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ALTOONA, Pa. -- The self-service kiosk is certainly not a new concept for the convenience store industry. But what was once a luxury item is now evolving into a competitive advantage and opening the door to a new set of profitable possibilities.
"It is all about consumer convenience," said Mukul Krishna, senior industry analyst of digital media for research firm Frost & Sullivan. "Convenience stores want to make service as short and sweet as possible, and with a kiosk, the customer may not even have to go to the cashier."
Sheetz Inc. was one of the first to test the concept. It launched its "Order at the Pole" initiative last May by installing an outdoor kiosk from Radiant Systems at a new store in Medina, Ohio. The kiosk allows customers to order sandwiches from a pole-mounted kiosk while fueling their vehicles. All the outdoor kiosks are integrated with the indoor Made-to-Order foodservice machines, which Sheetz has been using for 14 years at all of its 275 stores. A year into the project, the company is reporting success.
"We believed it was something that consumers wanted based on research and feedback from core customers," said Rich Steckroth, manager of new business development at Altoona, Pa.--based Sheetz. And so far, it seems, the company was right.
"We are getting a much better hit rate than we had expected," Steckroth said. "We shot for five percent of all orders to come from outside, and we are running conservatively three times that rate right now."
The company chose a new store for its first installation to evaluate its acceptance in a new market with new customers. However, it installed a second kiosk in an existing Pennsylvania store approximately six months later to see how loyal customers would react to the change. Since this second installation, Sheetz has already seen an increase in foodservice sales, and plans for a third store installation are underway in Wilkes Barre, Pa.
The average kiosk deployment cost is $60,000, according to Frost & Sullivan.
Among the concerns Sheetz had going into the project was whether the kiosks could endure the Northeast weather. A harsh winter was a true test. "We worried if the kiosks would be suitable for an outdoor environment," Steckroth said. "But we've had one out there for a full year without replacing it yet."
Since the first outdoor kiosk premiered, Sheetz reported a win-win situation for the customer and the company. "The consumer benefits from the speed -- being able to cut out a step from the ordering process," Steckroth explained. "From our perspective, if the customer moves faster another spot open for the next customer to step in."
Sheetz isn't the only company deploying these kiosks, Kenyon Oil Co., operating approximately 300 XtraMart convenience stores, is also testing the concept.
The company installed its first kiosk in December 2002 -- an Xpress kiosk from Intermedia Kiosks -- at its Piney Creek, Md. store, and is already reaping rewards. "We have seen a very recognizable increase in sales as well as in the upgrade from single to combo sales by offering additional item suggestions," said Eckhard Breineder, Xtra Mart's food coordinator.
These machines take food orders from customers, and before processing the order, suggest additional items to be added to the purchase.
Currently, Kenyon Oil is installing kiosks in two additional stores in Maryland, and one will be available in English and Spanish. "This is an enormous advantage compared to an English speaking person behind the counter trying to talk to someone who doesn't understand the language."