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Store 24 and FREEosk Establish New Approach to Kiosks in Convenience Store Environment
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Store 24, a New England convenience store chain, is rolling out a novel network of kiosks with the help of FREEosk, Inc. and Scala. The kiosks help drive store traffic by providing a useful service, high-speed Internet access. At the same time, the screens above the main structure act as attractors to the kiosk and drive revenue for the store through advertising and increased sales. There are some 120,000 convenience stores in the U.S. Every day there are 93 million customers visiting those stores. This is roughly comparable to the number of television households. For advertisers, however, there is a significant difference in these two locations. In the store, consumers are in a perfect position to act immediately. Given the burgeoning demand for interactive kiosks, there are many retailers that are betting that act they will. One such retailer is Store 24, a Massachusetts-based chain with 80 stores in four New England states. Together with their partner, FREEosk, they are deploying kiosks in stores in the Boston area and expect to have 20 locations running by the end of the first quarter. Unlike some of the earlier adopters of the technology, however, FREEosk has spent the past two years carefully studying the fast evolving market to arrive at a solution that will stick. |  |
Making kiosks work.
Jeffrey Wootan is executive vice president of FREEosk. He is the technology whiz behind the product. He works closely with Bob Gordon, who is CEO of both FREEosk and, not coincidentally, Store 24.
"We have been watching the Web industry and its various advertising models for some time," Wootan said. "Advertising on the Web can be good for a particular site, but has yet to show it's true potential for retail in general. We concluded that to be effective, retail ads had to get close to the point of purchase."
Kiosks clearly have the potential to do that. But, Wootan and Gordon felt that they had to offer something more compelling to the user than, say, a coupon machine. They needed a killer app. That killer app is email and Internet access over a broadband connection.
The kiosks employ a unique, two-screen design: the chair-level screen (yes, there is even a chair for users) for Web surfing and a higher screen for advertising. Five minutes of Web-surfing to either Yahoo or MSNBC is free, other sites or additional time is charged at 10 cents per minute. Customers can pay by inserting cash or credit cards in the machine. As an additional feature, they offer a Web phone at attractive long distance rates.
Gordon recently said, " FREEosk customers are not necessarily in a hurry and, in fact, they are encouraged to surf." Since installing machines in late November the company has found that the units were in use an average of 12 minutes every hour and achieved 70 separate uses per day. There is very clear evidence that this application is doing what it is supposed to do - drive more traffic into the stores.
Generating incremental revenue, the bottom line.
While there is some revenue generated by the interactive use, that is not expected to be the primary revenue stream for the store. That will come from advertising. And that is where Scala comes in.
Wootan is particularly enamored of Scala's flexibility in broadcasting and scheduling. To use Boston as an example, the promotional content in Chinatown may be different from that in a store location near one of Boston's many universities. Scala's Network Manager 3 software provides the ability to easily cater messages to individual locations. At the same time, managing the flow and timing of that content has to be easy to do. Having the flexibility to drive content locally is also important. He uses the example of promoting particular items such as fresh sandwiches and other perishables that are unique to an individual store.
Moreover, since advertisers tend to be picky about getting what they paid for, the ability to monitor and report, as well as tie data into billing systems, is crucial. These are integral parts of the Scala software. Wootan is looking forward to deploying the newest version of Scala software that will further simplify the process of identifying and correcting player problems in the field. He also looks forward to enhanced capabilities of tying the kiosks into store systems through Windows® scripting software. This will enable stores to enhance sales through automated, real-time promotion of items based on data that is fed from inventory systems.
New Scala software, an early take.
An early look at the new software has Wootan more than satisfied with its new features and capabilities. "The new authoring elements are very attractive both visually and in terms of productivity," he said. But, the areas that he finds most valuable are those that relate to the operation, scheduling and management of the network.
He describes the new broadcasting process as more "pull" than "push." "This is huge for us," he said. In the prior version of the software new content was distributed to the kiosks serially. "Say you have a 40 megabyte Snapple commercial. If it takes five minutes per store to load, that would take an hour and a half for 20 stores to be updated. Now, the process will take place in parallel so all 20 stores will be up to date in five minutes," Wootan added.
Store 24 is using 128-megabit DSL service in each of its stores. This service carries data to the Scala screens and the PC for Web users, as well from and to the stores' own information systems. Wootan likes the fact that Scala updates can be scheduled at times when other data traffic is lightest.
Wootan also appreciates the new, Web-based network interface that enables an administrator with access privileges to control the scheduling of content from any location - conceivably even from the very kiosk at the Store 24!
Finally, he is looking forward to implementing the new network monitoring features in Network Manager 3. These include continuous polling of systems in the field and automated email alerts that provide immediate notification if a player has encountered a problem. Wootan says that taken as a whole these new features make an already robust network even stronger and, most important, more reliable and accountable to the advertisers who are paying the bills.
Early results promising.
Already at this early stage, Store 24 is seeing a sales lift on products that are advertised on the kiosk. With the addition of coupon programs, that will only improve over time. And they are beginning to see a sense of community building around the kiosk-equipped stores. The movie theater complex across the street from one Store 24, for example, has found it a good location to advertise.
Gordon and Wootan believe the time is ripe for broad acceptance of the right kiosk solution in retail environments. Technology has enabled increasing levels of self-service, which for more and more consumers is becoming the norm. Gordon and Wootan are not focusing their vision on technology for technology's sake, but rather, on creating a rewarding, and increasingly personal, consumer experience.
The average convenience store drives about $275 per square foot per year. Gordon and Wootan believe that their kiosk can achieve double that for the store in advertising revenue alone. Add in incremental direct sales, increased traffic and enhanced customer loyalty and it could just be that their thoughtful approach to this market is about to pay off.
Easier network management.
Jeffrey Wootan is executive vice president of FREEosk. He is the technology whiz behind the product. He works closely with Bob Gordon, who is CEO of both FREEosk and, not coincidentally, Store 24.
"We have been watching the Web industry and its various advertising models for some time. We concluded that to be effective, retail ads had to get close to the point of purchase."
- Jeffrey Wootan, executive vice president, FREEosk
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