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The Self-Service Revolution

BY CSA STAFF

Although self-service technology has graced the retail landscape for years, many consumers have been slow to adopt it as a part of their in-store experience. But as shoppers have grown more comfortable using technology, the demand for self-service has risen. Richard Arnold from Dayton, Ohio-based NCR Corp., which offers self-service solutions and support services, spoke with Chain Store Age Web editor/associate editor Samantha Murphy about the state of the self-service industry and where it is headed.

Chain Store Age: What is behind the recent growth of self-service technology?

Richard Arnold: Consumers are driving the self-service revolution as their appetite for “self-everything” continues to grow. Across a spectrum of every-day transactions, consumers are looking for self-service and, in fact, many demand it. A recent NCR Self-Service Consumer survey conducted by Buzzback Market Research found that 86% of North American consumers said they are more likely to do business with a company that offers the flexibility to interact with self-service—whether via the Internet, on a mobile device, or at a kiosk or ATM. In addition, 66% of survey respondents said the availability of self-service technologies actually creates a more positive perception of the deployer’s brand.

CSA: How is the overall self-service movement evolving?

Arnold: In recent years, retail formats have converged and the challenge of differentiating the retail experience has become more difficult. This has made it difficult for retailers to compete simply on the basis of product selection, and in many ways, even price. To win the loyalty game and stand out from the crowd, retailers must turn to improving their shopping experience—and consumers are clear that this includes expanding the channels in which they are served.

In many stores, consumers can choose to wait for an attendant or head for self-checkout. The Internet channel offers multiple opportunities for businesses to capture the consumer. The number of people who browse, comparison shop or buy online makes this a must-have channel for retailers. Furthermore, the use of mobile phones, contactless and mobile payments, as well as viral marketing and short message service (SMS) communication, creates another channel to connect to the consumer.

The NCR Self-Service Consumer survey showed that consumers value the ability to use a combination of self-service channels. In fact, 97% surveyed said they would use a combination of such self-service channels to handle a retail transaction or service.

CSA: Self-checkout is becoming commonplace in retail. What other self-service technologies are gaining momentum?

Arnold: Though self-checkout continues to be a major queue-busting solution worldwide, kiosks are also gaining traction with retailers and consumers. There are approximately 800,000 non-ATM consumer kiosks in use today, and this is expected to grow 17% by 2013. Because consumer queue frustration continues to increase, kiosks that handle gift-card purchases, DVD rentals, bill payment and foodservice restaurant order and pay are becoming more popular.

Retailers also are interested in expanding their current self-checkout platform to create queue-busting self-service options in other areas of their store. In response, NCR developed a FastLane self-checkout platform that can be extended to provide consumers with our FastLane Self-Return solution, which enables shoppers to scan and return purchased items at a self-service device. Similarly, the FastLane Order and Pay system is designed to address a variety of self-service opportunities within a store, such as a deli or bakery section. Retailers want to see variety with the systems they implement.

CSA: With self-service growing, what role should assisted-service play?

Arnold: Retailers should realize that the need for differentiation, combined with the proliferation of various consumer touchpoints, creates a requirement to consistently deliver on their brand promises—such as low prices, superior services, etc.—across all channels. Therefore, retailers must implement a service methodology that satisfies their shoppers anywhere along a continuum of service, ranging from high-touch-assisted service to a total self-service experience.

In addition, industry research has shown that stock visibility, price management and tools that empower better associate service will have a strong demand from retailers in the years to come. Ongoing concerns about data security and privacy also will drive risk-adverse retailers to invest in PCI compliance and advanced payment technologies.

CSA: How do retailers manage these technology complexities?

Arnold: Retailers are challenged with deploying the right technology that supports their service methodology at every consumer touchpoint. Retailers should look for a vendor that offers the innovation and experience necessary to help them manage these complexities.

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Michaels comps down for the quarter

BY CSA STAFF

IRVING, Texas Michaels Stores reported that total sales for the quarter were $847 million, a 1% increase from fiscal 2007 first quarter sales of $839 million. Same-store sales for the comparable 13-week period decreased 2.9%.

Ceo, Brian Cornell, said, “While our overall comps for the first quarter declined 2.9%, we were very encouraged with the sales of our kids and specialty craft categories, scrapbooking and frame and art supplies. Sales in April showed a reversal of trend with same-store sales up 3.1% on a strong increase in transactions. This positive sales and transaction performance gives us confidence that our new marketing and merchandising programs are connecting with our Michaels customers.”

For fiscal 2008, the company expects same-store sales growth  to be approximately flat given the current economic environment.

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Kirkland’s 1Q sales up 2.1%

BY CSA STAFF

JACKSON, Tenn. Kirkland’s reported that net sales for the first quarter ended May 3 increased 2.1% to $84.1 million from $82.3 million for the first quarter ended May 5, 2007. Comparable-store sales for the first quarter of fiscal 2008 increased 4.3% compared with an 18.8% comparable-stores sales decrease in the first quarter of fiscal 2007.

The company reported a net loss of $2.6 million, or 13 cents per diluted share, for the 13-week period ended May 3, 2008, compared with a net loss of $7.5 million, or 38 cents per diluted share, in the 13-week period ended May 5, 2007.

Robert Alderson, Kirkland’s president and ceo, said, “The first quarter results reflect strong merchandising execution and the benefits of aggressive financial initiatives that have reduced our operating costs, improved cash flow and strengthened our liquidity. During the quarter, we experienced improved customer conversions as shoppers have reacted very favorably to our merchandise mix. The positive comparable-store sales and trimming of unproductive stores led to leveraging of occupancy and distribution costs. Combined with an improvement in merchandise margin and a year-over-year reduction in operating costs of almost $5 million, we were able to post a significant improvement in our pre-tax results.

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