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Wednesday, June 25, 2008

Trillions predicted for self-service kiosks

A new research study conducted by IHL Group projects that $607 billion will pass through self-service kiosks in North America in 2008; transactions will surpass $1.7 trillion by 2012.

According to IHL Group, the global research and advisory firm specializing in the retail and hospitality sectors, this more than threefold increase will take place due to the slowing economy and the increased comfort level consumers have for using self-checkout systems, in lieu of checkout lines manned by customer service representatives.

The 2008 North American Self-Service Kiosks study analyzes six types of self-service kiosks that accept payments: self-checkout systems, ticketing kiosks, check in kiosks, food ordering systems, postal systems and other retail kiosks.

The report spans the United States and Canada, providing projections for each variety of kiosk in terms of number of units in operation and transaction volume and highlighting best-in-class systems for each category.

"With the economy slowing, kiosks are growing quite a bit right now," said Greg Buzek, President of IHL Group, a part of IHL Services Inc. "And the dollar value of the transactions through the kiosks are going up significantly. People tolerate self-service a lot more during a downturn in an economy."

Overhead reduction

According to Buzek, self-service kiosks allow retailers to allocate their employee resources more effectively, deploying less employees on the retail floor, particularly during nonpeak shopping times.

"If you go into a Home Depot, for instance, on a Tuesday morning at seven o'clock, they've got the contracting counter open and they've got four self-checkout lanes open," Buzek said. "That's it, there's no other place to go during that time, so they can have more lanes open on Saturday and Sunday when everybody's in the stores."

In association with Visa Inc. and self-service kiosk vendors, Franklin, Tenn.-based IHL Group has been conducting the kiosk study since 2001 – a watershed year for self-service kiosks, Buzek said, because of 9/11. As a consequence of that catastrophe, the commercial airline industry took a major financial hit. To reduce operating costs, the airlines went to self-service kiosks.

"And, so doing, it trained consumers to say, 'Wow, this isn't too bad; this is actually pretty easy,'" Buzek said. "So that's what's helped get self-checkout kiosks going and get them employed."

Fast forward to 2008 and American Airlines Inc.'s recent announcement that customers who purchase domestic economy class tickets will be charged $15 each way for the first checked bag and $25 each way for the second checked bag.

"So, all of a sudden, every transaction at those kiosks is now 15 bucks more," Buzek said.

He added that kiosks will continue to proliferate and grow in popularity, with consumers opting to make larger ticket transactions at self-service terminals.

Market potential

Other markets where kiosks will be increasingly employed are quick service restaurants and movie theaters.

"Instead of having this one big line, one big cue on Friday night at seven o'clock, you're going to have kiosks available to get tickets," Buzek said.

Grocery stores are another location where kiosks will be utilized more often, with people picking up premade sandwiches from the deli section, for instance, and then speeding through self-checkout.

"Kiosks are ideal for that kind of environment," Buzek said. end of article

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