room for children � and adults who want to behave like children. The complex includes pool tables, state-of the-art video games and simulators.
But entertainment-themed venues, more than family-dining or "comfort food" restaurants, depend heavily on customers having disposable income.
"Most of the challenge we faced was on the amusement side," said Mr. Corley. Amusement and game revenue dropped 5.5 percent in 2003, accounting for 47 percent of revenue, the company said.
Even allowing for the economic downturn, the company's share performance was trailing that of its peers, according to Dolphin LP, an investment group that last year held about 9 percent of the company's shares and was a top stakeholder. In advance of the company's annual meeting in June, Dolphin offered a slate of three replacement candidates for the nine-member board.
That battle heated up after Renaissance Capital Group Inc. offered, then withdrew, a shareholder proposal pushing for a sale of the company.
Investors were alarmed in part at the company's debt load, which smothered its ability to grow. The company opened only one outlet in 2002 and none in 2003, compared with four per year in 2000 and 2001.
At about 50,000 square feet each, the stores are massive and cost about $9 million to launch. On average, each store contains 150 games valued at about $2 million.
Bank debt, largely from new store openings, had grown to $68 million by the beginning of the fiscal year, the company said. As sales improved during the year, the company used cash from operations to cut that figure to $54 million, said W.C. Hammett, chief financial officer.
Trimming costs
Also, in response to investor concerns, the company enacted $11 million in cost cuts late in 2002. The cuts took effect largely in 2003 and involved trimming 60 field and corporate jobs, a first for the company, and reducing employee hours, company officials said. Dave & Buster's retains about 6,500 employees, including about 130 workers on the corporate staff.
The company also obtained $30 million in private placement funds that helped it restructure older debt and jump-start its growth program.
One new outlet � a 55,000-square-foot complex complete with a rooftop patio overlooking the San Gabriel Mountains near Los Angeles � is slated to open in the fall.
The store opening is part of the company's bid to spur sales growth. In the last fiscal year, sales at restaurants open at least 18 months � a key measure of chain health � trailed the previous year's performance, albeit by decreasing amounts. Same-store sales were off by 7.5 percent at the beginning of the year but trailed the prior year by only 2 percent in the fourth quarter.
The company said it's looking for positive trends in the second half of this year.
And in a bid to draw more hungry video-game players, the company last year switched advertising agencies and launched a new theme: "Recess is calling."
Getting the message
Although the two entrepreneurs want patrons to hear the siren song of recreation, shareholders want to make sure that Dave and Buster continue to hear investors calling.
"I think clearly the company has gotten the message delivered by a lot of shareholders," said Donald T. Netter, senior managing director of Dolphin, based in Stamford, Conn. "There's clearly been a lot of progress, and investors are watching and are hopeful that things will continue in that vein."
Mr. Corriveau is convinced that they will.
"It's not how hard you fall," he said, "but how high you bounce back. Now it's up to us to keep our equilibrium" and follow through on the plans put in place.
Mr. Corriveau said some of the company's greatest accomplishments came in the last year � responding to the trials by cutting costs, paying down debt and ultimately appeasing shareholders.
"We've been bruised, but there's no killing us," he said. "We can bounce. And we never give up."
DallasNews.com | News for Dallas, Texas | Business
April 06, 2004
VOD and NetFlix
Netflix to offer movie downloads
Company to start video on demand over the web in '05; DVD rental firm also eyes video game market.
April 5, 2004: 2:37 PM EDT
NEW YORK (CNN/Money) - DVD rental company Netflix plans to start a video on demand service over the Internet next year, according to a published report.
Netflix CEO Reed Hastings also told entertainment industry trade publication Variety that the multibillion-dollar video game market is another related field that Netflix may or may not enter in the future.
Variety reported Monday that Netflix (NFLX: Research, Estimates), which pioneered using the mail to deliver DVD rentals, is looking at video on demand as a defensive move.
"We're playing it a little defensively, because if we lose the digital download market, you'll soon be hearing about the rise and fall of Netflix," said Hastings to the publication.
Customers can now rent up to three DVDs at a time from Netflix for a set price with no late fees. Variety said the VOD offering will expand that to allow for up to three physical DVD or digital downloads at a time.
Hastings expects that Internet VOD market is still relatively small, with relatively long download times for even those with cable or DSL Internet connections. He said that the physical DVD rentals will likely stay the preferred rental choice for the foreseeable future. But he expects the growth of wireless home networking and the expansion of digital video recorders, such as TiVo would soon allow consumers to easily transfer content from a computer to a television.
Netflix to offer movie downloads and eyes video games - Apr. 5, 2004
March 24, 2004
Multichannel
The 7 Habits of Highly Effective Multichannel Retailers
by Michael Ker
Multichannel retailing is hot. Forrester Research reported in May 2003 that multichannel retailers would contribute to 75% of online sales this year, while, ironically, pure play e-tailers would contribute just 25%. Yet multichannel retailers face a unique set of challenges not encountered by traditional brick-and-mortar stores. Multichannel issues exist on the selling and supplier sides, affecting both inbound and outbound shipments, and revenue and cost.
Given that the customer�s experience with a retailer is defined by its ability to manage the process of delivering a quality order on time, regardless of order channel, an integrated strategy for multichannel retailing must be deployed to maintain consistent, superior service across Internet, catalog, and brick and mortar. The strategy should include strengthening backend processes like order fulfillment. Following the seven habits below will mean bigger profits for your multichannel retail efforts:
1. Treat e-commerce as one of many channels � not a separate business. Retailers are typically divided into direct and store channels, and each channel doesn�t know what the other is doing. This can present a host of problems, from duplicate � and costly � systems to duplicate inventory to incompatible SKUs. Retailers must make sure that the right hand knows what the left hand is doing. Remember, e-commerce should drive store business and not stand alone. And since that�s the case, e-commerce customers should get access to customer service just like store customers do.
2. Implement cross-channel pick-ups and returns. The Wall Street Journal reported last November that multichannel retailers significantly benefit from impulse buys when customers pick up merchandise from a store that they ordered online. But, according to an AMR Research alert in December, one of the biggest problems retailers face is processing in-store pickups, since store clerks have no visibility into the customer�s online order. AMR further stated that up to now retailers have under-invested in technologies required to support cross-channel pickups and returns.
3. Make special orders as simple to buy as stock items. In traditional retail operations special orders are usually handled manually � that is, an employee handles processing one customer at a time without visibility into vendor lead times or inventory, and legacy systems aren�t much help. Throw in product configuration, returns and order cancellations and the process can be a nightmare. Consolidating special orders and services through a common order management system for all channels is mandatory.
4. Implement the right infrastructure for shipping single orders. As retailers� online or direct channels grow, shipping to customers requires a different process and infrastructure. Still retailers fail to see the differences between shipping single items and shipping bulk, nor do they understand what�s involved in building the correct infrastructure. Without implementing the right infrastructure, the processing cost per order will soar and may eventually kill multichannel initiatives.
5. Leverage drop-ship vendors. Vendor drop ship is the most underutilized order fulfillment strategy even though the benefits are so clear. Retailers who establish a drop ship partnership with their suppliers can expand customer offerings without incurring higher inventory costs. For every $10 million of wholesale inventory held by vendor partners, assuming a 15% cost of capital, freed up cash flow can amount to $1.5 million.
6. Use order visibility applications to manage your network of shipping locations. Customer-responsive order fulfillment requires the flexibility to manage changes, especially for long lead-time and made-to-order items. This cannot be done using point-to-point systems that merely send POs to vendors over the Internet. Without business applications that provide real-time order visibility, the benefit of sending electronic documents over manual faxing is marginal. By monitoring order fulfillment, retailers can improve long-term customer service levels.
7. Measure the performance of every process involved in getting the order to the customer, and then automate, automate, automate! The customer fulfillment value chain includes more than taking and delivering orders. E-commerce fulfillment, for example, starts with setting up systems for product merchandising, promotions management and interactive selling rules before you even get to order taking and order management. Once systems are in place, they must be measured with business intelligence tools to make ongoing modifications for improved customer service. Orders taken in-store, from kiosks, through the call center, and via the Web storefront can and should be analyzed using a common database.
Michael Ker is CEO of Redwood Shores, Calif.-based Escalate, a provider of e-commerce and order management solutions.
March 18, 2004
Plastic & Cash
Consumers Increasingly Favor Credit Over Cash
Cash could be a thing of the past as consumers increasingly prefer credit cards.
Push For Plastic
Consumers Increasingly Favor Credit Over Cash
By Ari Weinberg, Forbes.com
Special to ABCNEWS.com
March 17� What's in your wallet?
Among the 185 million card-holding U.S. consumers, the average person carries three bank-issued credit cards, four retail credit cards and one debit card, according to CardWeb.com.
That's a lot of plastic � reflecting an incredibly competitive industry that's becoming even more so.
Over the past year, the credit and debit franchises of Visa USA and MasterCard International have become increasingly threatened by consolidating banks and payment processors, multiple law suits and even themselves. The battleground is getting bigger and nastier.
Over the past few years, credit card issuers have improved rewards and cashback cards. Citibank, a unit of Citigroup, now offers a card that grants 5 percent cashback on everyday purchases at supermarkets, gas stations and retailers. That's almost 400 basis points more than a standard checking account earns in interest.
Even debit cards have joined the rewards game.
Banks are also moving very fast into pre-paid, gift and payroll cards. There are mini-cards for a keychain and wireless card acceptance terminals.
Plastic payments now account for 53 percent of consumer purchases, compared to 43 percent in 1999, according to a survey by the American Bankers Association and Dove Consulting. For the largest issuers, Citigroup, MBNA and J.P. Morgan Chase cardholders are generating tremendous amounts of purchase volume. Total plastic purchases � either credit or debit � are up 54 percent since 1999.
"Banks are looking for higher revenue out of consumer spending," says Matthew Park, an analyst covering specialty finance for A.G. Edwards.
Merchants Prefer Debit
But merchants, lead by retailers like Wal-Mart, Sears and Safeway are set on lowering transaction fees. They're pushing for more debit card transactions which, not coincidentally, cost merchants much less. Pulled directly from a buyer's bank account, such purchases accounted for 29 percent of more than $2 trillion in card activity last year compared to 17 percent of $1.3 trillion in 1999, according to The Nilson Report.
Last April, Visa USA and MasterCard International helped that process along by settling a seven-year lawsuit over their charges for debit purchases confirmed with a signature � as opposed to the ATM-style PIN entrance. They agreed to pay restitution to merchants and lower their fees.
"PIN-based debit is cheaper for the retailers," says Doug Bergeron, chairman and chief executive of VeriFone, a former Hewlett-Packard unit that dominates the U.S. market for point-of-sale terminals. "In the intermediate term, the fees could become more indistinguishable and tighten the spread," says Bergeron.
For now, that's simply pushing the banks and card associations to get more credit flowing since the fees on the credit side are bigger. Yet that volume may not come from the friendliest of places.
A pending federal antitrust verdict against Visa and MasterCard stands to open up their member banks to issue cards from competitors American Express and Discover, a unit at Morgan Stanley.
Amex Vs. Visa
In January, American Express announced that MBNA, the largest independent credit card issuer in the United States, would begin issuing American Express credit cards. (Not to be confused with AmEx charge cards, which have no spending limits but must be paid off monthly.) AmEx, which has 79 partner issuers around the world, expects many more U.S. deals to come. The difference between American Express and most other cards continues to be higher fees associated with accepting the card.
While the interchange fees charged to merchants for accepting any type of credit cards are getting more competitive, the fee for American Express processing is often higher. AmEx argues the premium is worth it, since AmEx cardholders allegedly make larger purchases.
"We have a spend-centric model," says Steve McCurdy, an executive in AmEx's third-party card business. "And it receives a premium price from the merchant."
But not all merchants agree. Some think the Amex fees aren't worth it: thus the snarky Visa ads that plug places that "don't take American Express."
Unlike publicly held Amex, Visa is ultimately an association of banks, serving as a clearinghouse to promote the brand. It collects a fee every time a transaction takes place between a card-issuing bank and the merchant's bank. Last year Visa USA crossed $650 billion in credit card transactions and $454 billion in debit transactions
Much-smaller MasterCard, with $514 billion in credit and $82 billion in debit transactions last year, is virtually a public company. Following a 2001 merger with Europay, the company registered its stock with the U.S. Securities and Exchange Commission and files quarterly and annual financial statements.
Last year, in the wake of its $1 billion settlement in the merchant case, MasterCard suffered a net loss of $385 million on $2.2 billion in revenue compared to a $116 million profit on $1.9 billion in revenue in 2002. A big test for both MasterCard and Visa will come in the pending merger between J.P. Morgan Chase, the third largest MasterCard issuer, and Bank One, the largest Visa issuer in the United States.
"They'll have to decide which association and which processor," says Gwenn Bezard, a senior analyst with Celent Communications. "Switching will involve a lot of costs."
All of this means good news for the consumer, who's come out as the big winner in the credit card wars. There's little chance the merged bank will be able to push the consolidation costs on to its customers. But wherever those costs get pushed, there's sure to be even greater pushback.
Could this be the big break for multi-use cards or smart cards?
Your wallet would surely thank them.
March 11, 2004
So you got a Hummer...so what...
Gizmo covered the original Smartruck two years ago and it became one of our most popular stories in 2002 � but the new version is several levels of magnitude above the original model in capabilities.
US ARMY develops SMARTRUCK III
Gizmo covered the original Smartruck two years ago and it became one of our most popular stories in 2002 � but the new version is several levels of magnitude above the original model in capabilities.
Built in partnership with International Truck and Engine Corporation, the machine showcases the latest in armour protection, highly-advanced communications and detection and deterrent capabilities, making the SMARTRUCK III a true mobile command-and-control center.
�It�s the right truck for right now,� Dennis J. Wend, Director of the National Automotive Center told editors at the Society of Automotive Engineers� (SAE) 2004 World Congress.
�Our first focus is to bring forward this mobile unit for our soldiers here and abroad, but at the same time we�ve designed a number of commercial versions which can be easily modified to address homeland security or other priorities.� Specifically, Wend said some of the multiple applications would include:
�For the Air Force, it can be a command-and-control center designed to monitor airfields and their vast surrounding areas.
�For the Border Patrol and U.S. Marshals, SMARTRUCK III will detect the movement of personnel or vehicles in remote areas.
�For Homeland Security, it is configured to monitor both bio threats and personnel movements.
�For a war zone, it brings state-of-the-art communications and detection systems while offering up-armored protection to withstand terrorist and insurgent roadside attacks.
�And there are unlimited applications for commercial uses working with our International Truck and Engine partners for business and industry. This platform does it all!�
The SmarTruck III was built for the NAC, the Army�s official link to developing collaborative technologies with commercial and academic partners, by Integrated Concepts & Research Corporation (ICRC) of Madison Heights, MI, and Heart International of Grand Blanc, MI.
The SMARTRUCK III owes its wide-appeal to its adaptable modular design and innovations in defence and occupant protection, field intelligence, communications and vehicle performance.
Defense and Occupant Protection
In military operations, SMARTRUCK III�s vehicle systems are capable of detecting and responding to personnel movement, a bio-threat in the air or an incoming missile. The vehicle armor, four-point safety belts, run flat tires and fire suppression systems enhance crew protection.
SMARTRUCK III is equipped with a weapons station module featuring a remote controlled .50-caliber machine gun that rises from the back of the vehicle and has sniper-detection directional sound capabilities.
SMARTRUCK III�s advanced perimeter defence capabilities are based on the military�s F-CLAS system, named one of the Army Material Command�s Top 10 Greatest Innovations of 2002. The system supports vehicle survivability from close-in threats like rocket-propelled grenades and antitank-guided missiles with anti-missile missiles deployed from behind SMARTRUCK III�s side flares. Also housed behind the side flares are smoke and tear gas canister launchers.
SMARTRUCK III is outfitted with Level III ballistic protection (to withstand 7.62 x 51mm rounds) and can include armor flooring designed to dissipate the energy from a ground explosion away from the vehicle.
An Automatic Fire Suppression System (AFSS) can sense an explosion or fire in the crew compartment and suppress it within milliseconds, thereby preventing harm to the occupants and reducing fire damage to the equipment. The vehicle diagnostics system will aid the crew in tracking vehicle health and/or identifying and resolving maintenance issues.
Field Intelligence
The highly-sophisticated Surveillance Module houses two primary camera systems: the periscope camera and the telemmersion system.
The periscope camera includes a night vision camera, visible light camera and laser range finder in a self-contained pan-and-tilt.
For high-resolution situation awareness, the telemmersion system can raise eight feet above the truck for capturing the 360-degree full-motion spherical scene at 100 million pixels per second. This compact system includes directional sound monitoring and contains a base unit which can hold up to four hours of recording.
The intelligence equipment includes a Bio-agent Acquisition System which can acquire particulate samples from intake air, distinguish bio-aerosols from dust and other non-biological material and capture samples for analysis.
Unmanned Aerial Vehicles (UAV�s) can be controlled from the SMARTRUCK III�s electronic interfaces. For example, ducted fan UAV, capable of vertical takeoff and landing and high speed horizontal flight, could offer a low-cost surveillance option. Depending on the mission requirements, UAV�s can carry a variety of payloads including cameras or Nuclear, Biological and Chemical (NBC) sensors for air quality sampling.
Communications
SMARTRUCK III�s communication technologies create an integrated, stand-alone Command-and-Control Center. Each of the rear seat passengers will operate a 20� touch screen (with a storable keyboard and mouse) to monitor the numerous SMARTRUCK III technologies. They also each have two 7� LCD screens to view their selected camera feeds. SMARTRUCK III incorporates high-speed satellite internet access and satellite TV.
The front and rear seat passengers will have removable wireless tablet PCs which allow users to monitor vehicle operations and control some of the peripheral devices from outside the vehicle.
Riding in captain�s chairs, the SMARTRUCK III�s four person crew operates an array of ultra-high tech equipment:
The Driver is responsible for piloting the vehicle. From a pop-up LCD display, the driver can view the forward-looking night vision camera which extends the driver�s visible range. An inverted LCD mirror allows the driver to monitor the rearward action.
The Gunner operates the weapon station control unit, including all weapon system camera feeds, weapon deployment, target acquisition and firing.
The Surveillance Operator and the Communications Operator, through their numerous electronic interfaces, will monitor UHF, VHF, military and/or police band radio traffic, track the highly-detailed GPS navigation software, monitor the real-time vehicle diagnostics, control a UAV device and payload, control and view the camera feeds, analyze NBC detection data and engage the electric-shock door handles and other countermeasure controls.
Overall crew comfort is a high priority with the SMARTRUCK III. The on-board systems have been organized for efficiency and stowed to maximize crew space. The cabin is air conditioned and includes a center-cab full-reclining sleeper seat.
Telematics
Using the latest telematics systems, the SMARTRUCK III and its commercial variations can be designed to maximize uptime for the vehicle, increase fleet productivity and reduce operating cost in several key areas.
These include: systems management using GPS for location monitoring; situational updates for tracking supplies; logistics control; full-time vehicle diagnostics; prognostics of predictive failures; embedded training for operators; and systems management for recording vehicle performance.
Vehicle Performance
The base vehicle for SMARTRUCK III is an International V-6 powered Crew Cab, 4200 series medium-duty platform. Its exterior reflects design elements of a military HMMWV and can accommodate existing shelter modules.
Fitted with an air suspension that allows adjustable ride height, reduces storage space needed during air transportation and improves off-road performance.
By recovering a portion of the energy normally wasted as heat by the vehicle brakes, the SMARTRUCK III also boasts a hydraulic launch assist (HLA) that can provide a 25 � 35 percent improvement in fuel efficiency, a 30 percent reduction in emissions while also providing high torque very quickly, even at low speeds.
The massive 37/12.50R20 Michelin XZL tires further SMARTRUCK III�s performance capabilities, offering exceptional traction and handling on varied terrains including snow, sand, mud and highway.
Providing 8.5 kW of continuous power as needed, the Aura Systems� AuraGen G8500X underhood generator system serves as the primary power source for all add-on vehicle technologies, providing high quality AC/DC/Engine-off Silent Watch power as required, whether the vehicle is mobile or parked.
�We�re living in a new world,� said Wend, �facing new kinds of threats to soldiers and civilians alike. The SMARTRUCK III is designed to take on that environment and win.�
The National Automotive Center is the Army�s official link to working with commercial and academic partners to create vehicles that will give the Army the mobility, survivability and agility it needs to operate efficiently and effectively in today�s new threat environment.
For the military, the NAC�s partnership approach makes it possible to improve vehicle performance, safety and endurance while also reducing design, manufacturing, operations and maintenance costs.
For commercial partners, the application of jointly developed technologies has similar impacts � safer cars and trucks, more advanced technology available to the consumer and lower cost because of the broader market base.
Hey, I went to MIT too and I like kiosks...
MIT grad wishes kiosks in cherished space fit in better...
COLUMN
Defeating Lobby 7 Kiosks
George Waksman
7-100LA, more commonly known as Lobby 7, is one of the most beautiful locations at MIT, Killian Court being its only competition. These places are beautiful not for what they have, but for what they do not have: clutter.
Understanding the beauty of these places is not difficult and does not require any great eye for aesthetics, but just some patience. Go to Killian or Lobby 7, choose a place to stand, sit, or lie, and look around. Appreciate the dome, the sky, the space or whatever you like; just appreciate the beauty of the emptiness.
I have seen the many faces of Lobby 7. I was a freshmen during the height of renovations and it was a horrible place. During renovations, Lobby 7 was a network of tight corridors between scaffolding; it was cramped and oppressive. When renovations were completed and Lobby 7 was itself again, I found myself invigorated every time that I came to campus. Enter the doors of 77 Mass. Ave. or walk out of the Infinite Corridor and suddenly everything opens up. Glance up at the dome, then left and right; the beauty sinks in for just a moment and you are off to your destination. Maybe if you have some time, you sit on one of the pedestals, have lunch, watch the people, or just relax.
But, a horrible thing has happened to Lobby 7: the information kiosks. Those cold metal prisms scattered in Lobby 7 to provide information destroy the space. Enter Lobby 7. Look left, see a kiosk directly in front of you; look right, see a kiosk directly in front of you. Your time is up and you are off to your destination without the moment of beauty that Lobby 7 would otherwise provide. The kiosks are a hideous abomination that must be defeated.
The kiosks have wheels and I thought this to be their saving grace. For the past month, almost every morning, I have diligently moved the kiosks to the sides of Lobby 7, restoring its splendor. I do not move the kiosks for myself alone. I move the kiosks for everyone that sees MIT: I move the kiosks for the students and faculty on their way to class and lab; I move the kiosks for the visitors to marvel at the splendor of MIT; and I especially move the kiosks for the children and high school students that enter Lobby 7, look around, and are given that slight hint of how wonderful all of MIT really is. Alas, I have been told not to move the kiosks because the information they contain is so important that it outweighs the destruction of aesthetic beauty.
Let it be known, that I take no quarrel with the information on the kiosks and consider their role to be important. But the implementation is flawed. Perhaps the kiosks could find a new home where they will not destroy an architectural masterpiece. Maybe we could bring back the drop-posters of pre-renovation times, which did not interfere with the space and also served to remind us that MIT is a friendly student-oriented place. Or maybe, there is another way that we can display our information and have our lobby, too.
The salvation of Lobby 7 is not something that I can accomplish on my own. If you have any say over the kiosks, please reconsider their value. If you have something to announce, don�t use the kiosks but find another way; hang a drop-poster, post somewhere else, or find a creative alternative. Or just push the kiosks out of the way as a sign that you, too, recognize their evil.
George Waksman is a member of the class of 2005.
March 10, 2004
World of Patents
Kodak Sues Sony Over Digital Camera Patents
Tue Mar 9, 7:14 PM ET
NEW YORK (Reuters) - Eastman Kodak Co., the No. 1 maker of photographic film, on Tuesday said it had filed suit against Japan's Sony Corp (NYSE:SNE - news) (news - web sites). alleging that the consumer electronics company infringed 10 of Kodak's patents related to digital photography.
Rochester, New York-based Kodak, in a lawsuit filed Monday in federal court in New York, alleged that Sony's products use technology invented by Kodak, including an "electronic camera utilizing image compression and digital storage."
Kodak and Sony are among the leaders in sales of digital cameras, which do not use film and record images on computer chips and built-in memory cards.
The lawsuit comes at a time when Kodak is undergoing a tough transition toward digital products amid the decline of its film business.
Kodak's patents in question date from 1987 to 2003 on inventions related to a range of tasks, such as reproducing video images, printing, previewing and storing images.
Kodak spokesman Gerard Meuchner said the lawsuit follows the failure of talks between the companies that Kodak hoped would produce a licensing pact.
"We have attempted to resolve the matter with Sony for almost three years, and the discussions between us have not led to a suitable licensing agreement," he said.
In a statement, Sony said it "has not violated any Kodak patent related to digital imaging and will vigorously defend any allegation made in this regard."
The lawsuit seeks an injunction against further use of the technology and monetary damages.
Kodak already has licensing agreements with rival camera makers Olympus Corp. and Sanyo Electric Co. Ltd.
Shares of Kodak closed off 47 cents, or 1.8 percent, at $26.36 on the New York Stock Exchange (news - web sites).
U.S.-listed shares of Sony slipped 4 cents or 0.1 percent to end at $40.93 on the NYSE.
March 06, 2004
Patent News
on-demand book printing companies pay $15 million for patent infringement
On-demand printing patent
MLive.com - NewsFlash
ST. LOUIS (AP) -- A federal jury ordered the nation's leading provider of on-demand book printing to pay $15 million for patent infringement to the company that created the concept.
The verdict could mean consumers who follow certain steps when ordering such books online -- which are printed, bound and covered within minutes -- also may be infringing on the patent, said William Cunningham, a lawyer for the plaintiff, On Demand Machine Corp.
The three defendants said they would appeal the judgment. Lightning Source Inc. of La Vergne, Tenn.; its parent company, Ingram Industries, of Nashville, Tenn.; and Seattle-based Amazon.com had argued the patent wasn't valid and there was no infringement.
On Demand Machine Corp., a startup company founded by systems engineer Harvey Ross, filed the lawsuit in October 2001. Ross died three months later.
Ross was 68 in 1990 when he developed the idea that a customer could enter a bookstore kiosk, type a book title into a computer and access a synopsis, sales and other information before clicking on a command that would produce a printed, bound and covered book within minutes.
In the early 1990s, Xerox Corp. demonstrated that Ross' technology produced a book as good as an offset-printed version, which is made in large batches. But Xerox wanted $2.2 million to build a prototype.
Ross won his patent in 1995. When Xerox challenged parts of it, he returned to the U.S. Patent Office in 1997 to have its critical parts affirmed.
In 1996, Ingram Industries, whose book division is the leading wholesaler and distributor of books, refused Ross's offer of partnership.
The following year, Ingram announced Lightning Source, which began printing books on demand in January 1998 in a large production facility, rather than a bookstore setting Ross had envisioned. Its customers are publishers and retail book sellers.
Ross informed Lightning Source that it needed a license from him and that it owed him some royalties, but they refused, Cunningham said. Ross and his company sued, seeking damages they said amounted to no less than what would have been a reasonable royalty.
Wednesday's judgment is "considerably" more than the parties would have had to pay in royalties, Cunningham said. "He'd be pleased," Cunningham said of his late client. "It's vindication for 12 years of work."
Ingram spokesman Keel Hunt said "we certainly disagree with this decision." Amazon.com declined to comment.
KNO - KioskNews.Org: On-demand printing patent
March 02, 2004
Is the Music Store Over?
The big CD retail chains may have only a few more years before the downloading craze buries them. They can survive, but only by becoming like no store you've seen before.
You can forgive the chaotic, run-down atmosphere when you walk into Tower Records on Broadway and West Fourth Street in Manhattan. You don't even mind all those SpongeBob action figures and Beatles lunch boxes -- hey, the music industry's in a slump, and these guys are just trying to pay the rent. But when you pick up The Essential Bruce Springsteen, your temperature starts to rise. You should be ecstatic at the discovery of 12 new releases by the Boss, but instead you're furious: You can't buy them unless you shell out $25.99 for the entire three-CD set that includes 30 "career-spanning classics" that you already own from his other hit records. Why should you have to pay for all those songs twice?
Business 2.0 - Magazine Article - Is the Music Store Over?
February 27, 2004
Customer Surveys
Touch Screen Technology Invites Sun Country Passengers to Start Talking, and the Airline is Listening to Its Survey Results
TALKINGPOINT INC., a consumer research, registration, and relationship development company, is interacting and analyzing feedback from hundreds of Sun Country passengers everyday
MENDOTA HEIGHTS, Minn., Feb 27, 2004 (BUSINESS WIRE) -- Sun Country Airlines is literally in "touch" with its customers now, more than perhaps ever before. Earlier this month, Sun Country Airlines launched an innovative data collection campaign with TALKINGPOINT INC., a Minneapolis based customer Research Company. Sun Country passengers that choose to participate in a sixty second, touch screen survey on a computer screen at the gate are asked a variety of questions about their travel preferences, and or travel concerns. In exchange for their time and information, passengers are eligible for a drawing at the end of the month to win a pair of airline tickets anywhere Sun Country Airlines flies.
This traveler friendly interaction is proving to be a fast and easy way to initiate instant dialog between consumers and their airline through e-marketing campaigns. Sun Country President T. Jay Salmen says the immediate feedback is already proving a valuable consumer resource for Sun Country. "We're always looking for ways to better serve the needs of our customers, and this technology gives us that chance to interact daily and better respond to their travel expectations."
TALKINGPOINT INC., delivers in-store, incentive driven research campaigns via wireless, interactive devices. Sun Country is their first commercial airline client.
"TALKINGPOINT saw this as a great opportunity for two innovative companies to collaborate closely on what matters most to any business- understanding their customers," said Phillip Hotchkiss, President and CEO of TALKINGPOINT INC. "Our customer research, registration, and relationship development platform fits perfectly with Sun Country's desire to better understand and meet their constantly changing needs."
TALKINGPOINT has activated two touch screen monitors at Sun Country's departure gates at the Hubert H Humphrey Terminal in the Twin Cities and plans to activate another screen at Sun Country's kiosk when it opens at the Mall of America, later this spring.
Sun Country Airlines is a low cost, low fare, scheduled service carrier specializing in leisure destinations, as well as offering daily non-stops to cities such as Dallas/Ft Worth; Denver, Los Angeles, New York, Orlando, and Phoenix.
For more information and FAQs related to Sun Country Airlines: visit www.suncountryairlines.com
SOURCE: Sun Country Airlines
Sun Country Airlines, St. Paul
Jim Stack, 651-681-4840 or 651-775-9112
[email protected]
February 25, 2004
VoIP
Nice blog from ther defacto authority on VoIP Jeff Pulver....The Jeff Pulver Blog
February 24, 2004
Mega Grocery
Retail Innovator Meijer Now Adapting to Compete with Wal-Mart, Other Stores
By Greta Guest, Detroit Free Press
Feb. 24--GRAND RAPIDS, Mich. -- Meijer celebrates its 70th anniversary this summer by reinventing the supercenter concept it created in 1962 and then watched as Wal-Mart cloned the concept to become the largest company on the planet.
Meijer Inc., the nation's 9th largest private company, with an estimated $11.1 billion in annual revenues, has aggressive remodeling projects planned for the chain's 158 stores along with several new stores in the next few years.
It is testing new grocery and general merchandise strategies by New York designer and architect David Rockwell at two stores near Meijer's Grand Rapids headquarters. Rockwell is best known for designing the Kodak Theater in Los Angeles and the Planet Hollywood restaurants.
Meijer plans to compete with Wal-Mart on price, in some cases, and with offerings not typically found at a discount supercenter. Besides Wal-Mart, the company sees competitors in Kroger, Target, Kohl's, Whole Foods Market, Costco, Walgreen and others.
The test stores are offering items like sushi, $120 bottles of wine, organic food, gourmet food to go and hand-painted chocolates. They also are testing a drive-through pharmacy and have placed the pharmacy, along with health and beauty products, at the entrance.
Hank Meijer, CEO and cochairman, says the competition has made the company his grandfather founded in 1934 more frugal. Inside costs are being pared, from selling one of two corporate jets to laying off 1,900 salaried workers last month. And he's trimming the cost to build a new store by a third.
"It's a new climate in which there is an imperative for us to be low-cost in our operation so we can be low cost for our guests," Meijer said during a recent tour of the retailer's test stores.
"In a sense, part of what makes what we do exciting is that we are in competition with as formidable a competitor as anyone has ever conceived of. That has a sense of adventure about it that I guess also implies a lot of risk," Meijer said.
Meijer now leads its competitors in market share in eight metropolitan areas including Detroit, Ann Arbor and Columbus, Ohio, according to Mass Market Retailers, a New York-based industry publication.
In comparison, Wal-Mart, with about $245 billion in annual sales, is the dominant general merchandise retailer in 73 of the top 100 markets, the publication said. And Wal-Mart plans a major expansion in the next two years, including seven new Michigan stores this year.
Meijer plans to open five stores this year and then start opening supercenters at a rate of eight per year.
One Meijer pilot store is testing the grocery operation and the other is testing out the new general merchandise design. Company spokesman John Zimmerman said the supercenter plans to remodel up to 45 stores this year with the new concept, including stores in Commerce and Chesterfield townships.
The new grocery and general merchandise concepts will be combined in the new Southfield store in the Tel-Twelve shopping center in 2005. Meijer plans to demolish the former Kmart at that location and build a 194,000-square-foot supercenter.
Zimmerman said that Meijer competes head-on with 50 supercenters, most of them Wal-Marts. By 2007, he projects the company will be competing with 350.
Fred Marx, a Farmington Hills retail analyst and public relations consultant, said Meijer has survived because it keeps evolving.
"I think Mejier has kind of met the barbarians at the gate," Marx said. "Meijer is to be commended for getting out in front of this. I think they are far better prepared to withstand the assault than other players in the country who have had Wal-Mart coming in."
Key changes for shoppers in the grocery area include:
An expanded deli with gourmet food to go, including prime rib and grilled salmon.
An expanded bakery with specialty cakes and hand-painted chocolates.
An expanded cheese section with 200 varieties.
An expanded wine area with bottles priced at $6.99 to $120. The area has hardwood floors, and wine is displayed in long polished wooden bins.
In the second test store, highlights of changes in general merchandise are:
New signs and lower shelving for a more open floor plan.
More private-label brands including At Home with Meijer by Rockwell, which includes bedding, doormats and other items.
Kitchen supplies and baby clothes displayed directly across from the grocery section.
Wood and carpeted floors in the clothing section. New brand names include Sag Harbor and Gloria Vanderbilt.
A new electronics section called E4. The area has televisions, computers, digital cameras, video games and small electronics.
Bob Phibbs, a Long Beach, Calif.-based retail consultant and author, said that while Meijer has a history of innovation, it might overreach its core customer with the new concept.
"People shop at a wine merchant because they know everything about wine and they can help you out with it. I doubt a $7-a-hour-clerk can do that," Phibbs said. "It's good to have the upscale merchandise, but you have to have the upscale help to go with it."
Tony Camilletti, senior vice president of JGA, a design firm in Southfield, said the firm consulted with Meijer two years ago on its fashion presentation.
With recent layoffs, he wonders if Meijer is moving toward a more self-service approach while offering more upscale goods.
"A very large superstore concept to approach a luxury market I think is kind of like an oxymoron," Camilletti said.
Still, what has differentiated Meijer from the beginning, Camilletti said, is that you could buy a T-shirt and a gallon of milk on the same trip.
That appeals to Karen Hembrough of Ada. Steering around a cart loaded down with food, she said she spends at least $200 a trip, "and that's when I don't wander into the other section.
"I got the cutest suede coat here that I love to brag about where I got it for $50. You can get your lettuce and suede coat on the same trip," she said.
Hank Meijer said the company has a better sense of itself now than it did two years ago. It plans to expand by 6 percent a year.
"We all want to be part of a team that's not merely going to cling to survival," Meijer said.
MEIJER FACTS:
--Founded: 1934 in Greenville by Hendrik Meijer
--CEO: Hank Meijer
--Headquarters: Grand Rapids
--Annual revenue: $11.1 billion (estimated)
--Employees: 75,000
--Stores: 158 in Michigan, Illinois, Ohio, Indiana and Kentucky
--Innovations:
1938: First offers shopping carts.
1954: Starts using automated conveyor belts at checkout lanes.
1962: Opens first Thrifty Acres, a food and general merchandise store, in Grand Rapids.
1977: Lane scanners are introduced in a pilot program and expand throughout the chain.
1988: Starts 24-hour service at all stores.
1995: First in the market to open self-checkout terminals.
2004: Introduces new six-bag carousel bagging system to make checkout faster.
-----
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Drugstores
Albertsons Announces Major Operational Changes
FEBRUARY 23, 2004 -- BOISE, Idaho - Albertsons Inc. on Friday announced major changes in its senior leadership ranks and organization structure, including new programs to promote customer service, quality and new format development.
First, Albertsons said it would launch a business-wide Six Sigma Quality program, bringing "a new level of productivity and customer service" to the food and drug retailing industry. Albertsons' chairman, c.e.o. and president Larry Johnston, a former executive with General Electric, added that Six Sigma has transformed industrial giants like GE, Allied Signal and 3M, and said it holds the same potential in food and drug retailing. Leading the effort will be Jim Gentile, who has been named s.v.p. of Six Sigma Quality.
The company also announced it is establishing a new centralized customer service operation, consolidating customer service operations for every major banner in all 2,300-plus stores under one leadership team. The new team will have responsibility for front end operations, the national customer service center, the national "Service Challenge", store process implementation and the "Customer First Second to None Program," among others. Pam Powell, currently group v.p. of marketing, has been chosen to lead the new effort and has been named s.v.p. of customer service.
Major changes are also occurring in food operations, as several division consolidations and new leadership appointments were announced as follows:
� Four former divisions -- Southwest, Intermountain, Northwest and Rocky Mountain -- have been consolidated to form the new Intermountain West Division headquartered in Boise, Idaho. Bob Butler, formerly e.v.p. of Western Operations, has been named to lead the new division and is also being named e.v.p. of food operations for the entire company with the responsibility for co-coordinating all division presidents.
� The former Acme and Florida divisions have been consolidated into one new Eastern Division. Carl Jablonski, currently president of Acme Markets, becomes president of this new division headquartered in Philadelphia. Larry Wahlstrom, currently president of the Florida Division, moves to Boise, and becomes assistant to the chairman for special projects reporting to Larry Johnston.
� Donna Robbins has been named president of the Northern California Division succeeding Jim Gentile. This division continues to be headquartered in the San Francisco area.
� As announced two weeks ago, Judy Spires has been named president of the Dallas Ft. Worth Division serving Texas, Oklahoma, Nebraska & Louisiana. The division will continue to be headquartered in the Dallas area.
The company now has seven operating divisions (six food and one Drug).
Finally, a new division is being formed to develop new formats and also manage the company's large store construction and remodel programs. Roe Cefalo, who has served as e.v.p. of Eastern Operations for the past four years, becomes e.v.p. of real estate, construction, store development, and new formats for both food and drug. In this new role, Cefalo will have responsibility for the company's $1.3 Billion Capex Program as well as operating responsibility for new format development.
Mike Clawson, formerly president of the Northwest Division, has been named president of the company's new price impact division reporting directly to Cefalo.
In the future, the company plans to open price impact stores in multiple cities across the U.S. This new division will be completely autonomous and operated separately from Albertsons' traditional food and drug operations.
Based in Boise, Idaho, Albertsons employs more than 200,000 employees and operates approximately 2,300 retail stores in 31 states across the United States, under banners including Albertsons, Jewel-Osco, Acme, Albertsons-Osco, Albertsons-Sav-on, Sav-on Drugs, Osco Drug, and Super Saver.
Albertsons Announces Major Operational Changes
Convenience Store Business
7-Eleven Canada Making a Move to the Mall
February 24, 2004
VANCOUVER, CANADA -- 7-Eleven Canada Inc. is taking convenience to where the customers are--including malls, colleges, airports and hospitals.
The new stores will be smaller than the typical 7-Eleven store with more of a concentration on fresh food, Vice President of Development at 7-Eleven Canada Jim Waldron told the Globe and Mail.
The 7-Eleven store at the Vancouver International airport has surpassed sales projections.
"We do serve a different niche, a different customer...a customer who needs to move in and out quickly and who looks for the convenience. We're looking to develop aggressively over the new few years," said Waldron.
Competition for consumers' convenience dollars has intensified in Canada, leading retailers to look for "innovative ways to attract a time-starved consumer who is looking for faster, more convenient methods of getting the shopping done," writes the Globe and Mail.
Expanding into nontraditional settings could be a savvy move for convenience stores, say industry analysts.
"In the right facility and the right venue, convenience stores can be very effective and very productive. Wherever you have high traffic, you can generate high volumes of sales"--which will be necessary to be successful in high-rent locations, such as malls and airports, said convenience store consultant Hugh Large.
Waldron said 7-Eleven plans to open more small stores in urban locations as well as in malls and hospitals. These stores are fashioned after the units parent company 7-Eleven Inc. developed for Japan, where space is tight and rent is high.
7-Eleven Canada Making a Move to the Mall | NACS Daily
February 18, 2004
Locations in Retail Space
Tom Moseman has advice for retailers that put their store displays in high-traffic areas.
Beware the "butt-brush" factor.
INSIDE RETAILING
Badly placed store items can get brushoff
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BECKY YERAK
Published February 17, 2004
Tom Moseman has advice for retailers that put their store displays in high-traffic areas.
Beware the "butt-brush" factor.
Moseman, whose Envirosell Inc. is sort of a feng shui adviser to merchants, banks and fast-food chains, spoke at the National Retail Federation's Retail Advertising Conference, which ended Friday in Chicago.
Among Moseman's tips for customer-pleasing store designs: Think twice about putting point-of-sale displays in busy areas, including where checkout lines creep back.
"We're posterior-sensitive beings," said the senior vice president for the New York behavioral research firm, whose clients include Wal-Mart Stores Inc. and Lowe's Cos.
Invade shoppers' personal space, and they're likely to move on and not buy the product being highlighted. "Understanding the butt-brush factor is extremely important."
For stores that stack jeans, Moseman recommends putting husky sizes on top. It saves the amply proportioned from bending over.
Likewise, petites don't have to scale shelves.
And avoid displaying merchandise close to store entrances. Here's why: Shoppers entering a store need to pass through a "decompression zone," giving them the chance to slow their gait and scope things out. Shoppers who haven't decompressed tend to breeze by goods.
Considering displaying interactive devices? Don't bother unless you want children to use them.
Sinking sales: Spiegel Inc. said sales at its Eddie Bauer stores open at least a year dropped 7 percent in January compared with the same month last year.
The Downers Grove company also said catalog and online sales fell 28 percent, mostly due to a planned reduction in catalog circulation and a change in mailing dates.
Spiegel debuted its revamped semiannual catalog and Web site in late January. The comparable 2003 semiannual catalog was mailed in late December 2002.
Environmental Sears: The U.S. Environmental Protection Agency and the U.S. Department of Energy, which give an "Energy Star" seal of approval to products reducing greenhouse gas emissions, recognized Sears, Roebuck and Co. for selling more environmentally friendly appliances than any other U.S. retailer in 2003.
Of course, Sears sells more major appliances, green or otherwise, than any other retailer.
Sears increased the dollar volume of its sales of Energy Star-qualified appliances, including Kenmore, Frigidaire and Maytag brands, by 30 percent in 2003. The goods account for 60 percent of appliance dollar volume for Sears and 40 percent of unit sales.
The least expensive Kenmore dishwasher is $229; the Energy Star version starts at $279.
Energy Star appliances use a third less energy.
Lowe's was recognized last year.
Bad break: What if you opened a store and then broke your right wrist?
"It's not very easy," said right-hander Elisabeth Brusson, who in November opened French jewelry store Renaissance Ethnique at 2050 N. Halsted St.
Last month Brusson, who moved from her native France eight months ago for her husband's job transfer, took a spill on ice and now has her arm in a cast.
"I've learned to write a little with my left hand," she said.
But arranging product displays is next to impossible. That duty now falls largely to her one employee.
It's Brusson's first stab at entrepreneurship. How are things going? "Not bad," she said. "You have to learn to be patient."
Chicago Tribune | Badly placed store items can get brushoff
February 17, 2004
Windows Tricks
Simple way to kill Windows Explorer and run dedicated task
I was sent this simple trick of how to kill Windows Explorer.
"Access Start->Shutdown, then while holding CTRL-ALT-SHIFT, left click on CANCEL. This will kill Windows Explorer, leaving a system where you can only access the last application you used. Great for Internet Cafe's and libraries, since you cannot access the TaskBar, StartMenu, Desktop or anything else."
The way back is to use Ctrl-Alt-Del to get up the Task Manager, New Task, type in "Explorer", but with a limited keyboard it might work for you.
Posted by timdaw at February 17, 2004 12:36 PM
KNO - KioskNews.Org: Cheap Trick
February 16, 2004
Standards research
Sarbanes-Oxley: Road to Compliance
As the initial June deadline for complying with the Sarbanes-Oxley Act nears, publicly traded companies across the United States are scurrying to deploy software packages that will put them in compliance.
Not surprisingly, IT departments view the act as an opportunity to show their impact on the company's bottom line by helping forge tighter links between business processes and technology. However, the compliance process is turning out to be more costly and time-consuming than originally expected, and in many cases, according to at least one study, companies are not turning to their IT departments to manage compliance.
The law, officially known as the Public Company Accounting Reform and Investor Protection Act and enacted in July 2002, requires companies to make new disclosures on internal controls, ethics codes and the makeup of their audit committees on annual reports.
The act is better known by its nickname, after its co-sponsors, Sen. Paul Sarbanes, D-Md., and Rep. Michael Oxley, R-Ohio, who chair the House-Senate conference committee meeting on corporate accounting reform. The initial phase of the act focuses on Section 404, which requires companies to perform a self-assessment of risks for business processes that affect financial reporting.
Public companies with market capitalizations of $75 million or more must be in compliance with Section 404 for their fiscal year ending on or after June 15. Smaller companies have until the fiscal year ending on or after April 15, 2005, to comply.
But according to several large companies embroiled in the process, compliance isn't turning out to be quick or cheap.
Tom Martin, audit operations manager for Boise Cascade Corp., in Boise, Idaho, estimates that his company will spend about $7 million a year on Sarbanes-Oxley compliance, including 20,000 auditor-hours this year, after recording 17,000 auditor-hours on Sarbanes-Oxley compliance last year.
"We should be in compliance by the end of the year," Martin said. "Then we'll have to do it all again next year."
Boise Cascade began an implementation of Movaris Inc.'s Certainty product late last year to build a repository of accounting controls that share the same framework across the company's multiple divisions.
"We have to have a description of our controls and evaluate our controls on an ongoing basis and be sure they're in place and work," Martin said. "We needed something that could be accessible throughout the U.S. and the world. And we knew we needed a Web-based system, something that was very easy to use, since folks would only be doing it once a year."
To Martin, Sarbanes-Oxley compliance is a five-phase project: planning; scoping, which is determining what's material to the company and needs to be documented; looking for information gaps; and implementation, evaluation and monitoring.
Boise Cascade is now in the implementation, evaluation and monitoring phase and expects to be audit-ready by Sept. 30, Martin said. The company is doing a pilot project at its distribution centers, then will roll out Certainty to its other business units.
"The product has enabled us to look at our controls environment in one package," Martin said. "We knew our controls were similar, but not the same, so we look for opportunities to standardize the process."
Forming a central repository of documented controls for multiple business units is also the task at hand at Volt Information Sciences Inc. The New York-based company needs uniform, complete documenting of controls, business processes and risks, according to its chief financial officer and senior vice president, James Groberg.
"The basic task may not be that difficult, but it's extraordinarily difficult if you have many business units," said Groberg. "We need to be able to get at [the controls] quickly in a format the business units themselves can understand. We want an audit trail."
Volt is using OpenPages Inc.'s Sarbanes-Oxley Express product to build its controls repository. Groberg agreed that the process was expensive but described it as a "wake-up call," one that his company could benefit from in the long run.
"[Section] 404 [compliance] is extremely difficult and very expensive, but in the long run, it's a benefit for the management of the company," Groberg said. "We'll be more certain that we have the internal controls in place that we need to have so we'll avoid the costs of finding errors."
Having the right financial controls in place is nothing new at Volt and most other companies, Groberg said.
"We've always had these controls in place," he said. "It's a question of organizing them properly so that we have a better monitoring overview from the management standpoint and can prove to the public that we have the controls in place that can prevent a material misstatement."
Sarbanes-Oxley compliance requires more than just a new documentation system.
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John Imperato, vice president of finance at Viasys Health Care Inc., saw compliance as an opportunity to get a standardized financial reporting system in place at his company's multiple business units. Until recently, each unit had its own reporting system, with nonstandard processes and consolidations done manually by e-mailing Microsoft Corp.'s Excel spreadsheets back and forth.
Viasys is now in the final stages of implementing Cartesis Inc.'s Magnitude financial reporting software companywide for internal and external reporting.
"The same general product categories [at different business units] did not update together," said Imperato. "Every one of the companies had their own reporting systems."
Keeping up with Sarbanes-Oxley
Five steps to compliance
# Planning Form compliance committee, select software to assist in compliance process
# Scoping Determine what information needs to be documented and is material to company
# Documentation Document business processes and controls in place to ensure information is accurate
# Gap analysis Identify and remediate inadequate controls
# Implementation, evaluation and monitoring of controls Document and update controls as needed, then turn them over to audit team, which evaluates depth and effectiveness of controls; develop ongoing process for monitoring controls
With Magnitude deployed throughout the company, all accounting systems update at the same time and link to a central consolidation system, Imperato said. Magnitude also allows Viasys to drill down into reports to get general ledger and sales information on specific products.
"Compliance was a big issue, but there were management issues as well," Imperato said. "Now we'll have a lot more confidence that our information and numbers are complete and accurate."
At Viasys and other companies, Sarbanes-Oxley compliance is spearheaded by and is the ultimate responsibility of the finance department. But as the examples illustrate, compliance ties into typical IT department challenges, such as application and data integration, particularly when different divisions and companies are involved
IT can't shy away from playing an important role in compliance. Yet a recent Hackett Group survey indicates that more than 50 percent of public companies aren't getting IT involved in the process.
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"IT can be a huge, huge enabler," said Scott Holland, senior director at the Hackett Group, an Answerthink Inc. company. "Technology and processes need to be in the same room. One cannot be successful without the other."
Hackett analyst David Oppenheim said Sarbanes-Oxley could make the public company CIO a "superstar."
"Having an understanding of what different technologies are in an organization and how they're connected to each other is critical to the analysis associated with Sarbanes-Oxley compliance," said Oppenheim in Philadelphia. "The business users may think they understand the system, but that's a false sense of security."
IT is heavily involved in the Section 404 compliance process at Volt, according to Groberg.
As part of the compliance process, Volt IT personnel needed to document security and application access as well as know when the company's PeopleSoft Inc. financial system is not functioning properly. IT works closely with financial and operational personnel, Groberg said. "They look to you to give them what they need to do their job."
At Boise Cascade, IT was first actively involved in screening companies with Sarbanes-Oxley compliance offerings, based on Boise Cascade's specifications, Martin said.
As part of the compliance initiative, IT was then given ownership of certain business processes involving design, testing and implementation of software so that all software applications involved in compliance are running as they were intended to, Martin said. "The internal auditors test the financial controls and the IT auditors test the IT controls," he said.
Like Viasys, commercial real estate developer The Rouse Company consolidated its financial planning applications. But instead of Cartesis, the company turned to SRC Software Inc. and its SRC Budgeting product.
Breaking it down
The average billion-dollar public company ...
# Manages 48 disparate financial systems
# Manages 2.7 enterprise resource planning systems
# Uses stand-alone spreadsheets for financial reporting (47 percent)
Robert Edwards, vice president and CIO at Rouse, said the consolidation ensured the company's finance software was easier to administer and organize around a set of common business rules, which helps in the compliance process.
"We have less gaps in our Sarbanes-Oxley process, so there's less of a chance we'll have a compliance issue because someone didn't understand the disparity of systems," said Edwards, in Columbia, Md.
Edwards agreed that Sarbanes-Oxley compliance was costly, although he declined to discuss how much Rouse was spending on compliance efforts. However, he said he expects Rouse to realize benefits in the long term.
"We think a lot of the upside will be long-term, not an immediate payback," Edwards said. "The long-term effect should be that we produce higher-quality business processes throughout the organization with higher-level awareness and controls."
Ultimately, the Sarbanes-Oxley Act will change the way the business world works, for the better, Edwards said.
"Companies will have higher-quality staff, automation and processes," he said.
There could, however, be casualties along the way. While smaller-cap companies will have longer to comply, they are otherwise bound by the same standards as larger companies. Edwards said he is not sure that's the right way to go and predicted that Sarbanes-Oxley could drive many smaller public companies out of business or at least into the arms of private financiers.
"If you have to pony up $1 million a year in ongoing compliance costs, and you're only making $100 million a year, that's a lot of money to spend on a non-revenue-generating activity," Edwards said.
The Hackett Group, of Atlanta, predicts costs of annual compliance at most companies will be in the range of $5 million to $7 million.
While Rouse's IT department is heavily involved in Sarbanes-Oxley compliance, Edwards stressed that all departments in an organization need to take ownership of business processes for compliance to succeed. He advocated that each department have its own compliance team leader to oversee department-level compliance efforts.
"If companies are just getting their accounting department or auditors involved, then I can guarantee you they'll have an opinion rendered against them," Edwards said.
"Sarbanes-Oxley compliance is a lot like Six Sigma or TQM [total quality management], where everyone in the organization has to be aware and own their own processes," he said.
February 02, 2004
RFID Acceptance
A survey of U.S. consumers by Cap Gemini Ernst & Young reveals some occasionally surprising desires and concerns regarding RFID.
By Jonathan Collins
Feb. 2, 2004�A survey on U.S. consumers� perceptions of RFID technology has shown that the majority of consumers are unaware of the technology and that the appeal of RFID lies not in changing their shopping experience but in recovery of stolen items, improving product safety and lowering the price of goods.
Edward Westenberg
Conducted in October 2003 by business and technology services provider Cap Gemini Ernst & Young with assistance from SmartRevenue, a Ridgefield, Conn.-based research firm, the survey polled 1,000 U.S. adults 18 years of age or older in an Internet survey. The composition of the consumers surveyed was representative of the entire U.S. population from the standpoint of age, gender, education and residential location. The respondents were asked to complete an online questionnaire that included a brief explanation of RFID and a wide range of questions regarding the technology, as well as basic demographic questions such as gender, age and education.
�The goal of the survey was to gain a better understanding of consumer awareness of RFID,� says Edward Westenberg, senior manager in Cap Gemini Ernst & Young Global�s retail practice in New York City. �Retailers and CPG manufacturers considering RFID deployment should take the benefits and concerns that are important to consumers into consideration.�
The survey found that just 23 percent of consumers had heard of RFID technology, and that among those who recognized the term, perceptions were mixed. For example, when those who had heard of the technology were asked whether they perceived RFID as favorable or as unfavorable, 48 percent answered they didn�t know or had no opinion about it, while 42 percent indicated they had a favorable perception, and just 10 percent had an unfavorable perception.
Although more than 75 percent of the survey respondents didn�t recognize RFID as a technology by name, about half of the consumers surveyed indicated they used or had heard of existing services such as Mobil Speedpass or highway toll devices like E-Zpass. However, eight out of 10 of that 50 percent were not aware that these applications use RFID technology.
Awareness of things like Speedpass stems from the value that these services bring to consumers, and if retailers and CPG companies are going to win similar consumer awareness for their own RFID deployments they will have to deliver similar tangible benefits for consumers, says Westenberg.
According to the survey results, the RFID-enabled benefits that consumers value are not necessarily the same ones currently determining RFID deployment by retailers and CPG manufacturers. Although some retailers such as Metro Group have used trial deployments of RFID as a way to help merchants combine individual consumer identification and purchasing history with RFID-prompted selections and sales suggestions, consumers are wary of such developments. The survey found that the benefits of RFID least important to consumers were increased access to more products, instant recognition of preferences that can lead to faster/better service, and instant in-aisle suggestions for companion products.
The survey also asked consumers about their apprehensions related to RFID. From a list of issues that had the potential to make respondents feel �extremely concerned,� the three most frequently chosen were (1) the use of consumer data by a third party, (2) an increase in targeted direct marketing and (3) the potential for tracking consumers via their product purchases.
�The survey shows that retailers and CPG manufacturers need to educate consumers about where their data will be stored and the privacy policies related to the data,� says Westenberg.
Consumer support for RFID mostly involves security and safety. The survey found that the top two benefits most important to respondents were the potential for faster recovery of stolen items (rated as �extremely important� by 71 percent of respondents) and improved car anti-theft capabilities (70 percent of respondents). In third place was savings stemming from reduced product costs (rated as �extremely important� by 66 percent). Improved security (such as protection from tampering or counterfeiting) of prescription drugs came in fourth (65 percent), and faster, more reliable product recalls ranked as the fifth (62 percent).
While many of the respondents claimed they would be willing to buy an RFID-enabled product to get the benefits that are important to them, a far smaller percentage said they would consider paying more to receive those benefits.
Cap Gemini Ernst & Young published the survey�s results in a report entitled , available on the company�s Web site at www.us.cgey.com.
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RFID Journal - Consumers Voice Opinions on RFID
January 30, 2004
Trends in 2004
eMarketer's team of senior analysts have come together to present 11 trends that will influence business and society in 2004.
1. DIGITAL MUSIC: Online retailers will have the most success in selling digital music as a break-even product or loss leader. The mass appeal and low price of music make it an excellent impulse purchase, but few digital music stores today integrate sales of digital music with CDs or related products. Retailers will need to capture profit elsewhere, given that thin margins on digital music make it untenable. Mass market retailers such as Best Buy already use CDs as a loss leader; online retailers such as Amazon.com, which will launch digital music alongside CD sales and its CDNow discount buyers' club, will reap the highest overall value from selling digital music. -- Senior Analyst Ross Rubin
Refer to: Digital Music: "Fear-to-Peer" Tactics Pave Way for Download Revenue (new spotlight report for January 2004)
2. IT SPENDING: Small and medium-size businesses (SMBs) have become big targets for leading technology vendors from IBM and Microsoft to Intuit. Individually, SMBs don't always spend much on technology, but with millions of small and medium-size companies out there, IT sales into this market is a multi-billion dollar opportunity. Recent tax cuts in the United States currently permit SMBs to deduct as much as $100,000 annually in fixed capital expenditures from their taxable earnings -- up from $25,000 prior to 2003 - which should further stimulate IT investment by US SMBs through the end of 2005. -- Senior Analyst Steve Butler
Refer to: Trends in SMB IT and E-Business Spending (new spotlight report for January 2004)
3. GAMING: The next generation of video game consoles is expected in 2005/2006, but Sony and Microsoft have already laid the groundwork for the future, which involves network-connected gaming. Multiplayer network-connected gaming is still a hardcore gamer activity, but with the majority of people under 30 brought up on video games, interactive entertainment will be the norm rather than the exception over the coming decade. -- Senior Analyst Ben Macklin
Refer to: Console Wars II: The Battle for Mainstream (new spotlight report for January 2004)
4. ONLINE ADVERTISING: The long-awaited rebound of US online ad spending from the declines of 2001 and 2002 is finally here. That the rebound is being fueled mainly by a direct response ad format, paid search, is a reason for concern, however. While many Internet advertising practitioners already know that the Web is also a branding tool, the media attention and industry buzz directed at paid search might sway large traditional advertisers and agencies into seeing it as a "mere" direct response medium. Even as ad dollars grow, such a scenario would be a setback for online advertising. The proliferation of rich media, for example, presents enhanced opportunities for branding online. -- Senior Analyst David Hallerman
Refer to: Online Ad Spending: More Money, More Choices (new spotlight report for January 2004)
5. PORTALS: The 'big three' portals will continue to be the online destinations where most Internet users congregate. In another year, eMarketer's next related report may be about the 'big four' as Google IPOs and begins to resemble a portal. Google is already a powerful advertising platform, but there may be additional opportunities for advertisers and marketers within Google as it evolves. Meanwhile, AOL, MSN and Yahoo! won't be sitting still... -- Senior Analyst Ben Macklin
Refer to: Portal Plays: Strategies & Developments of the 'Big Three' (new spotlight report for January 2004)
For the remaining six trends to watch in 2004, read on to the next page.
Here are the last six of 11 trends to watch in 2004 according to eMarketer's senior analysts.
6. LATIN AMERICA: Latin America offers the world's lowest-priced Wi-Fi services. In a region long beset with high Internet access costs, this finding comes as something of a revelation. Although Wi-Fi access points are not yet widespread enough to have a major impact on Internet usage patterns, aggressive pricing strategies bode well for Latin American consumers, particularly as they trickle down to fixed line-based broad- and narrowband services. Foreign investors may remain wary of Latin America's technology markets after their meltdown in 2000, but several intrepid telcos have forged ahead, paving the way for continued growth in Internet access and usage across the region. -- Senior Analyst Noah Elkin
Refer to: Latin America Online: Tracking Internet Access & Usage (December 2003 spotlight report)
7. ONLINE CONTENT: The Internet evolution from free to fee is not just a temporary phase that will go away now that online advertising is picking up. The shift is here to stay, and it's growing. Along with comScore Networks, which has quantified this trend for the Online Publishers Association, IDC, Jupiter Research and eMarketer have also identified that US consumers are spending increasing amounts of money on online content across a variety of content categories, and this will continue. -- Senior Analyst Ben Macklin
Refer to: Online Paid Content: Trends & Opportunities (December 2003 spotlight report)
8. WI-FI: Competition in the Wi-Fi market will remain fierce. There are currently approximately 60 Wi-Fi chip startups, and some are already dropping out of the game. As with much of technology in these tougher times, only the strong -- and well funded -- will survive. Look for established names, such as Intel, Microsoft and Cisco, to lead the charge, accomplished by plenty of acquisition and consolidation activity as well as heavy marketing campaigns. Yet, will anyone turn a profit? -- Senior Analyst Noah Elkin
Refer to: Wi-Fi: Trends & Prospects (November 2003 spotlight report)
9. INTERACTIVE BANKING: Banks once hoped that the Internet would reduce traffic in higher-cost channels such as the branch and call center, but they now realize that may not happen exactly as planned. Instead, bankers are using the Web increasingly to reach more desirable customers -- affluent, educated and loyal -- and also as a tool to retain existing customers, with services such as online bill payment. In addition, savvy banks see that combining the Internet with in-person channels is often the optimum way to deal with complex financial tasks such as mortgages and financial planning. -- Senior Analyst David Hallerman
Refer to: Interactive Banking in the US: Making the Most of a Multi-Channel World (November 2003 report)
10. WIRELESS: The increased competition within the US market has forced operators to be aggressive with pricing as well as offering consumers larger and larger buckets of minutes per month. This would account for the greater amount of time spent each month talking on mobile phones in the US. Despite the US and Canada lagging behind Western Europe and Japan in mobile phone penetration, it is likely that the North American mobile market will be the world hotbed of growth and innovation in the short- to medium-term and in many respects will leapfrog a number of the Western European and Asian markets. -- Senior Analyst Noah Elkin
Refer to: Wireless Worldwide: A G-7 Comparison (November 2003 report)
11. E-COMMERCE: US e-commerce demonstrated solid expansion during 2003, culminating in online retail sales of $17.8 billion during the holiday shopping season. Last year, 81.2 million Internet users in the US made an online purchase; this number is expected to grow to 86.5 million online buyers in the US by the end of 2004. -- Senior Analyst Ross Rubin
Refer to: Retail Industry Online (October 2003 report)
For more information on any of the 11 trends to watch in 2004, visit eMarketer.com.
January 28, 2004
Grocers: Workers are Key
For the chief executive of any food distribution company, worrying comes with the territory, especially these days.
JANUARY 01, 2004 -- For the chief executive of any food distribution company, worrying comes with the territory, especially these days. There's competition that seems to intensify by the week as Wal-Mart continues its massive supercenter rollout and the number of retailers seeking a piece of the grocery business grows constantly. There's the dilemma of finding and keeping good workers without being overwhelmed by the costs of taking on new employees. There's the economy, which seems to be emerging from nearly three years in the tank, but is hardly on fire. There's the ever-present threat that government may come up with yet another idea that translates to more expense for businesses.
And then there's the biggest challenge of all: mustering the vision and creativity to wring positive results from an overstock of negative influences. In the current climate, that's the most basic job requirement, and it's one c.e.o.'s who shared their goals and concerns with Progressive Grocer take very seriously.
"We believe there's always going to be a battle for consumers, and those that can execute right at the local level are going to ultimately win, whether it's a supercenter or anyone else," says Jeff Noddle, chairman and c.e.o. of Eden Prairie, Minn.-based Supervalu.
"If you focus on serving the customer rather than just focus on one competitor, I think you have a much better chance to do what we're supposed to do," says Jack Brown, chairman, president, and c.e.o. of Stater Bros. Markets in Colton, Calif. California retailers are bracing for an influx of some 40 Wal-Mart supercenters, beginning next month. "We're supposed to be entrepreneurs," Brown says. "As merchants we're supposed to look for those areas and products that our customers want that they can't find someplace else."
The imperative to keep striving is alive and well in Pittsburgh, where Giant Eagle chairman and c.e.o. David Shapira warns, "Those food retailers that lack innovative vision run the risk of not only losing market share today, but of ultimate extinction, as well."
On the other side of the country, that resonates with wholesaler Unified Western Grocers in Commerce, Calif. "You will see many changes at Unified Western Grocers in the coming year, including a new emphasis on perishables, an expansion of our specialty food categories, and beefed-up services�like real estate and retail technology�that will help our retailers better distinguish themselves from their competitors in the marketplace," says Alfred A. Plamann, president and c.e.o.
And in the Southeast, Rick Anicetti, president and c.e.o. of Salisbury, N.C.-based Food Lion, emphasizes staff recruitment and development as a way to keep his chain on the leading edge. "I constantly challenge our organization to seek the best possible candidates and to create a nurturing environment that will help all associates reach their full potential. This approach produces knowledgeable, flexible, and innovative employees who strive for excellence and create a strong leadership pool," says Anicetti.
Keeping ahead of
competitors
Noddle says that Supervalu keeps tabs on the growth of aggressive competitors, "although we're one that believes that we always have new competition in the industry. We believe that currently it's supercenter competition." That represents a new challenge, he says, because of the size of the companies, particularly Wal-Mart.
"We've put a lot of stress on delivering our retail business and in support of the independents we serve on the distribution side being very local in our merchandising and marketing," Noddle says. "We believe in that very strongly. We believe that ultimately the consumers will respond to those who execute the best for them within their market."
To that end Supervalu has worked hard to maintain an in-market decision-making process even as it has centralized many administrative functions and taken advantage of the purchasing clout that comes with scale. "The decisions as to what people are going to buy, how to price goods in the market, what to advertise, what to display�those kinds of decisions, we believe, you leave in the local market," Noddle says. "It's a very difficult balancing act, but it can be done."
Supervalu places a premium on innovation and creativity, he says, and one of the company's creative moves involves turning a core competency into a service it can sell to other food distributors. The Advantage Logistics subsidiary, formed in 2002, recently won a contract to run a third distribution center for Kroger Co. and now manages a DC for a manufacturer, Atkins Nutritionals.
The Save-A-Lot price-impact format continues to be expanded, Noddle says. "We think it is a very innovative way to go to market, and very focused and targeted toward a specific customer demographic."
In California Stater Bros. began preparing early for Wal-Mart's entry into the market, says Brown, traveling the country to see its grocery operations firsthand. "We've been in Syracuse, Bentonville, Dallas, Indianapolis, and looked at the operations," he says. "I had about seven of our people take a trip�actually, I took several trips�just to get a feel for it, so they'll know what they're coming up against. And then we came home and made our plans."
Brown takes a broad view of the coming competitive picture. "There are more issues than just price that we compete with, and we want to be sure that all the issues that we control have been honed to develop customer loyalty," he says. "We'll be close on price, but we'll be way above them on every other category there is in the store�in service, in cleanliness, in our people."
One key, he adds, is merchandising the store as a brand, first creating high expectations among customers, then meeting them. "When our customers think of Stater, I want them to think of us as that brand," Brown says. "It's their store, and everything they expect, we deliver."
Unified is also preparing for Wal-Mart's entry into California, and Plamann says that means paying especially close attention to expenses. "Retailers must do a good job of managing their costs on a daily basis to survive in the marketplace of tomorrow," he says. "In my opinion this means there will be continued consolidation among retail grocery companies in 2004 and beyond."
Giant Eagle has been traveling for some time the road on which California grocers are about to embark. "Food retailers are challenged daily to demonstrate a consistent level of quality, value, and service to our customers�all while competition is increasing in multiple channels and there is growing attention on pricing strategy," Shapira says. "But what will truly differentiate Giant Eagle from the competition is our constant focus on innovation to enhance and redefine the shopping experience, innovation targeted at the customer in the forms of more inviting and convenient store formats, unique value-added products and services, and technology that ultimately reduces the costs of goods and provides competitive value."
The importance of people
A concern frequently cited by corporate chiefs is having people on board who can raise their companies' odds of success. "One of the industry's biggest challenges is to find good employees," Anicetti says. "As the service sector becomes increasingly automated, it is more critical than ever that companies hire, develop, and retain highly qualified and talented people to serve customers and to lead the business."
Brown's view is strikingly similar. "There's a tremendous need for skilled and trained people in our industry even today, but when you get people like Wal-Mart coming into an area, of all the things they say they bring, I can tell you they don't bring people," the Stater Bros. c.e.o. says. "They don't bring skilled people in the supermarket industry; therefore, they will go out and pirate people from the existing chains and supermarkets in that area. If you bring in 40 stores, you're talking over 4,000 grocery people who will have to be replaced somewhere on a per-store basis, and, therefore, I think chains need to do all they can to continue to develop the loyalty of their employees with the goals of their chain. Otherwise they will bail out for other opportunities that may be real or just believed."
And Wal-Mart will be aggressively looking for workers. The world's largest company estimated it would need to hire 616,000 people last year just to account for turnover, and it plans to create 800,000 new jobs from now through 2008, 47,000 of them for managers. Not that Wal-Mart is worry-free. Vice chairman Tom Coughlin has called finding enough employees to support the expansion plans his biggest concern.
"Last year we put a terrific amount of effort into training because we're getting ready for the first Wal-Mart supercenter to open in February in La Quinta," Brown says.
The problem of finding and keeping good people may grow more intense. The economy, so far in a recovery that's been mostly jobless, is showing signs that employment is starting to creep up, and some economists predict that job growth will be steady, if slow. A leisurely pace of improvement could afford companies some time to solidify their relationships with their employees to head off excessive turnover as more opportunities become available.
The cost dilemma
But while smart employers value their workers, they also have to take into account the ever-increasing expense of keeping each employee on the payroll, costs that automatically attach to every new hire, as well.
Noddle says Supervalu's costs for health insurance have risen 13 percent to 15 percent in each of the last two years. "Whether those are union plans or nonunion plans doesn't make any difference," he says. "Ultimately we have to share the majority of that burden. No business can take these kinds of increases on such a large expense as health care."
He says good health care is in the interests of both Supervalu and its employees, and he calls reports the company wants to eliminate coverage for its union workers "absolutely untrue." Supervalu's aim, he says, is to get employees to participate in covering some of the costs. "If they are more engaged by paying some portion of it, they're going to be better users of the health care," Noddle says. "Health care is important, and until such time as there is a broad national solution to a better health care system in the U.S., this is what we've got and we need to respond to it."
While the cost of health care is a nationwide concern, California grocers are suffering doubly from rising employment expenses because of the state's exploding costs for workers' compensation. Plamann says that because Unified does 70 percent of its business in California, it is at a competitive disadvantage against wholesalers from other states and will remain in that fix until the Legislature enacts reforms. "Total workers' compensation costs for California employers are expected to exceed $20 billion in 2003, and our workers' compensation premiums are the highest in the nation," he says.
Brown says Stater Bros.' workers' comp costs have gone up 210 percent in the last five years�along with a 110 percent jump in utility costs and an 86 percent increase in fuel spending�and he's hopeful the state's new administration will begin to take some action.
Monitoring the economy
The national economy is always something to be watched, Noddle says. "People think we're insulated in this business from variations in the economy, and of course that's really not true," he says. With a presidential election coming in November, Noddle observes, it's especially important to be alert "because the administration and the government in general tend to act differently in an election year than they do in other years."
Noddle expresses optimism about Supervalu's outlook, and he feels the economy is getting back on track. But he cautions, "The amount of deficits the government is running is going to have to be dealt with sooner rather than later."
Both Brown and Plamann say they're concerned about California's fiscal crisis, which led to the recall of former Gov. Gray Davis and the election of Gov. Arnold Schwarzenegger, but Brown says the national economy, at least, appears to be "in pretty good shape."
Although Davis got the blame, he says, the Legislature shares much of the responsibility for California's huge deficit. However, with the change of administration, he adds, "at least I have hope."
Plamann notes, "There are still many unknowns. Will taxes be increased to reduce the deficit? What new methods will be introduced to raise revenue? What additional cuts in services will be put forward? How will our borrowings impact future growth?
"Because of the size and scope of the retail grocery business in California, our industry will be on the lookout for tax items and other legislation that could have an impact on our industry, such as vehicle license fees, split roll property tax, manufacturers' investment tax credit, and so on."
Regulatory concerns
On the federal level, legislation mandating country-of-origin labeling at retail for most perishable commodities and meats has played to what are probably the most universally bad reviews by the food distribution industry since the ergonomics regulations issued at the close of the Clinton administration. They were set aside by Congress shortly after President Bush took office.
The rules, originally scheduled to take effect next September, appeared at presstime to be headed for a two-year delay, but grocery executives don't show signs of becoming big fans, even if they get extra time to prepare. "I, for one, believe that if customers want this kind of information, then everybody will find a way to deliver it to them in their own way and their own style," Noddle says. "But the country-of-origin labeling legislation adds billions of costs into the system that ultimately get passed to consumers, and the tradeoff is not worthy of it."
Plamann says if and when the law goes into effect, it needs to serve the best interests of retailers as well as consumers. "Our industry is taking a two-pronged approach toward county-of-origin labeling�preparing for its implementation and simultaneously lobbying against aspects of the law that place excessive burdens on retailers," he says.
The extent of the expected burden apparently isn't clear to the government yet. The Small Business Administration's estimate of the number of retail food stores that would be affected is far greater than the estimate made by the Agriculture Department, which proposed the rule.
Complying with the Sarbanes-Oxley Act of 2002, which set new rules for corporate accounting and governance, has already raised companies' expenses, Plamann says. "While these and other changes have helped restore public confidence in the integrity of business information, financial records, and the impartiality of corporate governance, these changes have also added significant cost and manpower burdens to these very same companies," he says.
"At Unified, for example, we have changed the structure and makeup of our board and committees, created new audit and internal control staff positions, and stepped up our monitoring and tracking controls throughout every department in the company."
Brown praises the Medicare bill signed into law last month as "a tremendous step forward." He notes that the measure was no sooner passed than a horde of critics were trying to undo it. "But Dianne Feinstein, the Democratic senator from California who voted for it, said, 'Give it a chance; you've got to start somewhere.' Those were some of the most encouraging words, and, I think, real leadership words, that we need in Congress in both houses to really get America moving again rather than sniping at every issue you can."
Employee Benefit Numbers
Nearly Eight in Ten U.S. Employees Register for Benefits Online; Companies Use Online Decision Support Tools to Drive Emerging Health Care Strategies
LINCOLNSHIRE, Ill.--(BUSINESS WIRE)--Jan. 27, 2004--Online enrollment for benefits continues to be the number one choice for U.S. employees, with 77 percent using the Internet to enroll this year. This is an increase of seven percent from 2002 and more than 25 percent from 2000 according to research conducted by human resources outsourcing and consulting firm Hewitt Associates.
As online enrollment has increased, use of other channels and paper confirmations has decreased. In fact, the number of companies that eliminated paper confirmations of enrollment increased 74 percent this year. In addition, only four percent of participants enrolled through interactive voice response (IVR) and 19 percent through call centers, compared to eight percent for IVR and 23 percent for call centers in 2002.
"Smart companies recognize it's not enough to offer a Web option to drive paperless enrollment and improve efficiency; they must provide value-added services and tools to drive Web traffic, enable self-service and support consumer-driven strategies," noted Maureen Kincaid, Hewitt's Health Management practice leader.
During this past open enrollment season, which typically runs from late September until early December, Hewitt successfully enrolled more than 10 million employees, retirees and their dependents on behalf of nearly 140 clients. Ninety-six percent of these clients offered online enrollment (up from 59 percent in 2000), and more than one-fifth of them had more than 90 percent of their participants enroll online. While extremely complex situations can be handled through Hewitt's customer service call centers, nearly 15 percent of firms require self-management, meaning that participants must use the Internet or IVR to enroll.
Online Enrollment Tools Grow in Importance and Functionality
As health plan choices become more complex and costs continue to rise, companies are offering employees more educational content and enhanced decision-support tools, such as health plan comparison charts, flexible spending account estimators, health plan cost calculators and provider information.
Through surveys conducted during enrollment, employees indicated that they value and use these tools to aid in their decision making. Sixty-two percent of participants noted that the health plan cost calculator tool helped them to consider at least one plan different from their current plan, and 32 percent said that, based on the information in the tool, they would likely choose a medical plan different from their current one. Sixty-six percent indicated that the health plan comparison chart prompted them to consider a plan different from their current choice, while 27 percent said the tool influenced them to likely choose a different plan. Fifty-five percent of participants used the health plan comparison tool to make their final enrollment decisions, and fifty-one percent said that the tool helped them gain a better understanding of plan changes.
"Online tools are a must-have for all employers, especially those who need to drive employee behavior change and enhance consumerism to advance emerging health care strategies," added Kincaid. "Employees have more skin in the game than ever, and employers are working hard to provide the information and decision support necessary to empower them."
High Satisfaction Among Users
Efforts to add greater value to the online enrollment experience are paying off, not only in terms of usage, but also in terms of satisfaction. Hewitt data shows that 93 percent of employees enrolling for benefits online were satisfied with the overall enrollment process, and 96 percent were satisfied with the ease of use and time it took to enroll. With nearly 90 percent of participants indicating that they had online access to all the information they needed to enroll, calls to the customer service center decreased five percent over the previous year.
About Hewitt Associates
Hewitt Associates (www.hewitt.com) is a global human resources outsourcing and consulting firm. It provides services from offices in 38 countries.
Contacts
Hewitt Associates
JoAnne Laffey, 847-442-7648
[email protected]
or
Kelly Zitlow, 847-442-7662
[email protected]
BUSINESS WIRE: The Global Leader in News Distribution
January 26, 2004
Tomorrow's Workforce
Tomorrow's workforce of contingent, offshore and outsourced employees has arrived. For HR at the largest companies, this requires a whole new way of looking at things.
BY ANNE FREEDMAN
The economy is growing. U.S. jobs are being added at a rate not seen since the 2001 recession ended. And corporate America--and many of this country's workers--are in the footloose-and-fancy-free mode.
The down economy of the last several years tamped down but did not extinguish a unique uptrend in the late '90s: the growing reliance of businesses on free agents--and the workers who love being them. Contingent workers, independent contractors, consultants, job sharing, offshoring and outsourcing--these are all elements of the same phenomenon. It ain't the 1950s anymore. And it's doubtful it ever will be again.
"More and more workers want an unhitched lifestyle," says Steve Bercham, vice president of the American Staffing Association of Alexandria, Va. "They don't want to be attached to one specific employer."
The same is true of employers. According to interviews with HR leaders of some of the nation's largest employers (see this year's Top 100 chart starting on page 34), more and more companies enjoy the flexibility of using nonpermanent employees. It's easier and less expensive to add consultants or contingent workers when you need them, and easier and much less painful to dispose of them when you don't. It's also often cheaper and more efficient to use outside service providers to handle non-core business processes than to develop that talent inside.
Demographics play into this trend. With many experts predicting an upcoming shortage of skilled workers, employers may need to manipulate the make-up of work teams so as to accommodate skilled workers who, for whatever reason, do not want to take full-time jobs. And making it easier for workers to move around is the portability of pension and health benefits.
"This is a time of change like none before for the U.S. workforce and the global workforce," says Dennis Zeleny, senior vice president of human resources for DuPont, the $30 billion science company based in Wilmington, Del.
As corporations staff up in this growing economy, human resource executives should include job sharing, outsourcing and offshoring plans as well as the hiring of contingents and consultants in their workforce planning. And while they ensure their companies are legally isolating consultants and contingent workers as non-employees--per the famous Microsoft case of a few years ago in which the courts ruled long-term consultants should have been properly classified as employees due all rights and benefits--they also need to embrace their fragmented workforces in terms of corporate culture, training, security, communication and performance management.
Fuzzy Math
The free-agent momentum that gained traction in the late 1990s was, without a doubt, slowed by the uncertain economy of the last two years. According to the American Staffing Association, the percentage of U.S. workers in temporary staffing positions doubled in the 1990s, increasing from 0.99 percent to 2.54 percent in 2000.
Hit hard by the economy, that number dipped to 2.06 by 2002, but--always a leading indicator of the economy--staffing has been up for the past six months. Temporary workers, of course, are only a portion of the free-agent workforce, and it's difficult to get an exact picture of the number of consultants, contractors and others who make up that group.
Kelly Services, based in Troy, Mich., puts the number of free agents as high as 33 million, and growing--or one in four American workers. The U.S. Bureau of Labor Statistics puts it at about half that in statistics from 2001, but it's not conclusive data.
"I think it's fair to say," says Larry Kanarek, a director at management consulting firm McKinsey & Co. in Washington, "that American business has figured out there are multiple ways of getting the job done."
Demand for temporary workers historically has been highest in financial services, health care, telecommunications and information technology, according to the Labor Department.
Today, however, contingent workers encompass such diverse slots as teachers, scientists, engineers, physicians and company managers.
At the same time, businesses have taken the lessons learned in the 1980s--when so many manufacturing jobs were shipped overseas--and applied those lessons to white-collar service workers, says Kanarek.
Able to tap into a pool of well-educated, English-speaking workers overseas, U.S. companies--particularly financial and IT services, call centers and business processes--are using today's telecommunications networks and the Internet to significantly reduce costs and, in some cases, increase production by taking advantage of the 24-hour clock. For example, a company can transmit data to workers in India and, because of the time difference, can have that work completed by the time U.S. offices reopen the next morning.
A Firm Core
"I think HR policies, HR strategies, HR practices ... follow what's going on in the marketplace, and companies just try to respond," Zeleny says. "What employers do from a people standpoint really is a reflection of this greater economic reality.
"I think there's always going to be a place--and this is true in DuPont and true for companies in general--that it will always be critical to have core employees as part of a company. I think that, by and large, there will be a large chunk of [permanent] employees, but I do believe there will be continued use of outsourcing and these kinds of consultants or auxiliary workforces that companies use."
At DuPont, which has about 79,000 employees (although it recently announced plans to reduce its workforce as part of a strategy to cut $900 million in costs over the next two years), that means outsourcing many IT services--"over the last three years, maybe about 1,000 people"--as well as pension-claim administration and benefit-claim administration, Zeleny says.
HR needs to be part of those strategic workforce decisions, he says. "I think we need to come to our business leaders with solutions," he says. "You need the right balance. You need to know what you have internally, what skills you need to have internally and what skills are nondifferentiated, and you need to go to the outside.
"I think the bias is that critical value-added work stays within the company; the things we get paid for doing, the things we get paid for knowing, stay inside the company. I don't think those are up for grabs," he says.
As for short-term hires, they are left to line executives, but DuPont's HR tracks such usage by cost, and often works with the line to determine the best way to solve short-term needs.
"There is dispersion in terms of how those decisions are made, but I think setting good guidelines and then following up every now and again by looking at the data helps you course-correct," Zeleny says.
Unique Business Model
At FedEx Ground, the company's very business model was formed around "an independent contractor-delivery workforce, which is kind of unique in our industry," says Lee Holly, senior vice president of HR for the $3.6 billion, Pittsburgh, Pa.-based subsidiary of Federal Express Corp.
"I think the time has passed when one size fits all," Holly says. "You really have to be open and receptive to coming up with a variety of offerings such that employees can really design their own relationships [with companies] to the [greatest] extent possible."
Holly's 43,000-employee company is dependent on its team of 14,300 independent contractors, who work as either pick-up and delivery contractors or as long-haul contractors. During peak season, the company will add up to 2,800 temporary drivers and up to 2,000 part-time package handlers to work in facilities.
And whether those employees are independent contractors or temporaries, they are trained and onboarded by FedEx Ground via a combination of classroom time, hands-on instruction and observation to "engage [them] in our mission, which is to be the best small-package carrier in the market, [a mission that gives us] a relatively singular focus on the customer," Holly says. "We go to great lengths to make sure our people know what is happening with the business on a day-to-day basis."
That includes a variety of communication techniques including intranet sites, posted weekly updates, monthly newsletters sent home as well as formal presentations and contractor roundtables.
"[The use of independent contractors] really doesn't take away from the company mission," Holly says. "If anything, it really helps, we think, because if they do right by our customers, they're going to be able to grow their business and be successful businesspeople, so we have structured the relationship in a manner that maintains the independent owner/operator structure but fully supports what we are trying to accomplish in the marketplace."
There is always a need for corporations to assess the most efficient way to deploy resources to accomplish business objectives, says Joseph Bonito, vice president of global leadership effectiveness for pharmaceutical giant Pfizer Inc. in New York.
At Pfizer, that means keeping core competencies internal but being open to outsourcing skills that are outside of that scope, such as the recruiting function, IT desk support services and the managing of clinical trials, even though Pfizer conducts clinical trials internally.
"If you hire consultants and contractors," Bonito says, "you have to focus both on the expertise they have as well as, 'Is it the right cultural fit?' if you want to ensure that you get great alignment [on business goals]."
Companies need to create selection criteria for service providers that emphasize values and leader behaviors as well as technical skills, he says.
Zeleny agrees. "The one thing we are very careful about," he says, "is people, whether they are on-site for a short period of time or whether they interact with our employees by phone or whether it's a permanent or temporary relationship with us ... we make sure people understand our core values," including integrity, respecting people and the environment, diversity and more. "We just won't do business with people who don't share our core values and who we believe are not 100 percent ethical in terms of the most stringent standards."
Service providers also need to have an understanding of the businesses' strategies and key imperatives. Pfizer spells out the scope of work and business objectives in its requests for proposals and contracts, and discusses corporate values with agencies supplying talent to the organization. It also is proposing the creation of an intranet-based database to collect post-mortem information from internal leaders on the effectiveness of various consultants and the like, says Frank Callaghan, director of global sourcing.
But at this point, says Susan Raffetto, director of global strategic staffing for Pfizer, making overall workforce decisions is an art, not a science. "I don't know if other companies have figured it out," she says. "We have a labor force that consists of many different types of workers and ... it's really driven by the business needs. There are no set policies and guidelines which, I think, is probably going to be the way of the future."
Temporarily On Board
Expectations are key to effective project staffing, says Robert W. Lincoln Jr., senior vice president of global human resources for Manpower of Milwaukee, Wis. Onboarding or orientation sessions are important, he says, because temporary workers need to "feel like they belong." They need to understand how their contributions fit in with the company's goals.
Manpower takes it upon itself to transmit its corporate clients' cultures and business objectives through orientation and training sessions, but companies should not assume that all of their nonpermanent workers are getting that kind of attention.
That's rarely the case with consultants, says Laura Sue D'Annunzio, vice president of A.T. Kearney, who is in the Southfield, Mich., office of the Chicago-based management consulting subsidiary of EDS. Because understanding her clients, their values, objectives and culture are necessary for her to do her job, D'Annunzio takes ownership of the onboarding process.
But whoever is responsible for that transfer of knowledge, it is important that it gets done, she says. At one company D'Annunzio consults with, the company uses contract workers as administrative staff. "Yet," she says, "they really represent the voice of that company in answering phones and scheduling meetings for executives. I think it's very important for them to understand the company that they work for and that they represent."
Protecting the company from liability as it regards harassment, discrimination or other security concerns is also a reason to onboard contingents and consultants, says Monica Barron, research director of AMR Research of Boston, Mass. Unfortunately, all too often, HR leaders embrace the "put-your-head-in-the-sand approach and hope something doesn't happen," she says, "and something will happen."
For many HR leaders, on-site temporary workers--and most companies probably have more free agents on-site than they realize--are invisible. HR is often left out of the loop as line executives go directly to procurement when needing temporary help. In addition to liability issues, that invisibility affects overall workforce planning, performance management and communication.
"If you are using a contingent worker, you still need to be very aware of, 'Are you getting the deliverables you are supposed to be getting?' the same way you would with an existing employee," she says.
"Companies, I think," says Barron, "are starting to realize ... that they need to take a more holistic view of their workforce. What is my workforce made of? How much is it costing me? And is it really the best make-up for what I need to get done?"
Communication is an important aspect of managing free agents, but that's really no different than tailoring your message to diverse employee cultures, ages, motivations, home circumstances and whatever else, says Jim Porter, senior vice president of HR for Carlson Cos. in Minneapolis.
"We have different segments of the organization that we are dealing with all the time regardless of the [job status]," he says.
At Carlson, the company has put "a lot more emphasis on alternative work arrangements rather than using contractors or temps," Porter says. That has been particularly important in its Minneapolis headquarters, a city that has a very low unemployment rate, and among the company's headquarters' workforce, which is about 70 percent female, he says.
While Carlson will probably look seriously at some overseas outsourcing--probably of call centers--over the next few years, Porter believes it's important for companies to keep employees on staff as opposed to mixing varieties of workers.
"I think one of the things you try to avoid is having two people sitting in cubicles next to each other doing the same work and each having different employee classifications," he says. "It creates so much more complexity ... to build your team. I am not sure that [given] the money you might save, you really get the payoff over the long run."
That's not to say Carlson--a hospitality and leisure company that includes such well-known companies as TGI Fridays and Radisson Hotels and Resorts as well as Carlson Marketing Group--doesn't use consultants or contingent workers at times, but it tends not to use them in "a mass way," he says.
They are probably going against the corporate grain in that attitude.
"I think generally as the economy recovers you are going to start to see more alternative or flexible labor models just because it's going to get more and more difficult to find qualified people," says Jeff Silber, a stock analyst following the staffing industry for Harris Nesbitt in New York, "so you are going to have to [push] the envelope in finding the types of people and skill sets you need.
"You will see demand flock to where the skill sets are; temporary staffing moving upscale."
This new workforce is a dose of reality, says DuPont's Zeleny. "I think the fact that corporations are more open today is a ... good thing. I think it allows companies to be more nimble, to have a better view of what the landscape of talent is," he says.
"I think it's an advantage for the corporation."
Send questions or comments about this story to [email protected].
Cover Story - Staffing Up BY ANNE FREEDMAN
Customers Prefer Self-Service
When companies empower customers to transact how they want, when they want, the majority of customers will choose the lowest cost option
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by Patrick O�Neal
Monday, January 26, 2004
I am a typical customer. The whiz-bang isn't working and I need it to be, now! So how do I get the best possible customer support? Should I pick up the phone or go to the Web site? Do I help myself or do I ask for support?
Like most people I embrace the self-service revolution. I give my bank money without ever stepping in the building. I make flight reservations and check in online. I always use the pay-outside option when pumping gas, check myself out of hotels, and even buy movie tickets online. But while embracing the self-service revolution, there are times when I want live help.
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So what does this mean for CRM providers?
There are several right answers. And the answers depend on the circumstance and the mood of the customer at the time. But these days the guiding principle is to let the customer choose.
When companies empower customers to transact how they want, when they want, our experience shows that the vast majority of customers will choose the lowest cost option. What will make customers applaud in today's high-tech world? Getting an answer to their issue as quickly and as painlessly as possible. Here's how:
Web self-service
With 67 million American consumers on the Internet each day we now represent the many. With few exceptions it is possible for companies to give customers the tools that were historically only available to call center agents and internal customer support people.
Savvy companies let customers reserve hotels, book airline tickets, order products, track shipments, and find for themselves answers provided in a well-managed and targeted knowledge base. Really savvy companies reward these self-sufficient customers with lower costs and improved service.
Phone self-service
While the phone can't offer all of the benefits of the Web, voice-recognition technology and interactive voice response (IVR) are taking this media to new heights, without using the keypad (good for those cell phone users who insist on driving while reading a map and talking on the phone). This media works in those situations where small amounts of data are gathered to deliver small amounts of data. For example, give me your telephone number and birth date and I will tell you the status of your order.
What about Internet chat?
Internet chat has to be the most under-recognized and underutilized communication method available to man. This option is significantly more effective than phone or email. Here's why:
# Chat allows customers to continue working on the Internet without cutting the connection to make a phone call. Even with broadband, talking on the phone while navigating the Web is a hassle.
# While using chat, customers can multitask. This increases their satisfaction.
# The chat agent can push URLs, cobrowse Web pages, download files, and (with permission) even take over control of the customer's PC.
# Since there is a transcript of the entire text conversation, if a customer is dissatisfied the customer and the company avoid the he-said, she-said scenario of the phone world.
# Chat agents can handle two to three customers simultaneously, without the customer being aware of this. Companies can use domestic and/or offshore agents, wherever Internet is available.
# First time-resolution rates are significantly higher than email and at least equal to those obtained over the phone.
# Whereas phone agents live in the world of "let me tell you," chat agents live in a world of "let me show you" or "let me do it for you." Phone and email cannot compare.
Email does have its place
I was recently Web shopping for an item and simply wanted to know if it was available in blue. I sent off my message, received an answer the next day, and was completely satisfied. There are times when I want help without the need or the hassle of waiting in a phone or chat queue. Email does have its place.
It is not uncommon for a contact center to answer a customer's email, only to discover that the customer had called in by phone in the interim, or sent several emails with the same issue. Email used for complicated or urgent issues leads to poor resolution rates, low customer satisfaction, and escalated costs. But here is a basic set of guidelines for successful email deployment:
# Let customers understand that email is for basic questions that don't require information gathering. Provide a quick means of transitioning from email to Internet chat or phone.
# Deliver email through a Web form, avoiding narrative text altogether.
# Do not use autoresponse email unless you have clearly set this expectation with the customer. This will greatly degrade your reputation in Web-delivered service.
# Use email primarily as a means of providing follow-up information (confirming an order, thanking the customer for contacting you, providing a link for tracking a shipment, etc.).
# Set an expectation on turnaround time that you can meet or exceed. Otherwise, customers will send multiple messages and may call you as well.
# Invest in email technology that will allow you to manage queues and measure performance.
Reducing phone volume
Phone service is undeniably the most expensive form of service. So why offer it at all? To start with, it may be the only option available to a customer at a given point in time, for example, when the customer is traveling or otherwise does not have access to the Internet. Or Internet service could be down. Or the kids may be monopolizing the computer to chat with their friends. Since written communication (chat and email) doesn't always provide the perfect forum for expressing emotion, customers may just want to speak with someone.
That said I submit to you that customers generally do not prefer the phone. In my experience customers choose nonphone options at least 80 to 90 percent of the time. Too often, companies position self-service, chat, and email as ways of pushing the customer away. Here are some ways successfully divert customers from the phone toward other options:
# Create a self-service environment that parallels the ATM model: deliver those features that are used often and will be used successfully in this environment.
# Provide customers with a simple transition to a live agent. Too many companies create a robust self-service engine and hide their phone number deep within the site.
# Give the customer enough information to make an informed choice as to what live option they should use (e.g., queue times, handle times, etc.).
# Reward your customers for using your less expensive service options. For example, if your phone hours are Monday-Friday, 8 a.m. to 5 p.m., provide 24x7 Internet-chat service. If wait times for the phone are typically three to four minutes, provide chat service within one minute.
# Require customers to first visit your Web site before calling. Eliminate inbound phone numbers altogether, and instead have the customer request a call back via the Web. The request is routed to a contact center that makes an outbound call. Or provide the customer with a PIN that they are required to enter into the IVR when calling. Customer rewards include no phone charges and more accurate skills routing.
When you have successfully moved most of your traffic away from the phone, consider positioning phone as a value-add service that includes a per-minute or per-incident charge. The options are endless, but for the most effective CRM today's guiding principle is, let the customer choose.
About the Author
Patrick O'Neal is President and CEO of Sento. Prior to joining Sento O'Neal served as managing director of Digital Lighthouse Corporation (DLC) and as president of DLC's three subsidiaries that deal with regulated industries (securities, insurance, and mortgage). He received a BA from Indiana State University and a JD from Indiana University. Contact him at [email protected]
destinationCRM.com: Customers Prefer Self-Service
January 19, 2004
Retail Spending
Industry Groups Say U.S. Retailers Will Spend More on Technology
January 16, 2004 21:03
Industry Groups Say U.S. Retailers Will Spend More on Technology
By Leslie Brooks Suzukamo, Saint Paul Pioneer Press, Minn.
Jan. 17--Retailers will spend more on technology in 2004 than last year, according to recent studies, and that could benefit two Twin Cities software firms that have been waiting for a turnaround in software spending.
At the National Retail Foundation annual convention in New York this week, the NRF and BearingPoint, a McLean, Va., business consulting firm, reported that U.S. retailers are preparing to open their wallets for a wide variety of technology solutions.
The survey of 103 retailers showed keen interest in getting more out of the reams of data they already collect, starting with improving their security and disaster-recovery systems to adding new systems to track and manage inventory from the warehouse to the store shelf to sifting through sales data to determine everything from what to order and where to put it.
Meanwhile, Forrester Research of Boston predicts retailers are cranking up technology spending this year to generate more profits from their stores, a change from the past when they saw technology as only a cost-saving tool.
Retailers are focusing on four areas, Forrester analyst Kate Delhalgen wrote: streamlining their inventory and boosting gross margins, identifying their best -- and worst -- performing stores, upgrading their computerized cash register systems to reduce cost and improve service, and installing self-service technologies like kiosks and self checkout systems.
Among the nearly 20 companies she expects will have a good year are Lawson Software, St. Paul, and Retek Inc., Minneapolis.
The signs of improvement were evident at the NRF show, said Carol Mackenzie, director of Lawson's retail market products.
"The retailers we met were not just there to collect information as in the past. They had approved projects that they were shopping around to spend on," she said.
Lawson's revenue was off 2 percent through the first six months of its fiscal 2004, to $172.3 million. Its fiscal 2003 sales of $344.3 million was 20 percent below the previous year. But investors have sent its shares up 10 percent so far in 2004, to $9.15 a share.
Lawson until now focused primarily on serving the health care industry, but it acquired two small British software firms over the past 18 months that beefed up its retail software offerings. The St. Paul company is starting with mid-level and up grocery stores chains like the Twin Cities' Supervalu, which owns Cub Foods, as a way to attack a new market.
Worldwide, grocery spending on information technology reached $20.65 billion, and it's expected to grow 3.8 percent annually, according to Gartner, a Boston-based technology research and consulting firm. In the U.S., grocery IT spending will grow by 5.4 percent annually through 2006, Gartner says.
Information technology spending among retailers tends to be about 2 percent of total revenue but the latest figures show it will be "inching up" to 3 percent in 2004, Lawson's Mackenzie said.
The downturn in IT spending over the past three years was particularly strong among retailers, who typically hang onto back-office systems for up to 10 years before overhauling them, she said.
But surveys show that retailers are beginning to loosen those purse strings, though. The NRF-BearingPoint study, for instance, reported 83 percent of retailers expect to upgrade aging computerized cash registers with the latest "point of sale" software to provide real-time customer information.
Retek sells 30 different types software, including such point-of-sale systems, some of which are used by Best Buy stores, to allow sales people to know instantaneously what's in stock and where it's located, said spokesman David Naumann.
Its revenue through the first nine months of 2003 was $124.25, off 20 percent from the same period in 2002. Investors are also keen on Retek, sending its shares up 22 percent so far in 2004, to $11.30.
Of all IT systems, point-of-sale devices will receive the most attention in the retailers' IT budgets, according to a Gartner survey this month. More than 35 percent of respondents said they replacing their point-of-sale hardware, with another 28 percent saying the machines would be replaced in the next two years.
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January 12, 2004
Small Retailers & Technology
The fact is, the retail industry is at an inflection point � and whether an organization thrives, survives or dies depends largely on the strategic use of technology.
One Size Fits None: The Future of Technology for Small Retailers
by Harvey Braun
The retail industry today is a far cry from that of 50 years ago. And 20 years from now, it will bear little resemblance to today. The fact is, the retail industry is at an inflection point � and whether an organization thrives, survives or dies depends largely on the strategic use of technology.
This is particularly true for small and medium-sized retailers, which have neither the financial nor human resources of their larger counterparts. As a result, they are more vulnerable to today�s rapidly changing market conditions. For these retailers, judicious investments in technology can mean the difference between a successful future and no future at all.
THE PAST CATCHES UP
To fully understand the future of retail technology, it�s important to understand its past. Modern retailing emerged from the post-World War II boom that swept the United States. As millions of returning soldiers attended college on the GI bill, low interest rates made home ownership a reality for rapidly growing families. The end result was a large, educated middle class with greater assets and more spending power than ever before.
As these growing families moved into the suburbs, regional shopping malls took center stage. In the 1960s and 1970s, a plethora of new chains were launched to fill the malls. During this expansion, retailers developed computer systems and operational processes built on a �one size fits all� mentality, a holdover from the post-war boom. Despite their limitations, these systems saw retailers through decades of expansion as the growing economic power of the baby boomers created ever-increasing demand for consumables.
By the early 1990s, the industry was over-stored, over-homogenized and technologically under-powered. However, unprecedented economic prosperity and strong consumer spending disguised the industry�s flaws. All that changed in the late 1990s, when the collapsing economy, combined with the advent of online shopping, exposed the frailties of an industry built on a 1960 business model and 1970s technology.
THE FUTURE CLOSES IN
Even today, retailers are struggling to manage the complexities of multi-channel selling in an environment where the population is growing increasingly diverse, and where consumers have myriad shopping options, literally at their fingertips.
And this pressure will only increase. In the next 20 years, population growth will be driven primarily by descendants of recent immigrants, particularly in the southern and western states. The population as a whole will continue to grow older, as baby boomers become senior citizens. Meanwhile, disposable income is expected to remain relatively flat for most segments of the population.
The end result will be an older, more diverse population with less money to spend and more ways to spend it. These factors mean retailers will be more challenged than ever to break free of the �one size fits all� mentality, and instead reshape their organizations to meet individual demands.
TECHNOLOGY: THE STRATEGY FOR SUCCESS
Given the tremendous amount of change in the industry and the complexities of modern retailing, successful retailers will be those that:
* Make fewer mistakes than the competition,
* Improve control from conception to consumption,
* Accurately time and price goods,
* Integrate multi-channel touch points,
* Remove unnecessary costs, and
* Develop an understanding of customers as individuals.
Clearly, meeting these challenges depends on technology. Retailers today need to augment comprehensive back-office functions and a powerful communications network with real-time business intelligence on consumer behavior and changing attitudes. They need to seamlessly integrate storefront, Internet, catalog, kiosk and other distribution channels. In short, they need to deliver products on the customer�s terms while minimizing costs.
To accomplish this, large retailers have begun to abandon their home-grown, legacy systems in favor of third-party, enterprise-level systems that cost millions of dollars and up to five years to implement. But what about smaller retailers? How can they reap the benefits of technology when they can�t afford the multi-million dollar price tag?
In recent years, a new class of technology solutions designed for smaller retailers has emerged. These solutions offer much of the functionality of enterprise-level systems, but require a fraction of the time and cost to implement. The best systems are:
* Built on integrated, modular architecture. Small retailers implement the most valuable applications first. Then, as they grow, they simply add the functionality they need.
* Scalable. From one to five thousand stores, the system grows with the retailer.
* Comprehensive. Modules include all key functions, ranging from POS and merchandising to consumer attitudes, weather impacts and business intelligence.
* Multi-channel. Internet, catalog, kiosk, storefront and other channels are fully supported.
* Innovative. Best-of-breed solutions are seamlessly integrated into the core offering.
* Easy-to-use. Implementing and running the system is simple and straightforward. For maximum simplification, an ASP model allows retailers to outsource the software, hardware and network infrastructure.
* Proven. The solution is time-tested, and backed by a company with a strong track record.
In short, smaller retailers need to choose a retail system that can be customized to meet their specific technology needs both now and in the future. After all, today�s consumers are rejecting a one-size-fits-all approach. Small and medium-sized retailers need to do the same.
Harvey Braun is chairman and CEO of Island Pacific, Irvine, Calif., a provider of retail enterprise solutions
January 09, 2004
Restaurant Industry to 440B
The National Restaurant Association forecasts that restaurant-industry sales will continue to rise in 2004, reaching a record $440.1 billion
Executive Brief [pdf]
Highlights:
2004 Highlights
Restaurant-Industry1 Sales $440.1 billion
Locations 878,000
Employees 12 million
Restaurant-Industry Share of the Food Dollar 46.4 percent
TOP INDUSTRY TRENDS IN 2004
1. Continued expansion
2. Heightened interest in health and nutrition
3. Intensified government impact
4. Diversity embraced
5. Greater productivity through technology
6. Importance of tourism
7. Energy-cost management
8. A focus on service
9. Heightened competition
10. A bright future
SALES OVERVIEW
■ Restaurant-industry sales are forecast to reach a record $440.1 billion in
2004�an increase of 4.4 percent over 2003, or 2.0 percent in real (inflationadjusted)
terms. That compares with a 1.3 percent real gain in 2003.
■ 2004 will mark the 13th consecutive year of real sales growth for the
restaurant industry.
■ On a typical day in 2004, the restaurant industry will post average sales of
more than $1.2 billion.
INDUSTRY SEGMENTS
■ Sales at fullservice restaurants are projected to reach $157.9 billion in 2004,
an increase of 4.6 percent over 2003, for a real growth rate of 2.1 percent.
■ Sales at quickservice restaurants are projected to reach $123.9 billion in
2004, an increase of 3.9 percent over 2003, for a real growth rate of 1.5 percent.
REGIONAL OUTLOOK
Of the nine U.S. regions, 2004 restaurant-sales growth is expected to be the strongest in the Mountain region
(Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming) at 6.1 percent.
See www.restaurant.org/research for more details.
December 31, 2003
Embracing technology
Brokers need to get with the program on self-service, administrative technology
Like all good business people, brokers put a premium on their relationships with clients. But in the Internet age, the sharpest also realize that even with a good product, a smile and a firm handshake, you need something more to close a deal.
Many experts believe that something more can be found in technology that makes life easier and more efficient for both the employer and the broker. And if brokers have not caught on to the benefits, they need to do so now, or they are not going to survive.
�Information flows fast and furious between clients, insurance carriers and producers,� observes Michael Wojcik, senior vice president of the Chicago broker firm The Horton Group. �The new technology allows us to accomplish a lot more in a shorter period of time.
�Brokers that are technology-challenged right now will have a harder time keeping up.�
Quick, efficient, valuable
The debate over how much of the sales and administration process to automate is not new. Ever since high technology invaded the benefits world, brokers have wavered between the efficiency of self-service and the relationships bred from face-to-face interaction, coming to rest somewhere in the middle. But now, although in-person exchanges are still important, brokers are realizing that it is more vital to handle their clients� benefits issues quickly, efficiently and with as much value as possible. In fact, some believe it is necessary to facilitate face-to-face relationships.
With advances in self-service technology, �clients can handle basic administration without having to call in the insurance broker, so now they can talk about more strategic things such as the future direction of the employee benefit programs,� says Alan Cohen, CEO of OnlineBenefits, a broker partner that provides technological solutions. �Face-to-face interaction is still critical, and on a strategic level, you will always need it.�
It is just that there are other issues that will not necessarily be solved by talking things through. As Wojcik points out, information flows much faster now than it used to. That means employers and carriers expect to get what they need sooner than ever.
�If you do business with 10 or 11 organizations that require you to provide census data on eligibility, you have to provide it to them,� says Richard Travers, managing partner of the New York broker firm Travers O�keefe.
In fact, say Wojcik and Cohen, insurance carriers, not always among the most rapid companies to adopt new benefits technology, have started considering certain capabilities a given when it comes to broker relationships. Many of them, for instance, only will accept RFPs over the Web.
Moreover, employee-consumers are more comfortable researching and buying insurance products over the Web, and they have neither the time nor the patience to attend meetings when they can get the information via computer.
�People skim the Net; they don�t surf it anymore,� comments Michael Hope, a sales consultant at Spindustry, a technology solutions firm that works extensively with brokers. �Research is big. HR people aren�t just taking the agent�s word for it anymore. They�re looking around.
�There�s an overall comfort with the net, period. Five years ago, people probably didn�t want to buy CDs and books over the Web, but they do now.�
Simon Malls To Italy
Simon closes on $227.3 million Italian mall partnership
Simon Property Group closed on a $227.3 million (182 million euro) deal today through which it will own and develop malls in Italy.
The payment gives Simon a 49 percent interest in the 38-mall portfolio of Italian developer Rinascente Group. Simon has also acquired a similar-size stake in Rinascente�s future development opportunities under the joint venture, which is called Gallerie Commerciali Italia. Those new developments could total up to 6 million square feet over the next five years.
The centers, which range in size from 35,564 square feet to 547,840 square feet, are in various Italian cities and mostly anchored by Auchan hypermarkets. A joint venture of Auchan, a French company, and The Agnelli Group, an Italian investment firm, controls Rinascente.
Simon's equity investment was funded by a three-year, unsecured term loan at LIBOR plus 60 basis points, provided by Bank of America, Citicorp, J.P. Morgan and UBS. Simon is the largest U.S. mall owner, with 245 retail properties in the United States. It also has holdings in nine Canadian, French and Polish centers.
Simon is not the only U.S. developer to recently make a foray into Europe. The Mills Corp. opened the 1.4 million-square-foot Madrid (Spain) Xanad� in May. Mills is also looking for development opportunities in Italy.
Self-service retrenched
Robo Tom's, a Forerunner of Redbox, Closes Shop
Robo Tom's, a Forerunner of Redbox, Closes Shop
December 24, 2003
YORK, PA -- One of the convenience store industry's more innovative offers has ceased operation, at least in its original format.
In early December, Shipley Energy Group closed its two Robo Tom's outlets in Lancaster and York, Penn. Robo Tom's, which opened in 2001, was a forerunner to the media-hyped but also recently closed Redbox automated convenience store.
The Robo Tom's sites were actually much more of a bundled offer than Redbox. The York site--in addition to several vending machines that offered convenience store staples and hot-food items like pizza--provided unattended fueling, and developed a cash pay-at-the-pump option and loyalty programs.
"We are stepping back" from the overall concept of Robo Tom's, Rob Iosue, Shipley's vice president of marketing, told NACS Daily. "It's still a good concept," Iosue said, "but may have been ahead of its time," especially in introducing the many unique customer offers all at once, he noted.
Still, Iosue said that the innovativeness of Robo Tom's developed a core clientele for the company not just at its two Robo Tom's sites, but also at Shipley's 35 other Tom's convenience stores. Iosue said that the company likely would reintroduce some of the Robo Tom's concepts, such as the loyalty program and cash pay-at-the-pump option at attended locations to offer cash-paying customers added convenience.
Automated convenience stores have proven to be much more successful in other countries, particularly in Europe and Asia, but several experts still believe that the idea can succeed in the United States. Among the automated convenience store operations still in operation is SmartMart, a drive-thru automated convenience store in Memphis.
December 30, 2003
Retailers finding better methods for keeping track of their inventory
...An intranet kiosk inside a store would let shoppers order whatever they want, regardless of the inventory at hand, he said...Walgreens and Sears profiled...
December 30, 2003
BY SANDRA GUY Business Reporter
Shoppers know the dreary drill all too well: A department-store chain has your size or a certain brand at one of its stores -- but it's 30 miles away.
At a time when online sales are booming, why are brick-and-mortar stores still struggling to make merchandise easier to find?
Many retailers still rely on buyers' and merchants' gut feelings when they decide how much merchandise to order and where to display it.
That's slowly changing.
Planning and merchandising software has burst onto the scene, and retailers are starting to use these and other analytical techniques to find out how to give shoppers what they want where they want it.
"Retailers are finding that the cost of carrying inventory is very high, and they are not keeping inventory consistently across their chains," said Ted Dinsmore, president of Conchango Inc. in New York, part of the U.K.-based technology consulting firm.
Retailers are installing software that crunches numbers from store sales, analyzes marketing strategy and spits out inventory-control and cash-register data. It goes beyond the traditional Excel spreadsheet by drilling deeper into sales and supply-chain data in a variety of ways.
"Rather than being reactionary, waiting for an item to sell out, retailers are starting to be analytical," Dinsmore said.
Conchango has a deal with a large bookstore chain that Dinsmore cannot yet identify to use computer technology to analyze the company's sales. The issue arose when the company's executives wanted to confirm their suspicions that they could boost sales by gaining greater insight into hot and slow-selling titles.
Sears Roebuck and Co. evaluates demographics, seasonal weather predictions and each store's location and square footage to figure out the right merchandise mix, said spokeswoman Lee Antonio.
The demographics of Sears' store in the Loop show customers are a multiracial, multicultural mix of urban dwellers.
As a result, a young men's "Urban Shop" occupies a prominent spot surrounding the escalator on the second floor. Its sales are better than the company's average for the 50 shops in targeted stores nationwide.
Sears introduced the Urban Shop this fall to appeal to young men with labels such as FUBU, Icewear and Russell Simmons' Run Athletics sportswear.
The Loop store also carries a larger-than-normal assortment of cold-weather wear such as women's hats, gloves and scarves. As a result, the store has become the chain's No. 1 seller of cold-weather apparel.
The Hoffman Estates-based retailer keeps an eye on local events and happenings to help it keep items in stock.
For example, Sears on State will expand its assortment of church hats next spring because the Goodman Theater will be showing "Crowns," a gospel musical that celebrates African-American women and their church hats.
Walgreen Co. uses a similar approach by using a home-grown strategic inventory management system.
The system comprises hardware and software that analyzes data from cashiers' sales scanners to manage inventory and feed information back into the supply chain so supplies don't run out, said John Gleeson, vice president and treasurer for the Deerfield-based retailer.
Walgreen will enhance the system in February by adding a forecasting tool.
It will feed store sales projections into the company's distribution centers, helping prevent excess or inadequate inventory. Stores also might be able to stop carrying backup stockpiles. And finally, Walgreen hopes the forecasting tool will help it save costs to pay people to handle and stock products a store doesn't sell.
Walgreen also stocks items in different quantities and at varying shelf heights in each store, depending on its demographics. The fast-growing drugstore chain's customers can range from tourists to retirees to wealthy suburbanites.
"A single presentation doesn't provide the flexibility we need to manage our inventory well and to present the right items to the customers," Gleeson said.
Jay McIntosh, a retail analyst for Ernst & Young's Chicago office, sees opportunities for retailers to incorporate more of their dot-com operations into their brick-and-mortar stores.
An intranet kiosk inside a store would let shoppers order whatever they want, regardless of the inventory at hand, he said.
Pay Phones and Telegraph
The slow death of the payphone continues with nice article from Rocky Mountain News.
Cutting the cord
Pay-phone business plummets as cell numbers add up
By Mark Wolf, Rocky Mountain News
December 29, 2003
Josh Kohl leaned against a bank of pay phones at the Cherry Creek Shopping Center on a busy holiday-shopping Sunday while his friend Cory Johnson made a phone call.
On his cell phone.
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The last time Johnson used a pay phone was . . . hang on, he's trying to place it . . . oh yes, a few months ago when he didn't have his cell and needed to get in touch with a friend.
"It was probably the first time in years," the 20-year-old said. "I always use my cell."
Kohl, 21, whose cell hangs from his belt, said three or four years have gone by since he's dropped a pair of laundry-money quarters into a pay phone.
Pay phones are perched prominently near mall entrances at Cherry Creek, but they're largely ignored by the growing legions of walking talkers. The pay phones' digital screens offer four minutes of anywhere-in- the-USA time for only $1, and there was a time when that come-on could seduce seekers of cheap talk.
But now that free long distance is frequently embedded in cell-phone packages, the notion of spending parking-meter money on a phone call seems as quaint as a hitching post in a parking lot.
The old-style phone booth has virtually disappeared from the landscape, and the pay phone is steadily receding from the cultural shoreline.
Nearly 1.5 million pay phones were in place in the United States as of March 31, compared with 2.1 million in 1999, according to the Federal Communications Commission. Colorado has 22,595 pay phones, down from 24,044 in 2002. The state has the nation's third-highest percentage of households with telephone service (97.8 percent, slightly behind Maine and Pennsylvania).
The story of the pay phone's decline doesn't make much of a whodunit.
Glance down the escalator from the upper-level phone bank near the theater at Cherry Creek and you see a kiosk for T-Mobile. Downstairs, a pay phone at the east entrance is within sight of a Verizon Wireless store.
More than 153 million Americans subscribe to wireless service, according to the Cellular Telecommunications and Internet Association, and the number grows by more than 30,000 a day.
When cell phones first came out, they were a novelty, said Frank Semone, president of Western Paytel in Wheat Ridge and president of the Colorado Payphone Association. But that changed quickly.
"As they started multiplying and getting smaller and smaller, you could see your revenues keep dropping and dropping," he said.
"We've pulled out probably 15 (percent) to 20 percent of our phones the last couple of years. We used to have over 800. Revenues are off by 50 percent the past five years.
"We're trying to relocate them as much as possible. We pulled out all of our restaurant phones, and we're putting them where we can make some money: convenience stores, gas stations, places like that."
And malls. The Cherry Creek Shopping Center has 18 pay phones throughout the center and recently removed a bank of phones during the renovation of lower-level restrooms.
"We do think there's a place for them. Our customers are still using them, but not nearly at the same frequency," said Liza Herzlich, Cherry Creek's marketing director, who estimated that the mall had about 30 pay phones when it opened in 1990.
Pay phone can be lifesaver
Qwest is by far the largest pay-phone supplier in Colorado, with about 13,000 pay phones, down 1,000 in three years, said Qwest's Kate Varden. "Over the last five years, we've seen a decline of nearly 50 percent (in pay-phone use)," she said.
Still, when the cell battery is dead or there's no service, a pay phone may literally be a lifesaver, and Qwest remains committed to the business.
"When you need a pay phone, you need one," Varden said. "We know they're being used and know customers value them."
More than 600 pay phones await travelers at DIA. Qwest has removed 200 of its phones in the past year, bringing the total to about the same number as were available at the old Stapleton airport.
Each of Qwest's pay phones at DIA has a data port, and the airport has 20 AT&T Internet phones with screens and keyboards.
By contrast, the year-old, $100 million Alfred A. Arraj federal courthouse, at 19th and Champa streets, has a single pay phone, on the first floor with the vending machines.
Time was, University of Colorado students stood in line at a bank of phone booths that lined a wall on the lower level of the University Memorial Center. Pull the door closed and privacy was preserved.
They've been gone for years.
"We might have eight now; we probably had 20 when I came here six years ago," said UMC director Carlos Garcia. "Most students have cell phones."
Only about half of pay-phone calls are made with coins, according to Qwest, and high-tech Internet connection phones are replacing some pay phones.
All of Qwest's pay phones charge 50 cents for a local call.
Verizon, which has about 320,000 pay phones, tested lower rates (10 cents for a minute, 25 cents for 3 minutes) in Virginia and Florida recently but found little effect on use.
Public displays of confession
Even though pay phones are receding, public telephone conversations have never been more ubiquitous.
Cell-phone conversations have become part of the soundtrack of daily life. Personal and professional matters are blithely bantered into a cell with little regard for passersby.
"If you lived in a small town, you probably wouldn't do that. There's such anonymity in a city," said Audrey Brodt, a Denver psychologist who specializes in emotional intelligence and workplace issues.
"You're on the 16th Street Mall and talking about something awful or embarrassing that happened to you. Later that day, if you find your office mate overheard it, you'd be totally shocked."
On a recent Sunday, Nasya Newport stood a few steps from a bank of pay phones at the Cherry Creek Shopping Center and used her cell phone to find a pair of red strappy heels.
"We were just in Steve Madden and they didn't have the shoes I wanted, so I called the Park Meadows store and they have them, and that's where we're going," said the 18-year-old.
She last used a pay phone four years ago when she was in France: "My cell phone didn't work over there."
Down on the lower level, Majuma Wesakania of Denver dropped quarters into a pay phone next to Cinnabon.
"I don't have a cell," she said. "It's too hectic. I can have some peace. If I have to call somebody, I just use a pay phone."
The call she placed was to a friend - who answered on her cell phone.
December 23, 2003
Top Ten Franchises
In a year of milestones for Subway Restaurants, the company has once again been named the No. 1 franchise opportunity
Following Subway in the top 10, in order, are Curves, Quizno�s Franchise Co., 7-Eleven Inc., Jackson Hewitt Tax Service, The UPS Store, McDonald�s, Jani-King, Dunkin� Donuts and Baskin-Robbins USA Co.
MILFORD � In a year of milestones for Subway Restaurants, the company has once again been named the No. 1 franchise opportunity by Entrepreneur magazine.
It marked the 12th time Subway has topped the list. The 25th annual list is featured in the January issue, due on newsstands today.
Last month, the company achieved a major milestone by opening its 20,000th franchise.
Today the number stands at 20,243, including more than 18,000 in the United States and Canada.
"This tops a pretty exciting year for us," said Subway spokesman Kevin Kane. "We�re trying to get to 30,000 locations by 2010."
Founder Fred DeLuca opened the first Subway in 1965 in Milford and started franchising in 1974. The company headquarters, at 325 Bic Drive, employs 650 people.
Worldwide, the franchises employ 190,000 people in 74 countries. Subways have opened in such remote locales as Kuwait, Lebanon, Tanzania, Zambia and the West Indies. There are 29 Subway restaurants in China and seven in Russia.
"We�re hitting milestones in a lot of countries," Kane said.
"This year we passed 200 franchises in the United Kingdom and 50 in Germany."
Overseas presents the biggest growth opportunities for the company, Kane said.
Entrepreneur magazine considers several factors, including financial strength and stability, growth rate, size of the system, number of years in business and length of time franchising, start-up costs, litigation, percentage of terminations and whether the company provides financing.
"Offering a fresh, healthy alternative to fast-food restaurants, Subway has franchises throughout the United States and in several countries, with locations in traditional and non-traditional sites alike," the magazine article says.
This year Subway introduced several new products as well, including a new, healthier Kid�s Pack that has a fruit roll-up instead of a cookie and fruit juice instead of soda.
Following Subway in the top 10, in order, are Curves, Quizno�s Franchise Co., 7-Eleven Inc., Jackson Hewitt Tax Service, The UPS Store, McDonald�s, Jani-King, Dunkin� Donuts and Baskin-Robbins USA Co.
Consumers Show Payment Preference for Plastic Over Paper
For the first time, electronic payments have surpassed cash and checks as consumers' preferred payment method for in-store purchases
Consumers Show Payment Preference for Plastic Over Paper
December 23, 2003
WASHINGTON, DC -- For the first time, electronic payments have surpassed cash and checks as consumers' preferred payment method for in-store purchases, according to a new nationwide consumer-payment preferences study conducted by the American Bankers Association and Boston-based strategy consulting firm Dove Consulting. The research was sponsored by ACI Worldwide, eFunds Corporation and PULSE EFT Association.
The "2003/2004 Study of Consumer Payment Preferences" found that cash and checks now account for 47 percent of consumers' in-store purchases, compared with 57 percent in 1999 and 51 percent in 2001. This evolution of payment behavior continues to be driven by the increasing popularity of debit cards. Four years ago, debit represented only 21 percent of in-store transactions; today consumers report that nearly one out of three (31 percent) in-store purchases are made with a debit card.
This growth in debit-card use has come at the expense of both cash and checks. Although cash remains the single most frequently used payment method in stores, its share of the transaction mix has fallen from 39 percent in 1999 to 32 percent in 2003. Checks also play a diminishing role at the point-of-sale, accounting for just 15 percent of purchases. Comparatively, consumer use of credit cards for in-store purchases has remained relatively constant at 21 percent. At 2 percent, the "other" payments category is made up of prepaid cards.
"While in-store payment habits develop early for most consumers, they are by no means static," said Jane Yao, ABA's managing director of surveys and statistics. "Consumers will continue to look for--and migrate toward--new payment methods that satisfy their payment needs."
The check's in the mail
Consumers still prefer to pay their bills by check, but electronic methods are gaining in popularity. In 2001, 72 percent of recurring bill payments were made with checks; today, this percentage has fallen to 60 percent.
"Decreasing check volume represents an enormous growth opportunity for electronic payments," said Tony Hayes, managing director of Dove's financial-services practice and author of the study. "As consumers write fewer checks for bill payments, financial institutions and payment organizations have the ability to play an active role in influencing what payment methods are used in their place."
This decline in check volume is due in part to increasing consumer adoption of automatic payment and online bill payment. Today, 60 percent of consumers use automatic payment, with only 30 percent of consumers having never tried automatic payment. Although adoption of online bill payment is lower than automatic payment--41 percent of consumers currently use online bill payment--it represents one of the fastest-growing payment methods
Consumers Show Payment Preference for Plastic Over Paper | NACS Daily
December 18, 2003
Stored Value Loyalty
Stored value loyalty card boosts spend by 15%
Stored value loyalty card boosts spend by 15%
Monday December 15, 2003
Quick service restaurants in the US have been seeing as much as a 15% increase in average transaction value when an electronic (stored value) loyalty card accompanies the purchase, according to gift card and loyalty programme provider, Chockstone Inc.
Following a number of stored value loyalty card implementations, Chockstone reports that its stored value platform designed for the quick service restaurant (QSR) industry has had a significant and positive impact on its clients' transaction value trends. This article is copyright 2003 TheWiseMarketer.com.
Pre-pay and points
The firm's platform, ChockPoint, allows retailers to combine payment, loyalty, and promotional programmes through a single retailer-branded loyalty card. Programme members can then use gift card dollars, earn loyalty points, and redeem points in real time. Additionally, QSRs can instantly deliver promotions based on historical transaction behaviour or an e-mail offer previously sent to the individual cardholder.
Significant lift
Based on transaction data from 2003, Chockstone says that some of its retail clients are experiencing a "significant lift" in consumer spend as the transition is made from paper gift certificates to electronic gift/loyalty cards:
* QSRs reported an average of 14.5% increase in the average size of consumer transactions (whether cash, credit, or debit payment) when the stored value loyalty card accompanies the purchase.
* QSR locations are experiencing a 300% - 400% increase, period-on-period, in gift card sales compared to paper gift certificate sales.
* Some 72% of the stored value loyalty cards have been used two or more times since initial activation during the past six months.
"These latest results illustrate the financial benefit realised by retailers who upgrade their paper loyalty and basic gift card programmes to electronic gift and loyalty card programmes," said Jeffrey Lipp, president and CEO for Chockstone.
More Info:
http://www.chockstone.com
Source: Chockstone, Inc.
December 09, 2003
November 25, 2003
Workforce Analysis Report
Unicru and People Report Partner to Provide Advanced Workforce Analysis for Service Industries Today's News
Unicru and People Report Partner to Provide Advanced Workforce Analysis for Service Industries
Partnership will provide actionable business information to help companies strategically align people practices with corporate initiatives for the greatest impact to service and revenue
Portland, Ore and Dallas � August 25, 2003 � Unicru, Inc. and People Report� today announced they will partner to provide benchmark information regarding people practices across service industries, giving these businesses strategic information about the impact of hiring decisions on corporate business performance. The partnership, focused on broadening available and relevant human capital metrics, is being launched with People Report�s Survey of Unit Level Employment Practices, a comprehensive research survey that benchmarks best practices and critical issues related to both unit level management and unit level hourly employees. The Unicru Center of Excellence, which focuses on workforce analytics and optimization, will team with People Report analysts in the publication of the survey findings and outcomes.
Maureen Underwood, vice president of human resources for Bennigan�s Grill and Tavern states, �People Report�s comprehensive benchmark reports and research coupled with Unicru�s closed-loop data expertise is a natural partnership which will undoubtedly give companies the insight needed to create a competitive advantage through their workforce.�
Joni Thomas Doolin, chief executive officer and founder of People Report stated that, �Developing actionable human capital metrics that our members can use to improve their businesses is one of our primary goals. We are delighted that our partnership with Unicru
will allow us to reach more broadly into the entire service sector, enabling us to provide a comprehensive and updated picture of the workforce issues impacting managers and employees.�
About the Unit Level Employment Practices Report
The 2003 Survey of Unit Level Employment Practices research study addresses and benchmarks best practices in the areas of training, retention, cost of turnover, compensation, benefits, recruiting practices, work place safety, community involvement and other important issues related to both unit level management and unit level hourly employees. The study includes leading chain and independent restaurateurs, and leading retail, drugstore and grocery chains. Results will be available November 2003.
Unicru�s Workforce Selection System for Casual Dining
The Unicru system enables restaurants to consistently apply best hiring practices across all locations, giving managers more time to focus on guest satisfaction by enabling them to more quickly and efficiently hire the candidates that provide an excellent guest experience. The Unicru system lowers hiring and labor costs by presenting only the best candidates to management, streamlining tax credits, screening applicants and stops the payment of non-qualifying unemployment claims. Offered in English and Spanish, the system also features job-specific employee selection modules which focus on the key personality traits and skills associated with job success within managerial, front- and back-of-house positions.
About People Report
People Report is the foremost provider of human resource metrics, benchmarks, trends and best people practices for the foodservice industry. Acknowledged by the National Restaurant Association and the NRA Educational Foundation as an expert in workforce practices, this innovative research and consulting practice publishes quarterly and annual reports for its members that track, analyze and benchmark the people side of the P&L. Widely recognized by executives as a credible, confidential and timely resource. Key research components include: recruiting, hiring and training practices, compensation and benefits, diversity, turnover rates and costs and business outcomes related to workforce issues. For more information visit www.peoplereport.com.
About Unicru
Unicru is the leading provider of Workforce Selection and Optimization solutions that enable enterprises to efficiently attract and systematically select world-class employees. Through its comprehensive Web-based service, Unicru evaluates over six million job
November 19, 2003
Report on E-Government in UK
The Office fo the Deputy Prime Minister (ODPM) has published a report Process Evaluation of the Implementation of Electronic Local Government in England: Research summary.
The report has been put together by the Centre for Urban and Regional Development Studies, University of Newcastle upon Tyne.
This report takes a look under the bonnet of eGovernment to see how it's going in relation to the 2005 targets. and the main finding is unsurprising: The area where the early impacts of local e-government have been fastest to appear is in the provision of information.
91% of authorities report an increase in the number of ways the public can access information, and 78% have seen an increase in the take-up of e-enabled information. Progress has been somewhat slower in relation to the joint delivery of complex services, although almost a third of authorities (31%) have already seen an increase in this area.
November 17, 2003
Loyalty's Top Ten Best Practices
A free guide book covering the 'top ten' best practices for improving retail customer loyalty has been published by loyalty consultancy, Frequency Marketing Inc (FMI). The guide outlines how retailers can motivate customers with recognition and rewards by establishing strategies that target customer retention and incremental sales.
FMI gives away loyalty's top ten best practices
Friday November 7, 2003
A free guide book covering the 'top ten' best practices for improving retail customer loyalty has been published by loyalty consultancy, Frequency Marketing Inc (FMI). The guide outlines how retailers can motivate customers with recognition and rewards by establishing strategies that target customer retention and incremental sales.
FMI is currently offering free copies of the 20-page publication, entitled Best Practices Guide to Retail Loyalty. Through a series of ten 'best practices', retail marketers can identify ways to establish loyal customer relationships, as well as how to identify best customers and invite them to engage in a relationship, and how to initiate continuous dialogue with them. This article is copyright 2003 TheWiseMarketer.com.
"We've assessed our two decades of experience in creating and operating retail loyalty marketing programmes and summarised the essential elements in this guide," explained Kelvin Taylor, president for Frequency Marketing, Inc. "We believe that any retailer who is operating or considering launching a programme to reduce customer churn or increase loyalty will benefit from it."
To ask FMI for a copy of the guide (free of charge), send an e-mail to [email protected], giving your full name, job title, company name, mailing address, and telephone number.
More Info:
http://www.frequencymarketing.com
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.
Drivers License Renewal Online
Tennessee's Online Driver License Renewal Service Grows 164 Percent in Three Years
More than 230,000 Tennesseans have already visited www.Tennessee.gov for driver license-related services
NASHVILLE, Tenn.--(BUSINESS WIRE)--Nov. 17, 2003-- As the Tennessee Department of Safety enters its fourth year of providing online driver license services, more Tennesseans than ever are experiencing the convenience and efficiency of renewing their driver license online.
Since the department's launch of online services in October 2000, license renewals via the Internet have grown 164 percent.
To date, more than 230,000 citizens across the state have renewed their driver license or notified the state of an address change without leaving home. User surveys also indicate tremendous support for online services available through www.Tennessee.gov, the state's official Web site. Of the respondents who used the Internet to conduct a driver license-related transaction, 99 percent encountered no problems and 94 percent found it convenient. The average time to renew a license or change an address online is two and a half minutes.
"Improving the efficiency and convenience to citizens in need of driver license services is a priority for the department," said Tennessee Department of Safety Commissioner Fred Phillips. "We are pleased so many people have used the online services. Based on the overwhelming positive feedback we've received, we expect continued use of these online driver license services."
In addition to the online option, citizens are also able to renew or change their address by mail. By providing customers a choice on how they conduct their driver license activities -- whether online, by mail, or in person -- the Department of Safety aims to improve operating efficiencies for all citizens.
"We believe online and mail customers are not the only citizens who benefit from the expedience of these transactions," said Tennessee Driver License Director Larry Large. "Any decrease in foot traffic at a driver license office helps improve the wait times and efficiency for transactions that must be handled in person."
While the department is working to bring more driver license services online, procedures such as testing, name changes, state transfers, and commercial driver license activities do require an office visit due to security concerns. Valid Class D license holders are eligible to renew online or by mail every other time they renew their license.
About Tennessee Information Division
Tennessee.gov's online services are developed, marketed, and maintained by Tennessee Information Division, a Nashville-based subsidiary of eGovernment firm NIC (Nasdaq:EGOV - News).
About NIC
NIC manages more eGovernment services than any provider in the world. The company helps government communicate more effectively with citizens and businesses by putting essential services online. NIC provides eGovernment solutions for 1,400 state and local agencies that serve more than 71 million people in the United States. Additional information is available at www.nicusa.com.
Contact:
Tennessee.gov
Angela Nordstrom, 615-313-0303
[email protected]
November 12, 2003
2003 Consumer Credit Survey
The power of affluent shoppers, the rise of practical consumers and the dynamics of debit cards [great STORES survey]
link: http://www.stores.org/archives/cover.asp
2003Consumer Credit Survey
BySUSAN REDA, EXECUTIVE EDITOR
The power of affluent shoppers, the rise of practical consumers and the dynamics of debit cards
Finding - and Motivating - the Affluent Consumer
Practical Consumers Adopt Pragmatic Spending
Debit Replaces Debt and Moves to a PowerPosition
YoungConsumers Want Less Debt
Lower Interest Rates Move into the Front Seat
MasterCard and Visa are the Choices for Electronics
Cash-Back Bonuses Appeal to Discover Card Users
Men and Women Display Remarkably Similar Card Use Patterns
About This Survey
"WILLTHAT BE CASH OR CHARGE?"
REMEMBER WHEN IT WAS THAT EASY?
SINCE THAT MORE SIMPLE TIME, THE LIST OF PAYMENT OPTIONS HAS EXPANDED TO INCLUDE DEBIT, NUMEROUS MAJOR CREDIT CARD OPTIONS AND A HOST OF STORECARDS. SHOPPERS ALSO CONSIDER MYRIAD OTHER FACTORS BEFORE CHOOSING HOW TO PAY. WILL THEY RECEIVE 10 PERCENT OFF THE TOTAL PURCHASE IFTHEY USE THE STORE CARD? IS VISA THE GO TO CARD BECAUSE THEY CAN RACK UP REWARDS POINTS?
Understanding how consumers use credit cards, what motivates shoppers to choose one card over another and whether they're inclined to opt forcash, debit or credit for specific purchases is the first step on the path to improved marketing campaigns, more precise targeting of rewardsand, ultimately, the coveted customer lifetime value trophy.
The STORES 2003 Consumer Credit Survey takes that all important first step and shines a spotlight on today's changing payment landscape,illuminating consumers' credit behavior. The survey of 8,399 U.S. consumers was conducted by BIGresearch of Columbus, Ohio.
Against a backdrop of economic uncertainty, climbing gasoline prices, declining 401K retirement plans, soaring health care costs andpaltry savings rates, consumers are apt to make payment choices today that are different from the choices they made just year ago. Think for amoment how widespread "no interest" or "zero percent interest" offers have become. Zero interest deals are being brokered for cars, bigscreen TVs and leather couches, and the concept has undoubtedly seeped into the consumer psyche.
Meanwhile, homeowners are bombarded with refinancing appeals and encouraged to use savings to pay down debt. At the same time, asteady stream of unsolicited credit card offers keep pouring into mailboxes, inviting consumers to transfer high interest balances and addanother card to their ever growing pile of plastic. These factors and others shape consumer behavior.
The survey finds that the average consumer has at least two credit cards in his wallet; affluent consumers have several more. Still,which cards shoppers carry and how they use them varies significantly by age and income. This survey helps retailers sort out some of thespecifics by taking an in depth look at three key trends that emerged: the power of the affluent shopper, the rise of the practicalconsumer and the dynamics of debit cards.
The type of credit consumers use and how they use it varies immensely. But consumer behavior, when it comes to payment choice, doesn't need tobe a wild card for retailers. The STORES Consumer Credit Survey reveals what consumers say when asked that all important question:"Will that be cash or charge?"
Finding -and Motivating - the Affluent Consumer
Affluent consumers are a highly sought after segment. These shoppers, who report an annual household income of $50,000 or more, have morecredit cards than the average shopper and tend to exercise those cards more frequently.
Which cards do affluent shoppers carry? The STORES Consumer Credit Survey, conducted by BIGresearch, finds that a majority (74 percent)have a Visa card, and nearly as many (66 percent) carry MasterCard. A little more than three out of every 10 (31 percent), own aDiscover Card, and 20 percent hold American Express cards.
AMEX Blue, a smart card front runner that debuted during the dot com boom, has quickly found its way into affluent shoppers' wallets,with 9 percent of those polled indicating they have one. Meanwhile, Diners Club, a stalwart status card, is mentioned by 1 percent of surveyrespondents.
The research reveals that the largest share of affluent shoppers are between the ages of 35 and 54, a time that typically coincides with peakincome. Specifically, 39 percent of consumers in this age group have household incomes starting at $50,000 and ranging beyond $150,000. Still,underestimating the wealth of consumers at either end of the age spectrum is a mistake. Twenty three percent of shoppers ages 18 to 34and 23 percent of those 55 and older report household incomes between $50,000 and $99,999.
Affluent shoppers are more likely than other customer segments to possess store credit cards. The research finds that 32 percent of shoppersin the $50,000 household income bracket have store cards vs. 27 percent of all consumers. In fact, when viewing the assortment of creditcards these well heeled shoppers have, store cards rank third, trailing the clear front runners: MasterCard and Visa.
RETAILER OPPORTUNITY
There's a bit of a disconnect, however, between the number of store cards consumers have and the frequency of use. While 11 percent of affluentshoppers choose store credit when purchasing clothing and 7 percent pick the store branded plastic when buying big ticket items, such aselectronics and furniture, this type of credit card is the least used payment method in each instance.
Nonetheless, shoppers' proclivity for store cards suggests an opportunity for retailers to drive more frequent usage. Retailers oftenpersuade shoppers to acquire a store card by offering 10 percent to 15 percent off a sale item. Customers win by saving money; retailerswin by amassing customer data. But it appears that all too often the relationship ends there. Shoppers are not re using the cards, a reactionthat may be linked to the high interest rates associated with store cards.
What might prompt shoppers to take store cards out of the night table drawer and put them in their wallets? Lower interest rates coulddefinitely sway usage. The opportunity for cash back types of rewards might also be a powerful motivator. One merchant that has been successfulwith cash back rewards is Old Navy, the division of San Francisco based Gap that specializes in moderately priced family apparel. Old Navyrewards shoppers with a certificate worth $10 off their next credit card purchase every time they charge $100 on their Old Navy account.
Still, retailers are caught in the crossfire. In the interest of building customer relationships, they tend to be liberal when extending loans.Unfortunately, they also make a fair amount of bad loans which, in turn, necessitate higher than average interest rates.
MIGHTY MOTIVATORS
Retailers are not the only ones that can benefit from a greater understanding of what might motivate a consumer to use a credit card morefrequently. In today's competitive marketplace, every major credit card issuer and bank is trying to unearth that special something toswing additional business in their direction.
Some of the perks that seem to resonate with all consumers include lower interest rates, cash back bonuses and discounts. The affluent shoppermay have more disposable income, but they're as motivated - if not more so - by the lure of cash back, rewards/points programs and discountoffers. Among these well heeled shoppers, 54 percent are drawn to cash back bonuses and 46 percent indicate that rewards/points programswould motivate them to use a credit card more often.
While the prospect of piling on airline miles - one of the earliest credit card rewards offers - still holds sway with affluent shoppers, it nowranks at the bottom of the list of potential motivators for shoppers overall. Conversely, American Express and AMEX Blue cardholders aremost likely to be motivated by the chance to stack up airline miles.
The fact that so many different perks aimed at increasing credit card use exist begs the question: do any of these stimuli deliver theloyalty they were intended to produce? Some researchers say that the harder credit companies, banks and retailers work to winshoppers, the more powerful consumers become.
Today, it's plausible that a customer has one card that's used strictly for airline miles, another that they hold on to because of freeshipping and a third that's used primarily for big ticket items because of the annual cash back bonus.
More than six out of 10 respondents (62 percent) report that they would be motivated to use a credit card more frequently if the interestrates were lower. That's particularly true of 35 to 54 year olds and those who have a MasterCard. In each instance, 68 percent cited lowerinterest rates as a key motivator.
The question for credit card issuers is fast becoming "How low can you go?" The zero percent interest offers crammed into consumers'mailboxes suggest that most issuers can sustain these offers from 6 months to 12 months, but what happens to interest rates when that time isup? Already, consumers are falling into the pattern of shifting balances to lower interest or no interest cards. How long before creditcard issuers lose credibility with the consumer and can no longer make money by charging high interest rates?
Some interesting trends emerge when examining which cards affluent shoppers use most often for personal expenditures and which get the nod forbusiness.
Visa and MasterCard are clearly the go to cards when shoppers purchase items for themselves. Specifically, 44 percent of Americans with anannual household income of $50,000 plus pick Visa; 25 percent choose MasterCard. The affluent shopper doesn't behave too differently from thetotal respondent pool. The only notable exception is among American Express card holders. Seven percent of affluent shoppers usetheir AMEX to pay for personal expenditures, compared to 4 percent of all consumers polled.
A somewhat different picture emerges for business expenditures. Among affluent consumers, Visa and American Express are the cards ofchoice. Visa is cited by 15 percent of those polled and American Express is mentioned by 10 percent. Still, further analysis of the datareveals that those with the highest level of formal education have the highest propensity for American Express and AMEX Blue. Sixteen percentof those who completed college and another 20 percent of consumers who completed post college study or degrees have American Express in theirwallets. The card is also favored by those in professional or managerial roles - 17 percent have an American Express card.
Practical Consumers Adopt Pragmatic Spending
Plenty of research indicates that Americans are over extended when it comes to credit card debt. The average U.S. household reportedly carriesmore than $8,000 in outstanding card balances. The number of U.S. consumers filing for personal bankruptcy has reached an all time high. Acredit ratings firm predicts that bankruptcies will increase to 1.65 million by the end of 2003, an 8 percent increase over bankruptcyfilings during 2002.
In spite of such data, the STORES Consumer Credit Survey, conducted by BIGresearch, finds that consumers are becoming more practicalinsofar as how they think about debt and future spending. The survey asked respondents to read a series of statements describing changes they mayhave made in their lives during the last six months. The findings suggest that consumers see themselves as adopting a more pragmatic approachto spending.
For example, a little more than half of all survey respondents (51 percent) say they are more practical and realistic in their purchases.An even greater portion (60 percent) report they focus more on what they need rather than what they want. During the last two years,BIGresearch has seen a steady climb in the percentage of consumers describing themselves as more practical in their purchasing decisions.
Of course, what consumers strive for and whether they have the resolve to see that goal to fruition is unknown. Consumers generally havethe same state of mind about changing their financial position as they have about their perpetual New Year's resolution to lose weight -the motivation is there, but the follow through can be rocky.
Another glimpse into the consumers' financial mindset is derived by looking at the financial steps they plan to take in the next threemonths. More than four out of every 10 respondents (45 percent) indicate a desire to pay down debt, 39 percent intend to decreaseoverall spending and 33 percent say they plan to pay with cash more often.
Interestingly, MasterCard and Visa card holders have the strongest desire to pay down debt. Among MasterCard users, 53 percent note theirintention to pay down debt, while 51 percent of Visa card aficionados aim to reduce their balances.
While that finding might not appear to bode well for retailers, it does actually give merchants a marketing hook. Retailers will be challenged todevise offers that showcase their products in a practical context. Buying a new appliance, for example, may be a practical alternative toholding on to an older, less energy efficient model. Buying warmer clothing, such as turtlenecks and cardigans, is a practical alternative to turning up the heat.
HOME AND FAMILY The study also finds that 13percent of respondents intend to spend more timeand money on decorating their homes and 31percent are spending more time with family. Theformer will definitely make retail registerssing, while the latter is also likely to have apositive economic impact. Whether families spendtime together at the movies, the miniature golfcourse or the shopping mall, the potential tofeed the economy still exists.
Also noteworthy are variations in the attitudesthat exist across different age groups.Consumers in the 35 to 54 year old segment aremore inclined than the overall respondent groupto express a desire to pay more frequently withcash. In addition, their desire to pay down debtin the near term is greater than that of anyother age group. Meanwhile, consumers in the 55plus age group appear to be less concerned aboutpaying down debt and less apt to increasesavings.
COZYING UP TO CASH
At a time when the mainstream media leads thepublic to believe that Americans buy what theywant, when they want and usually use credit, thesurvey results suggest that cash - whether inthe form of money, check or debit - remains theleading method of payment for consumables, suchas groceries, health and beauty aids, gasolineand utility bills.
When purchasing clothing, 66 percent ofconsumers use either cash, check or debit. Thepercentage is even higher for groceries where 87percent pay with some form of cash.Interestingly, the propensity for selecting cashor a cash equivalent over credit is strongestamong 18 to 34 year olds and 35 to 54 year olds.Among the younger group, 73 percent make apparelpurchases using cash, check or debit. Among the35 to 54 year old crowd, 90 percent pay fortheir groceries using some form of cash.
While paying by cash or debit is now perceivedby many consumers to be one and the same, thereremains a steadfast loyalty to writing checkswhen paying bills. An overwhelming majority ofrespondents (72 percent) pay their utility billsby check.
Debit Replaces Debt and Moves to a PowerPosition
It takes time for consumers to accept a newprocess, particularly when it's linked tobanking or payment options. Widespreadacceptance of ATMs took nearly 20 years. Whileon line banking is moving further along theacceptance curve, industry watchers predict itwill take several more years before it reachessaturation.
The results of the STORES Consumer CreditSurvey, conducted by BIGresearch, reveal thatthe debit card - a relatively new payment option- has already made the transition. Debit cardsnow epitomize the fusion of innovation andadoption. Consumers with debit cards use them asa substitute for cash, especially whenpurchasing consumables, such as food andgasoline.
A breakdown of debit card users shows that womenare more likely to choose debit than men. Still,both sexes appear to use debit on a regularbasis. Once consumers become comfortablemanaging debit purchases, they tend to relishthe idea of paying for items on the spot, ratherthan passing up something they want to buybecause they don't have the cash or don't wantto deal with possible finance charges. Withconsumers carrying less cash than in the past,the debit card has moved into a position ofpower in shoppers' wallets.
FEELING THE PINCH
Debit's popularity may have something to do withthe view that it helps steer consumers clear ofadditional credit card debt. While the STORES/BIGresearchdata doesn't address shoppers' credit cardbalances, other research has found that a small,yet significant number of consumers aredangerously close to their credit limits on oneor more cards. Using debit, which instantlydeducts the payment from the user's account,prevents them from increasing their debt.
The results do clearly indicate a strong desireamong consumers to pay down debt and behave in amore practical fashion when making purchasingdecisions. Debit card acceptance is strongestamong the 18 to 34 year old consumers and withshoppers ages 35 to 54. Both segments express aninterest in becoming more practical andrealistic in their purchasing, and each plans topay with cash more often in the next threemonths.
Specifically, 56 percent of shoppers ages 18 to34 express the desire to become more practicalin terms of their spending, compared to 51percent of all consumer respondents. Meanwhile,37 percent of shoppers ages 35 to 54 hope to paywith cash more often in the next three months,compared to 33 percent of the overall respondentpool. Each situation is likely to advance debitcard use.
Not surprisingly, older consumers (55 plus) aremore reluctant to use debit cards. Only 17percent of consumers in that age group use debitcards to pay for clothing, for example, comparedto 25 percent of overall respondents. Whenpurchasing gasoline, 34 percent of 18 to 34 yearolds use debit and 28 percent of shoppers in the35 to 54 year old bracket use debit cards. Butonly 15 percent of the 55 plus segment buy theirgasoline using debit, less than half the portionof younger consumers.
If consumers continue to expand their debit use,the possibility exists for a major shift fromcredit cards to debit cards in the near future.
Young Consumers Want Less Debt
Before stereotyping young consumers asfoolhardy and impetuous spenders, take a look attheir attitudes toward debt. While they'vequickly amassed some credit card debt, they'realso committed to chipping away at theirbalances.
The STORES Consumer Credit Survey, conducted byBIGresearch, reveals that 18 to 34 year oldconsumers are most likely to have a MasterCardor Visa tucked in their wallets, a likely byproduct of the aggressive marketing campaignsthose companies stage on college campusesnationwide.
A recent American Demographics study reportsthat 93 percent of 21 year olds have a creditcard today, and 60 percent have had a card since1999. The report also finds that the average 21year old has $3,000 in credit card debt - formost, that's in addition to a hefty studentloan.
It appears that reality sets in shortly afterthe graduation march ends and the twentysomething crowd begins paying more attention toerasing debt and saving for the future. Thesurvey finds that 48 percent of 18 to 34 yearolds are interested in paying down debt, apercentage slightly above that of the totalrespondent pool.
The intentions of young consumers also exceedthose outlined by the overall survey pool whenit comes to increasing savings. Thirty sixpercent of all consumers say they want toincrease their savings in the next three months.Meanwhile, close to half (47 percent) of the 18to 34 year old crowd reveal their intention toboost savings. And, since saving is moreimportant than spending to this group, 44percent of younger respondents hope to decreaseoverall spending between now and early nextyear.
Lower Interest Rates Move into the Front Seat
It's difficult to assess how cognizantconsumers are of the credit card interest ratesthey pay. Experts speculate that shoppers have aballpark idea, but if pressed for specifics,most don't know if they pay 15 percent or 19percent.
Still, there appears to be an overwhelming senseamong consumers that the rates have climbed toohigh, and the prospect of lower rates isgrabbing their attention. Maybe it's a spilloverfrom the media circus surrounding the FederalReserve's every move, or maybe it's theonslaught of ads dangling zero interest or lowinterest purchases in front of shoppers.Whatever the root of the trend, the STORESConsumer Credit Survey, conducted by BIGresearch,suggests that consumer loyalty may take a backseat to the promise of lower interest.
For major credit card issuers and banks, theoffer of lower interest rates will be a toughone to rescind. Much like the high levels ofpromotional activity at department stores, oncethe door is opened to "savings" and consumersbecome conditioned to expect lower prices - orlower interest rates - closing that spigot maybecome nearly impossible.
MasterCard and Visa are the Choices forElectronics
When purchasing electronics and furniture,slightly more than four out of every 10respondents (41 percent) use a major creditcard. Six percent use a store card. Focusing thespotlight exclusively on consumers who purchaseelectronics yields insight into which storesthey shop most often and which card they're mostlikely to use for payment. Not surprisingly,different patterns emerge when the data issliced by the various store or bank cards.
Specifically, 50 percent of American Express andAMEX Blue card holders head to specialty storesto purchase electronics. Similarly, 48 percentof Discover Card holders beat a path tospecialty stores. Twenty two percent ofrespondents shop for electronics at discountstores, such as Wal Mart and Target, and mostwho choose to pay by credit make Visa orMasterCard their first choice.
Best Buy is cited by consumers as the place theyshop most often for electronics. Among Best Buyshoppers, all the major credit cards are used inrelatively the same proportion - only slightlymore pick Discover. The Discover Card also winsfavor with those who shop most often at CircuitCity and Sears.
Cash Back Bonuses Appeal to Discover CardUsers
Discover Card users are a little differentfrom the rest of the credit card carrying crowd.For starters, the percentage of women toting aDiscover Card is slightly higher than the numberof females carrying MasterCard or Visa. And,compared with other major credit cards, Discoveris the No. 2 card among consumers with ahousehold income of $50,000 plus. Among affluentconsumers, 42 percent have a Discover Card,while 56 percent carry American Express or AMEXBlue.
Dig a little deeper and a sharper image of theDiscover Card shopper emerges. For example, 80percent of Discover Card shoppers also have aMasterCard in their wallets, and 85 percent havea Visa.
Teasing out the spending patterns, one findsthat Discover Card shoppers are more inclined topay by major credit card than by cash or debitin every instance, including clothing, groceriesand gasoline. Specifically, 47 percent ofDiscover Card holders use a major credit cardwhen purchasing apparel, 27 percent choose acredit card when shopping for groceries and 68percent reach for a major credit card whenpurchasing electronics and furniture.
Interestingly, the Discover Card holder behavessimilarly to American Express and AMEX Blueusers. The main difference is the level ofhousehold income. On average, the Discover Cardholder has an annual income of $52,979, whileAmerican Express and AMEX Blue card holders postan annual income of $64,295.
Fitting the pieces together, it appears that theprospect of getting something back for using aparticular credit card resonates with today'sconsumer, and by exercising their credit cardsfor different types of purchases, they movecloser to a reward goal.
Men and Women Display Remarkably Similar CardUse Patterns
If men and women were engaged in a battle ofthe sexes over credit cards, chances are itwould be a very close match. The STORES ConsumerCredit Survey, conducted by BIGresearch, findsthat their attitudes toward credit vs. cash arenot dissimilar.
When purchasing clothing for themselves, womentend to favor some form of cash payment, be itcash, check or debit. Among women who shop atdiscount stores most often, a large majority (82percent) pay for their purchases using some formof cash. Among men who shop at discount storesmost often, 77 percent say they use cash, debitor check most frequently.
A closer look at the men and women who pay bycredit reveals that MasterCard and Visa are theleading choices, especially among those who shopmost often at department stores.
Some differences do exist in terms ofmale/female attitudes toward store cards. Womenare more inclined to use store cards than men.For example, 22 percent of women who shop mostoften at department stores say they use a storecard, while 14 percent of those who frequentspecialty stores pick the store's branded card.Men are more likely to opt for a major creditcard. In fact, among men who report shoppingmost often in specialty stores, 23 percent useAmerican Express.
About ThisSurvey
The STORES 2003 Consumer Credit Survey wasconducted by BIGresearch, a Columbus, Ohio basedfirm. BIGresearch utilizes the world's largest on line community of more than 60 million people to uncover the attitudes and opinions of themany subgroups that make up a marketplace.
The survey was conducted Sept. 4 11, 2003, and 8,399 consumers responded. A computer controlled system tied to market realities ensured morethan adequate representation of all consumer groups, defined by age, sex, income and geographic distribution.
BIGresearch takes 14 samples simultaneously, seven age groups for males and seven age groups for females. These 14 large samples are woventogether for a large market sample, usually between 5,000 and 10,000 individuals. The sample size allows for detailed cross tabulation and amore accurate measurement of the market. Each cross tabulation is dynamically balanced through computer intensive statistical procedures toknown market realities.
BIGresearch surveys are anonymous, self administered and free of interviewer bias. Questionnaires are designed to be completed quickly, usually in less than five minutes. Theshort, unannounced time period during which the data is collected precludes merchants, advertisers and the media from modifying behavior to influence results.
Usage Metrics
Retail customers under 35 are more likely than older people to opt for e-mail, web-based self-service or instant messaging for contacting customer service instead of resorting to telephone calls or store visits, a study by Harris Interactive says.
Young people more likely to choose online customer service options
Retail customers under 35 are more likely than older people to opt for e-mail, web-based self-service or instant messaging for contacting customer service instead of resorting to telephone calls or store visits, a study by Harris Interactive says.
The study noted that 26% of consumers include e-mail among their preferred customer service contact methods, 15% include web self-service and 8% include instant messaging. But when broken down by age groups, each of these services was most popular among younger consumers.
For e-mail, 32% of consumers aged 18-24 and 36% of consumers aged 25-34 chose it as one of their preferred methods, compared to 10% for consumers 65 and older. E-mail preference rates for other age groups ranged between 25% and 29%.
Web self-service was mentioned as a preferred method by:
-- 22% of consumers aged 18-24;
-- 20% of consumers aged 25-34;
-- 16% of consumers aged 35-44;
-- 18% of consumers aged 45-54;
-- 11% of consumers aged 55-64; (br> -- 4% of consumers aged 65 and over.
Instant messaging was cited as a preferred method by:
-- 17% of consumers aged 18-24;
-- 12% of consumers aged 25-34;
-- 10% of consumers aged 35-44;
-- 4% of consumers aged 45-54;
-- 6% of consumers aged 55-64;
-- 2% of consumers aged 65 and over.
The study, commissioned by RightNow Technologies Inc., a provider of online customer service tools, was based on a survey of 1,019 consumers aged 18 and over (including 551 men and 508 women) Oct. 16-19.
The study also found that, on average, consumers consider as acceptable customer service waiting times of seven minutes for telephone inquiries, and 10 hours for e-mail or web site inquiries. But it also noted that 48% of consumers said five hours is an acceptable waiting time for e-mail or web site inquiries.
link: http://www.internetretailer.com/dailyNews.asp?id=10635
November 05, 2003
Retail: Will that be Cash or Credit?
New STORES Consumer Credit Survey Answers
Critical Question: Will That Be Cash or Charge?
New STORES Consumer Credit Survey Answers
Critical Question: Will That Be Cash or Charge?
--Inaugural Study Examines Payment Landscape and Consumer Credit Behavior--
Washington, DC, November 5, 2003� With a variety of payment options and benefits available, consumers are able to make more payment choices today than they were just a year ago. The STORES Magazine 2003 Consumer Credit Survey, conducted by BIGresearch, examines today�s changing payment landscape, studying which cards consumers carry and how they are using them.
According to the survey, the average consumer has at least two credit cards in his wallet; affluent consumers have several more. The majority of consumers carry VISA (64%), and nearly as many carry MasterCard (54%). Ranked third was the Discover Card (24%), and 11 percent hold American Express cards.
One interesting finding in the study is how consumers are using debit cards, said Rick Gallagher, NRF Vice President and Publisher of STORES Magazine. �The study demonstrates that people are using debit cards responsibly, using them for consumables like grocery and gasoline,� he said. �Consumers are clearly using debit cards as a replacement for cash and checks.�
Through an analysis of what cards consumers own and use for specific purchases such as apparel, groceries, gasoline, electronics/furniture, health and beauty aids and utility bills, the study takes an in-depth look at three key trends that emerged: the power of the affluent shopper, the rise of the practical consumer and the dynamics of debit cards.
�Consumers are clearly changing the way they shop,� said Phil Rist, Vice President of Strategy for BIGresearch. �Understanding how consumers choose to pay is the first step on the path to improved marketing campaigns, more precise targeting of rewards and understanding what motivates the consumer to make a purchase.�
The study also addresses the effectiveness of incentives for consumers when choosing payment options such as lower interest rates, cash back, airline miles and rewards programs.
Key findings of the survey:
- VISA is the most popular card to own (64%) and use (42%) for personal purchases.
- Most consumers said they would be motivated to use a credit card if their interest rates were lower (62%). Cash-back (51%) was the second largest motivator and rewards/points programs (40%) were third.
- Women are more likely than men to use debit cards.
- Most consumers use a credit card (41%) when purchasing big-ticket items such as furniture or electronics.
- The majority of consumers prefer using cash (33%) or their debit card (32%) when purchasing groceries.
- Consumers were fairly split on how they buy apparel with 25 percent each choosing cash, debit card and credit card.
- When paying utility bills, the majority (72%) chooses checks, with 9 percent choosing debit cards.
About the Survey
The 2003 STORES Consumer Credit Survey was designed to gauge consumer behavior and shopping trends related to various payment options. The survey of 8,399 consumers was conducted September 4 �11, 2003. The consumer poll has a margin of error of plus or minus 1.0 percent.
STORES Magazine is the official magazine of the National Retail Federation.
BIGresearch is a consumer market intelligence firm that provides unique consumer insights that are gathered online utilizing very large sample sizes. BIGresearch�s syndicated Consumer Intentions and Actions survey monitors the pulse of more than 7,000 consumers each month to empower its clients with unique insights for identifying opportunities in a fragmented and changing marketplace.
The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet and independent stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.4 million U.S. retail establishments, more than 20 million employees � about one in five American workers � and 2002 sales of $3.6 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations. www.nrf.com.
###
Complete results for the STORES Consumer Credit Survey are available in
the December issue of STORES Magazine and online at www.stores.org.
October 29, 2003
Training Employees Pays off
While training can make a difference in any business, it can be especially crucial in the restaurant field, where the employees who are the company's public face tend to change jobs often.
At Cracker Barrel, training is a specialty
By KATHY CARLSON
Staff Writer
The Lebanon-based restaurant chain believes in investing in its employees.
Eleven years ago, Donna Golliher slipped a brown apron over her clothes and started work as a server at the Cracker Barrel Old Country Store in Crossville, Tenn.
Early one morning, before the rest of the servers had arrived, a bus pulled up and 45 people got out. When the store manager pitched in, taking drink orders and doing whatever was needed, Golliher noticed.
Then she learned about Cracker Barrel's training programs, which combine better pay, benefits and other incentives with the chance to move up. ''I was so taken away,'' she said last week. ''I knew that I wanted to stay with Cracker Barrel.''
Over her career, participating in the programs, she has earned the four stars that identify those who have completed all four segments of in-store training. She's worked on the red-shirt team that opens new restaurants across the country. Eventually she moved to the chain's home office in Lebanon, where she works now.
''I just think that Cracker Barrel provides a great opportunity to employees,'' she said.
While training can make a difference in any business, it can be especially crucial in the restaurant field, where the employees who are the company's public face tend to change jobs often. Training new workers can be expensive, especially now, when the restaurant industry grapples with whether to pass rising food costs on to consumers.
Trimming turnover by five percentage points, for example, through training and employee-recognition programs can yield big benefits at a restaurant, said Rick Ford, president of The Sage Group, a Brentwood company that offers training consulting primarily in the automotive and telecom industries.
Turnover for all hourly Cracker Barrel employees is about 118%, said Julie Davis, spokeswoman for the chain's parent company, CBRL Group Inc. That's about par for the restaurant industry as a whole, analysts said.
But for hourly workers who have completed all four parts of Cracker Barrel's Personal Achievement Responsibility training program, from cooks to servers, turnover is 24%, Davis said.
''They've created a real kind of career server, and that's different from the norm,'' said analyst Amy Greene of Nashville's Avondale Partners.
Every new Cracker Barrel restaurant employee starts as a PAR 0, and entering the PAR program is voluntary. Some, such as college students working part time, opt out because they know they won't make a career in the restaurant industry, Davis said.
Throughout the PAR program, employees learn and practice a growing set of skills, from the basics of the job to leadership and conflict resolution. They take written tests and are evaluated by managers. To progress through the program, workers must earn increasingly higher grades. The program is offered in English and Spanish, and workers are paid to study written learning materials.
As the workers progress, they earn salary raises and larger company contributions toward their health insurance, as well as other incentives, including discounts on store purchases. Davis declined to give amounts of the raises and insurance contributions.
The program has been in effect for 25 to 30 years, said Stacy Stinson, PAR program director.
''It's part of our culture. Our operations folks totally embrace it, and that's what makes it work,'' Davis said.
In more recent years, PAR IV employees have been able to participate in a separate internship program, which grooms in-store workers such as Golliher to become associate store managers, putting them on a management track. The only educational prerequisite is a high-school diploma or the equivalent. Golliher, for example, had some college credits but didn't graduate.
Golliher started in the internship program in 1995, as it was beginning. She made associate manager and then moved to the home office in Lebanon. She has had two promotions and now works as an operations specialist on special projects for the retail and restaurant parts of the company.
''If you have the desire, the ability is there to progress to any level that you would like. � I'm living proof of that,'' she said.
Restaurant industry analyst Robert Derrington of Morgan Keegan & Co.'s Nashville office says he doesn't get data on training per se, but he and other observers examine what he calls anecdotal evidence to see how customers are treated. The Cracker Barrel chain has been the top performing chain in its category for 13 years in a row, he said. In addition, the company has had ''solid'' same-store sales growth.
''The only way you grow your sales is if you take care of customers,'' he added.
CBRL Group Inc.
Headquarters: 106 Castle Heights Ave. N., Lebanon, Tenn. 37088
CEO: Michael A. Woodhouse
Symbol: CBRL (Nasdaq)
Description: CBRL is the parent of the restaurant-retail chain Cracker Barrel Old Country Store Inc. and the Logan's Roadhouse Inc. restaurant chain, both Tennessee corporations.
About the company: Both concepts are steeped in nostalgia. Cracker Barrel locations are modeled after yesteryear's country stores, and Logan's roots go back to the roadhouses of the 1940s and 1950s.
Number of employees: Approximately 65,000 people work for CBRL and its subsidiaries
2002 revenue: $2.2 billion for the fiscal year ended Aug. 1, 2003
2002 net income: $106.5 million
Market capitalization: Approximately $1.8 billion
Outstanding shares: Approximately 48 million 52-week share price range: $22.35 - 39.95
Kathy Carlson can be reached at 259-8047 or at [email protected].
October 25, 2003
Nation's Retailers Are Staffing Up for Holidays
With a larger hiring pool, job seekers should not expect the same bonuses and flexible scheduling retailers offered during the late 1990s, Challenger said. The lean staffing could lead to poorer customer service as stores rely on computerized kiosks to help shoppers instead of salespeople, Challenger said.
Nation's Retailers Are Staffing Up for Holidays, but Cautiously
By Janet Adamy, Contra Costa Times, Walnut Creek, Calif.
Oct. 25--Retailers are hiring cautiously for the holiday season -- a sign they're wary of predictions that holiday sales will pick up after three disappointing years.
Several large retailers say they plan to hire the same or slightly more workers as last year, widely considered one of the worst Christmas selling seasons in decades. Instead of bulking up now, they're planning to take advantage of an abundant labor pool that makes it easy to get workers if customer traffic picks up closer to Christmas.
Stores typically boost their staffs by one-third during November and December to handle the influx of holiday shopping. That hiring fits into a bigger Christmas buying picture that experts use to predict the strength of the coming year's economy.
The National Retail Federation predicts holiday sales will increase 5.7 percent this year to $217.4 billion -- the biggest jump since 1999.
But retailers aren't staffing to handle a sales spike. Macy's West plans to hire about 22,200 workers to staff its 110 western division stores, which is about the same as last year, said Human Resource Director Helen Harris. Target Corp. plans to hire between 50 to 80 seasonal workers per store, flat with the past two years, spokeswoman Paula Thornton-Greear said. David M. Brian also plans to keep hiring even with last year by adding 100 workers to its 15 East Bay gift stores. Nordstrom plans to keep hiring flat, too.
"You never know until the doors open in December," said David McCaulou, president of David M. Brian. "We're going cautious, and we're not concerned because there's a lot of availability of Christmas help on the market this year."
In the late 1990s, the Bay Area technology boom left retailers scrambling to find seasonal help. But since the economy soured in 2001, holiday applications have soared, giving retailers the upper hand. After being lucky a few years ago to find a college student to staff their registers, retailers say they're getting applications from overqualified professionals looking to make ends meet.
This may be one of the most competitive holiday job markets in years, said John Challenger, chief executive officer of Challenger, Gray & Christmas Inc., which tracks the job market. He predicts stores will add only slight more than the 555,000 workers they took on last November and December. During the three years ending 1999, stores added 655,000 workers for Christmas selling.
"There's a lot of competition out there," Challenger said. Since large retailers typically add stores each year, the hiring decrease is particularly significant.
Like most retailers, David M. Brian started hiring seasonal workers earlier this month. Already it's received 50 applications, McCaulou said.
Unemployment in Contra Costa County was 5.1 percent in September, slightly down from 5.4 percent during the same month last year. In September 1999, it was 2.8 percent.
With a larger hiring pool, job seekers should not expect the same bonuses and flexible scheduling retailers offered during the late 1990s, Challenger said. The lean staffing could lead to poorer customer service as stores rely on computerized kiosks to help shoppers instead of salespeople, Challenger said.
Some stores are upping their hiring by a notable amount. Gap Inc. plans to increase hiring by as much as 30 percent at its Banana Republic, Old Navy and namesake stores nationwide. That amounts to 25,000 new hires at its Gap stores, spokeswoman Jordan Benjamin said. Borders Group Inc. will increase hiring between 6 percent and 7 percent from last year because it's expanding its temporary holiday store business, spokeswoman Anne Roman said.
Harris said Macy's stores can hire last-minute workers more quickly because they've shifted some hiring to the Internet.
Although stores may hire through Thanksgiving, experts caution against waiting to apply.
"The time to look for those jobs is now," said Ellen Tolley, spokeswoman for the National Retail Federation.
JOB HUNTING TIPS: Experts say this may be one of the most competitive holiday job markets in years. Some tips:
-- Offer to start working now as an on-call fill-in for vacationing or sick staffers.
-- Apply to stores that suit your skills. For example, if you're a golfer, look for a job at a sports store.
-- Look beyond the sales floor. Stores also hire for back-office positions, including shipping, receiving, warehousing, accounting, information technology and security.
-- Promote computer skills: Some stores are changing from traditional registers to computer-based systems.
-- Dress up for your interview. If you own a suit, wear it. It will make you stand out among all the applicants who come to interview in tattered jeans and T-shirts.
SOURCE: Challenger, Gray & Christmas
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South Africa and Kiosk Market
The South African kiosk market has its own unique challenges that are a direct result of the diversity of the demographics of the region
South African Kiosk market
allAfrica.com: Southern Africa: Tecor Group Identifies Self-Service Technology As Key Growth Area in Southern Africa
The South African kiosk market has its own unique challenges that are a direct result of the diversity of the demographics of the region, in terms of literacy levels, low technology adoption rates, poor infrastructures, high HIV/AIDS statistics and crime rates.
Furthermore, the culture of the largest part of our population makes the adoption rate of this technology slower than in First World countries.
At the same time, the country faces steep political changes where government is under pressure to pay much needed attention to provide the majority of the population with the most basic services that include easier access to information. The empowerment of people through information and knowledge provides an excellent platform for Self-Service Terminal (SST) and kiosk solutions to government and service organisations.
In addition, corporations are faced with steep competitive issues. The only place where bottom line improvements can be made is through leaner and meaner infrastructures, the more effective use of technology and an increased focus on customer service and retention.
"All of these critical business and government issues can be addressed through the clever implementation and use of SST's and kiosk application solutions," says Nico Oosthuisen, CEO of Tecor Group (Pty) Ltd.
The kiosk industry is an emerging one, with a mix of established companies and other players seeking to stake their claim within the market. The kiosk market continues to grow rapidly and according to the Summit Research Associates' 2002 edition of its flagship report "Kiosk" and "Internet Technology"; the number of kiosks deployed worldwide is expected to increase by 75.6% by 2005. Self-service technology and the Internet will trigger much of this growth.
Why deploy kiosks, you may ask? The answer is not always easy, because there is no universal answer. Some kiosks generate revenue, while others save money by replacing human resources. Others serve as shopping portals in retail stores, while a growing number of kiosks simply provide information.
In addition, kiosks can be expensive to build and maintain, so naturally many are created with the goal of bringing in revenue. Key to the deployment of any kiosk project is to prove some sort of return on investment, whether it is in cash, customer goodwill or cost savings.
Accounting for an investment return on kiosks that don't generate revenue is a tricky issue. When deploying kiosks, one must make judgements on the value of the kiosk project based on intangibles. While the cost of the kiosk is measured in rands, the value of a satisfied customer can be priceless. An information kiosk, for example, offers a variety of services that do not generate revenue, but rather produce an enormous amount of customer goodwill.
Some of the more successful kiosk projects are those that enable users to do something they could not do otherwise.
Being at the forefront, Tecor is able to provide the following types of kiosk solutions:
* Internet kiosks usually are strictly pay-for-use machines offering access to the Web, though some deployments offer free Internet services and generate revenue through advertising income.
* Informational kiosks are those that dispense information and are considered to part of the soft benefit category. These might be used for trade show information, surveys, data collection, etc.
* Architectural kiosks can be any of the above. These are normally custom designed kiosks specifically made to enhance their surroundings while performing whatever tasks they are given.
"Implementation of any SST project requires knowledge and skills on a network environment - Tecor boasts good design and implementation skills across a variety of network products. Our excellent supplier and partner relationships give us accessibility to competitive price and solution offerings. Tecor chooses and customises the solution that best fits the customer's architecture and infrastructure," states Oosthuizen.
"In addition, the biggest contributor to a successful SST solution is a software application that delivers the message and functionality that a company wants to offer its clients."
Kiosk solution providers face a significant challenge from the moment the kiosk idea is born. The most important consideration throughout the entire process is the mindset of the ultimate user. The kiosk must make life easier for the user in some way, by solving a problem, automating a process or delivering a desired service. Electronic kiosks are therefore often the vehicles for moving client-customer relationships to a higher level. Any effort to reach out to customers, provided it is not too intrusive or time-consuming, can empower customers and make them feel more involved in the process.
October 24, 2003
Customer Self-Service
According to IHL Consulting Group's study, "Self-Service Kiosks in North America," the North American market will spend more than $155 billion at self-service kiosks in 2003.
KNO - KioskNews.Org: Here comes the sun.
Helius and Partners to Demonstrate Self-Service Kiosk Infrastructure; Together Companies will Deliver End-to-End Kiosk Solutions for Billion Dollar Industry
Helius Inc., the worldwide leader in business-class data broadcasting solutions, announced today a series of self-service kiosk infrastructure technology to be demonstrated at the FS/TEC industry tradeshow in Long Beach, Calif., Oct. 26-29, 2003. Working with key partners Vultron Technologies, Broadcast International and Microspace Communications, Helius will demonstrate the ability to manage and report real-time activities at self-service kiosks.
According to IHL Consulting Group's study, "Self-Service Kiosks in North America," the North American market will spend more than $155 billion at self-service kiosks in 2003. This number is predicted to grow to more than $900 billion by 2007, according to the same study.
"Self-Service technologies are pervading all aspects of our lives in North America today," said Greg Buzek, president of IHL Consulting Group. "Self-checkout systems at the supermarket, ticketing kiosks for transportation and entertainment, and new self-service technologies being introduced into fast food/quick service are rapidly growing in acceptance. The growth rate is dramatically accelerating in the retail, transportation and government sectors as a way to lower transaction costs."
"To maximize the value and service delivery of a self-service kiosk, an organization needs to have reliable full-time connectivity and the ability to update and control the content offered in real time," said Mike Tippets, Sr. VP of marketing at Helius. "Using the end-to-end solution offered by Helius and our partners, an organization will deploy a network of self-service kiosks rapidly and keep the content as fresh as necessary to maximize customer satisfaction."
Customers interested in this technology can visit the Helius booth at FS/TEC, or visit the Helius Web site at www.helius.com/kiosks for more information.
About Helius Inc.
Helius is a privately held company based in Lindon, Utah. For more information, please visit http://www.helius.com or call 801-764-9020.
NOTE: Helius is a trademark of Helius Inc. Other product and company names mentioned herein may be trademarks and/or registered trademarks of their respective companies.
Contacts
Helius Inc., Lindon
Richard Jackman, 801-764-9020
[email protected]
 | Note: KIS is the world leader in the self-servicetechnology market. If you are interested please contact info at gokis.net |
October 10, 2003
Market Research Photokiosks
What is a reasonable guess for total photokiosk deployments by Kodak by end of 2003?
One reasonable guess is close to 50,000 (up from 35,000 number). Figure 50% outside of U.S. with fastest rising market being China.
Customer Satisfaction Research July 2003
Dell receives top ranking in reliability and customer satisfactor in July 2003 analyst report.
EXECUTIVE SUMMARY
The Score Analysis of the Wave I 2003 data shows Dell�s and IBM�s weighted satisfaction indices have remained essentially constant, while HP�s weighted score has declined by a moderate level of 1.3% from its 4Q02 position. While the three vendors� ranks remain in their respective 1, 2 and 3 positions (Dell, HP and IBM), there has been a shift in the distances between their satisfaction indices. The distance between Dell�s and HP�s indices has increased and that between HP and IBM has narrowed. The distance between Dell�s and HP�s weighted satisfaction indices has nearly doubled from that of 4Q02, when the two competitors� scores were at a rare and marginal distance from one another. The current study results show the 1.9% distance separating them (up from 1.1% in the preceding quarter) runs about even with the average distance of the past year, while approaching the average 2.4% distance of the past two years. As the �Future Outlook� section demonstrates, this movement appears to be the beginning of a trend. Defined as a revival of customer support for Dell�s desktop products and services, this trend minimizes concerns for Dell regarding intensifying competition coming from its closest rival, HP. It appears the threat from HP may be cooling off, based predominantly on Dell�s ability to do a more convincing job at driving its value proposition message, while HP continues to work toward effectively improving its manufacturing and delivery efficiencies. While the gap between HP�s and IBM�s satisfaction indices has narrowed, the magnitude of that distance remains extreme at 5.7%.
The principal explanation of Dell�s increasingly competitive advantage over HP has to do with the perception of value. The single greatest contributor to the difference between the two vendors� scores, according to TBR�s weighted model, is desktop price/performance. Secondary contributors include out-of-box quality (where Dell�s performance was exceptional this reporting period, averaging at or above the �A-� level), delivery time, total cost of ownership and ease of doing business. Clearly, the Dell versus HP rivalry on the desktop does not resemble that of either the notebook or server segments this quarter, where substantial differences in customer perception between the two brands were difficult to extract from the data. IBM�s No. 3 ranking position has been determined by significant point losses against the competition across the areas of delivery time, price/performance, total cost of ownership and ease of doing business.
Full report [pdf]