Action Copy Portfolio - Self-Service

Client
Packaged Facts

Project
A market research report about self-service payment systems (kiosks, vending, etc.)

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(Excerpt 1)

Japan Loves Vending
Japan is clearly the world leader in vending machines. The country is home to 5.5 million vending machines, which earn revenues of 7 trillion yen yearly, or $58 billion, according to the Japan Vending Machine Manufacturers Association (Japan Times, April 15, 2007). By contrast, vending machines in the United States number a little under 8 million. While Japan has roughly 70% as many vending machines as the United States, its population is only about 40% the United States'. Furthermore, sales at Japanese vending machines are far higher than they are at their American counterparts. Compared to Japan's $58 billion in annual industry revenues, U.S. vending machine revenues for 2006 were approximately $23 billion, or about 40% of the Japanese level, according to Automatic Merchandiser's "State of the Vending Industry Report" (August 2007 issue).

The diversity of the offerings for sale in Japanese vending machines frequently fascinate visitors to the country. In addition to traditional vending staples like soft drinks and sweets and salty snacks, vending machines in Japan sell eggs, umbrellas, flowers, alcohol, hot cans of coffee, pornography, hot noodle soups, bags of rice and disposable cameras. Reasons frequently cited for the popularity of vending in Japan are a cultural affinity for automation and gadgetry, and that vending machines present a cost-effective way to use the country's expensive real estate. The Japanese vending industry is concerned, however, that the sales of some items are taking a hit from the expansion of convenience stores and online ordering.

Other self-service technologies have been slower to take root in Japan. For example, while prevalent there, ATMs frequently are taken offline soon after the end of banking hours and on Sundays and holidays. This practice undermines several core benefits of ATMs and suggests that Japan may not be culturally ready to fully embrace self-service solutions, as does the fact that self-checkout systems are only beginning to make an appearance there.

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(Excerpt 2)

Convenience Stores Slow to Adopt Self-Checkouts

Very few U.S. convenience stores use self-checkout systems. Unlike other retailers, the reluctance doesn't stem from worries about alienating customers through diminished service. After all, c-store customers, who already pump their own gas, assemble their own nachos, and microwave their own frozen burritos, are habituated to serving themselves. In fact, this atmosphere of self-service make c-stores a natural fit for ATMs and many types of buy-and-pay kiosks.

The key barrier to self-checkout deployment, therefore, is the fact that most c-stores already run on a bare-bones staff. With one person in many cases sufficient to run an entire store, owners can't replace those employees with machines without leaving the stores completely abandoned. Moreover, shoplifting at c-stores is already a problem, so any self-checkout machine would require someone to monitor customers and therefore not offer much in labor savings.

In addition, many items at c-stores do not lend themselves to self-checkout. Comprising a significant percentage of c-store sales, food items like hot dogs, donuts, and coffee in cups do not have bar codes and cannot be scanned. Tobacco and alcohol sales require a live human to perform ID checks. Lastly, self-checkout systems would take away space—already in short supply at c-stores—from product displays.

"The real question is, 'Would the convenience store feel that it is going to increase its sales because the customers will get in and out that much more quickly?'" asks Mark Lilien, a management consultant at Retail Technology Group. "I don't believe most convenience store owners would be easy to convince of that. […] The fact that so few chains have even tested it in a couple of stores indicates to me that the interest is hardly there at all" (Convenience Store Decisions, April 2008).