Idea of selling goods via machine catches on

CINCINNATI (AP) — Miner Gross likes the convenience of being able to rent a DVD with a couple of taps on a touch-screen and a quick swipe of his credit card.

“It only takes a few minutes, I don’t have to stand in line like I would at a video store and I can just drop it back in the machine the next day,” the 41-year-old said while scanning selections at a kiosk at a Cincinnati grocery store. “I’d get more things this way if they were available.”

The idea also is catching on with more major companies, which are turning to self-service to sell or rent goods formerly not available in machines. Macy’s Inc., Motorola Inc., McDonald’s Corp. and others are offering electronics, DVDs, cosmetics and drug prescriptions through emerging uses of automated retail that combine the self-service concept of traditional vending machines with the software of digital kiosks.

Do-it-yourself concept

With stores and products across the country or around the world, the companies are spreading the do-it-yourself concept to larger numbers of consumers.

“The thing that has been made clear to us is that people like the experience of being able to stand in front of a machine, see the products and accessories, and buy them right there,” said Geoffrey Baird, Motorola’s senior director of global retail and distribution.

Macy’s department stores began using machines from San Francisco-based ZoomSystems in 180 stores in 32 cities last year.

Electronic products including iPods and headphones are visible through the glass front of the kiosks, or robotic stores, which are about the size of two vending machines placed side by side. Customers press a picture of the item on a touch-screen and other parts of the screen for item information.

To buy a product, shoppers run their credit or gift card through a slot and a robotic arm selects the item and places it in the delivery bin for the customer to retrieve.

Security issue

The machines give Macy’s a secure yet accessible way to sell electronics, company spokesman Jim Sluzewski said.

“In many cases, items like iPods are behind locked glass and you have to find an employee to unlock it and assist you,” he said. “With Zoom, you can clearly see what’s there and it’s easy and simple to buy.”

Suburban Chicago-based Redbox Automated Retail LLC provides kiosks for DVD rental.

About the size of a soda machine, the units offer 70 titles that are updated weekly and selected via touch-screen. The DVD can be returned to any Redbox location by touching the return part of the screen and dropping the DVD in a slot.

Salt Lake City-based Smith’s Food & Drug Stores Inc., a division of Kroger Co., started installing Redbox kiosks in its Las Vegas area stores a couple of years ago and now has them in most of its stores in seven Western states.

“It has taken off like wildfire,” Smith’s spokeswoman Marsha Gilford said. “We’ve had video rental departments in our stores in the past, but this allows us to use that space for other products for our customers.”

Benefits

The technology now moving into traditional retail outlets not only gives consumers the convenience and speed they want but allows retailers to deploy their people to help customers in other ways, said Greg Buzek, president of the marketing research firm IHL Consulting Group based in Franklin, Tenn.

Neither Redbox nor ZoomSystems, which are privately held, release financial results, and the companies that partner with them would not disclose how much has been sold via kiosks.

But an IHL study released in July projects that North American consumers are on pace to spend more than $525 billion at self-checkout lanes, ticketing kiosks and other self-service machines including postal kiosks in 2007, an increase from $438 billion last year. The study says that number could reach nearly $1.3 trillion by 2011.

“Retailers can’t simply put self-service kiosks in and expect consumers to know how to use them,” Buzek said. “Those that train a staff person to help customers learn how to use these devices will be the successful ones.”

C. Britt Beemer, chairman of America’s Research Group, in Charleston, S.C., believes the negatives outweigh the positives in self-service retail.

“Shoppers who love to feel and hold things aren’t going to buy products through a machine, and those who don’t want to deal with long lines can shop online,” he said.

Redbox and ZoomSystems say they can handle most problems that might occur from a central location and have toll-free phone numbers on their machines if customers encounter problems.