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Predicting the future of digital signage and smart vending kiosks, Pt. II

From Cupcake ATMs to Coke machines with digital signage, intelligent vending is the wave of the future.

August 1, 2012 by Christopher Hall — w, t

(This is Part II of a two-part series. Read Part I here. - Ed.)

The next generation of intelligent vending kiosks could use digital signage to attract more buyers to purchase the products within the machines, providing increased sales lift. But the digital signage kiosks also could bring in added revenue through third-party advertising, help extend a retailer's footprint and even improve the customer experience and increase consumer engagement.

Helping retailers better serve customers and themselves

From the perspective of Intel Corp., smart vending kiosks — connected digital signage kiosks that allow for dynamic updating and advertising content as well as better inventory management — help solve a problem for retailers, said Raj Maini, Intel Corp.'s marketing director for digital signage worldwide.

Smart kiosks provide another consumer engagement node on the continuum of omnichannel interactive retailing, he said.

"Part of that whole interactive experience has been to include all channels, and vending is a retail channel that is out there available already," Maini said.

Also, as mobile interactivity and mobile payments technologies continue to be integrated into retail, these kinds ofhybrid kiosks offer another venue for interaction beyond just the sale of a physical item, he said. With technologies like near field communications on the rise, the kiosks can become interactive with the consumers' smartphones as well.

For instance, a vending kiosk could also offer coupons for items not in stock or to other retailers or vendors. Maini mentioned a recent subway vending-kiosk deployment that displays third-party advertising and offers discounts at nearby restaurants and vendors.

"With the advent of NFC you are able to even download some of these coupons onto your handheld device and walk into that restaurant and utilize that capability," he said. "And that's being piloted now."

Or, consumers eventually could just use NFC and their smartphones to simply pay for the items they want from the vending machines and dispense with using cash, coins or credit cards.

Payment options

Payment at vending machines started with coins, then went to cash and accept credit or debit cards. The next step is mobile payments; the subsystems that control the money exchange can be adapted to accept mobile payments such as Google Wallet, while also providing the vendor with more information on buyers, Maini said.

"All that is a continuum of the same issue, where more easily you are able to do the payment better; plus there is more possibility of being able to quickly complete the transaction and do more transactions than they could if the buyer only has a few coins in their pocket," he said. "And at the same time as that transaction happens anonymously, they're getting the data who at that location purchased what; they're learning the behavior of the consumer, and further augmenting that with data collected from (anonymous viewer analytics). You're able to connect a number of these things."

And while digital signage can attract more consumers to the machines, the digital signage aspects of the kiosks go beyond "just being in a 200,000-square-foot Walmart and seeing an ad for Coke while you're looking at the TVs," said Ross Elkin, vice president of sales and marketing for kiosk manufacturer VIGIX.

"It's seeing an ad for an OtterBox phone case on a kiosk where you can immediately engage and get more information about the item, all the way up to and including purchasing the product and physically getting it in your hand," he said.

The intelligent vending kiosks also offer a variant of the vending kiosk most consumers are already familiar with, such as the ZoomSystems Proactiv or Best Buy kiosks that dot airports across the country.

"Those are great, and we tend to think of the kiosk as a way to expand the brand's footprint — and it absolutely does that," Elkin said, "but there's also a variant of having it in a location where you might normally find ... all the relatively higher value items kept under lock and key."

For example, nearly every store has a selection of merchandise — whether it's allergy medicine, a camera or a watch — that it keeps locked behind a cabinent, which requires a shopper to find a sales clerk with the right key before making a purchase.

"And then you're kind of taking your chances on whether or not the salesperson has the knowledge to convince me to buy it," Elkin said. "So think of a vending kiosk inside a retail location that makes the product directly available to consumers: The information that's going to be displayed on that kiosk though the user interface and that digital signage is going to be more in depth, more correct and more controllable by the brand than anything than anything that a sales clerk could deliver."

That helps the retailer or brand, but it also benefits the shopper, because it gives the consumer direct access to the product they want, he said.

"I want a watch; I don't have to wait for someone to come along to sell it to me. I can buy it and out pops the watch," he said. "And these kiosks can take up the same amount of space that they'd give to a cardboard shipper display. So there are advantages on both sides."

That doesn't even take into account the still-growing segment of the population that prefers self-service technologies to dealing with salespeople.

"In some cases, it's the segment of the digital native population that that's just the way they do business, so to speak," Elkin said. "They're used to that sense of control, that privacy. They just like to do it themselves."

(Take a look at one novel approach to combining digital signage and vending kiosks, the Cupcake ATM, below:)

Additional revenue streams

Smart kiosks can provide additional revenue streams for retailers, whether it's just increased efficiencies leading to tighter bottom lines, or advertising revenue taken in from carrying third-party advertising on a kiosk's digital signage screen.

Having digitally connected kiosks allows for fast and dynamic price changes, and also allows for vendors to know exactly how much of an item the kiosk has in stock, which is impossible to do with unconnected vending machines that must be updated or checked individually.

And as noted before, digital signage on a kiosk can be used to do more than just attract shoppers to buy what's in the machines. The signs also can display third-part advertising.

"That has been very effective with nearby merchants seeing more traffic coming in," Maini said about the subway digital signage kiosks.

Sales lift?

Of course, the big number is what kind of sales lift do these kiosks offer, and the answer, so far, is it's too soon to tell.

Maini and Elkin areed that hard numbers have been hard to calculate, but the anecdotal evidence has been more than promising.

According to Maini, some initial estimates have been in the 3-5 percent range, but it's still too early to say with any certainty.

"That data has to be still collected," he said. "The last significant change was a number of years ago, when vending machines went from coins to bill exchangers, and this change is about to happen now, so we'll see, but I am predicting that in 2013, we'll see a lot more data of that nature collected."

Is there a significant sales lift when you add digital signage to a vending kiosk? The simple answer is yes, Elkin said, but the empirical data to back that up either hasn't been gathered yet or hasn't been released by companies that prefer to keep such information in-house.

"But certainly when you look at 'more traditional' digital signage, whether it's the mall networks to airport networks up to Walmart TV, there is lots of research that has been done on that kind of digital signage," he said. "Walmart will tell you all you want to know about the beneficial effects of digital signage at the point of sale."

Anecdotally, Elkin said, his company and customers believes the kiosks are seeing sales increases from the advertising.

"We want to gather more of that empirical data," he said. "Brands and retailers feel very proprietary about that information, so we haven't gotten a lot of fabulous numbers, but from what we've seen the effect is there, and it's the ability to go one step beyond."

Going one step beyond

Intelligent kiosks, smart kiosks, digital signage kiosks — whatever they're called — do more than just sell a shopper a piece of merchandise.

"We see the consumer engagement piece of automated retail as very important," Elkin said. "Yes, it's the sale, but it's also the impression you make, the information that that you deliver."

For example, a shopper trying to buy an expensive watch but can't find a sales clerk with the key is probably going to leave without a watch and a negative impression of the retailer. But with a smart kiosk, the shopper can either buy the watch then or learn more about the watch in an entertaining, self-directed fashion. Even if a shopper decides not to buy, he probably leaves with a good impression of the product or the brand if the interface is done well.

"And that's of value to the brand," Elkin said.

With the changes in vending kiosks coming down the road, vending is going to become more efficient and more interactive, provide more revenue from more sources, and increase both transactional and pricing flexibility through remote management of the kiosks, Maini said. And vending kiosks will become a wealth of information as they gather data on consumers' desires, demographics and behaviors.

"That is what vending is going to be all about," Maini said. "It is all going to come together." 

Read more about retail digital signage.

What do *you* think the future holds for intelligent vending kiosks combined with digital signage? Let us know in the comments below.

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