Universiti Teknologi Malaysia

International Business School

Technology Management and Innovation (MRC1113)


Individual Assignment


Prepared For
CS Chu


Prepared By
Name Program Metrics No
ZOEL-FAZLEE OMAR MBA (STRATEGIC MANAGEMENT) MR 121224


Submitted on
December 11
th
, 2013



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Table of Contents

Title Page

Abstract 2

Introduction 2

Purpose 4

Methodology 6

Findings 6

Conclusion 10

References 11




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Challenge of Technology Integration:
Self-Service Terminal for Retailing in Malaysia

Zoel-Fazlee Bin Omar

Abstract

The purpose of this study is to investigate the inherent problems and strategic issues
of kiosks as a SST for retailing in Malaysia. This study identifies the problem or strategies for
retail kiosks through the practice and identity of potential success factors by using previous
study by other researchers in the similar condition or near to the context of this study.
Information kiosks, or public access kiosks, are located in public thoroughfares, shopping
malls, airports, railways stations and other locations as a substitute for, or to complement
customer service through a human service agent. In contrast to the other public access
information arena, the Web accessed in the home or office, kiosks have received little media,
professional or academic attention. The retail application for Self-Service Terminal is not
always positively received. There are key factors and couple of potential problem found and
examine in this study which it can be used as the strategic issue of kiosk for retailing in
Malaysia. These findings can be association for research and study in the Malaysian
environment.

Keywords: Retail, Retail Kiosks, Self-Service Retailing, Impact of Retail Kiosks, Consumer
Satisfaction

Introduction

The essential factor for retailing is customer service where retailer can improve the
quality of service technologically by adopting self-service terminals (SST/Kiosk). It is a
technological interface that enables companies to delight their customers instantly by
allowing them to solve their problems using technology (Bitner et al., 2002). Self-service
technologies indicate any technological application, but the most typical SST is interactive
kiosks which refer to computer workstations for public access (Rowley and Slack, 2003). It is
basically a computer workstation that can be located in public places and designed to be easy
to use which often based on touch screens. Usually, retailing and other business environment


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such as food service, travel, advertising, supermarkets, bookstores and entertainment are
sometimes describe as multimedia kiosk or public access kiosk where it is being use to
provide information and services directly to customers. For example, there is a self-scanning
kiosk that integrated with scanning device for customer to self-check-out in the supermarket
(Hira and Susan, 2010).
There is also internet SST where it integrates with the growing application of
information technology in customer communication and service. Therefore, the purpose of
SST can be varies to many type of functions depend on the retailers goal. As the usages are
mainly for public environment, it is also an unobtrusive addition to the landscape of
traditional retail outlet. Other than providing point of interaction with users of the significant
customer of the retail store such as in-store promotion, related products, stock level and
availability, recipes, special offer, personalise product design or price check, it brings the
text-based information with interactive functions to other purpose. For example, it can
provide for human resource management for companies and educational applications with
educational video or presentation.
Kiosks can bring a competitive advantage to retailers (Tung and Tan, 1998).
However, the retail application does not always work as accordingly. In the environment
where there is lack of honesty, the concept of the SST unable to sustain successfully. For
example, there was an issue encountered after implementation of the personalised greeting
cards by Cosdel (S) Pte Ltd (Agent of Hallmark Card) in Singapore where some customers
took cards without paying, as the store assistants do not always have the time to oversee users
of the machine (Tung, 1998). Thus, it is very important for retailers to identify and
understand the natures of problems and issues of a SST. They would also have to know that
some customer innately expect products sold at kiosks retailers to not meet their expectations
due to the knowledge they perceive to have about retailers in general (Anjala et al., 2009).
SST can deliver financial returns to retailer and also gives impact to the consumer
satisfaction and retention. There are some studies have focused on self-scanning devices or
check-out systems in supermarket settings or have examine the influence on consumer
commitment toward the company. However, there are still challenges to integrate this
technology in retailing. Additionally, previous literature findings are based from a different
environment and region. Therefore, this conceptual paper will try to find the strategies and
issues that can be suitably used in locally.




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Purpose

Kiosks have been widespread in retailing, particularly, for the past few years
(Moerloose et al., 2005). Earlier, most of places that use SST are banks and airport for check-
in where retail applications were rare. However, the adaptation has changed where there are
retailers start to use such as supermarket, restaurant and bookstores. Some of this
implementation turns out successful where kiosk application in supermarket such as K-mart
in Canada was design with images, text, graphics and sound for their in-store information
kiosks. It is also can be seen in United Kingdom where Tesco had made the multimedia
transformation by testing an in-store computer system that offers shopper recipe, promotional
and nutritional information. Other than that, there was a development of a more robust kiosk
for the use of rural areas in developing regions where it require to be cost effective so that it
can provide communication and information services to the poorest sections of society
without increasing its cost while addressing at least the basic technical aspects for the kiosk
to sustain (Guo et al., 2010). This shows that the function of a SST can be expand from any
point of the region to specific area of interest in coming out with the right function and
application. We can see that the growth of SSTs help the growth in some of the retailing as
people are getting more used to the functions of a SST for different application. For example,
SST for ATM in banking is already commonly use everywhere and also airline self-check-in
is a standard procedure using a stand-alone kiosk in many countries.
Locally, there is a lot of SSTs are being use specially in banking service. There are
ATM in banks, directory kiosk in shopping malls and also ticketing machine in train station.
Most of these applications are not generally use in retailing. For banking, customer of the
bank can easily apply for personal loans or other loans using the kiosk. Banks such as RHB,
Maybank and Citibank here have been using a small terminal for customer to register them
self which they require to insert their MyKad for registration. It has the same concept of
banking at the counter only that this terminal is not only located in banks. Some are located in
public area such as shopping mall, department store and hypermarket. While in shopping
malls, there are a lot of SSTs located at each floor providing customer the directory and way
finder to their designated shops or location. Most of the terminals also include related
information by the tenant of the shopping mall including promotion, advertisement and
announcement. There is an also low transaction with low information SST in train station.
Commuters of the train can purchase their train ticket from the terminal without require them
to get it from the counter. It reduces the time to get the ticket where typical problem such as


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miss communication or short of return balance can be avoided or reduce. This type of SST is
also applicable in theme park where during peak period, high number of visitor which causes
the counter to pack or halt can be avoided by deploying a SST for ticketing application to
reduce time queuing for buying the ticket. Other than that, Central Bank of Malaysia uses
SST to provide information and frequently asked questions in the areas of banking, insurance
and other areas under the scope of the institution. It is also provides access to web-based
content such as Banking Info, Insurance Info and CCRIS.


Central Bank of Malaysias BNMLINK Kiosk

However, most of the SSTs are being deployed locally are at places that provide non
variety product for the end user such as stand ticketing or directory where most of them are
not retail items. There are very little kiosks uses in retailing where it provides interactive
information for their customer to purchase from the retailers. Therefore, this study will gather
all the related information on the challenges of integrating SST in retailing taken from past
research and study which includes the problem, success adaptation and also other related
factors to integrate this technology.



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Methodology

This paper has been produced by searches of literature and research on the topic of
SST which was made many other success studies. The searches were made in selected area
which cover the field of retailing, implementation, classification and environment that is
similar to this study. Recent study found that there are many factors that contribute to the
deployment of SST in retailing. Therefore, this study will gather most of the data and finding
that have relationship with and uses all the factors that have been found in the previous study.
A lot of studies found were not having the similar environment with this study.
However, there are a lot of studies come out with factors, classification, interviews and
analysis on relationship between retailing and SST that can be used for this topic. The
previous study were more covering on limitation, integration, taxonomy, experience,
environment, influence, implementation and also technology. These previous studies are very
useful to this topic as it give a lot of findings on the foundation of SST in retailing. Although
most of the data gathered from the previous studies may not having the similar environment
to this study, but they have a lot of similar factors that can be used to develop this concept
paper.

Findings

The concept of SST has been commonly practiced in most of countries across the
world. However, most of them are in developed countries. As for Malaysia context, the
environment does give effects to the usage of SST where the approach and usage towards the
SST requires different way of development. From the previous study on SST in retailing,
there are numbers of benefits in integration of SST. The benefit of SSTs is their efficiency
and effectiveness in improving customer service (Bitner et al., 2000). Utilizing kiosks,
retailers can deliver fast and customized services and provide convenient shopping
experiences (Meuter et al., 2000; Walker et al., 2002). In developed countries, supermarket
uses a self-check-out kiosk. Customers can conveniently pay for the merchandise without
standing in a long waiting line. Other than that, customers can order food and beverages
through kiosks located at their table in a restaurant. Kiosks also can provide information for
products (the image, price, availability, and location) and stores (location and operation
hours). Some kiosks feature information pull-up systems using key words or conditions
(Murphy, 2008).


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However, some of the factors that can be see are the uncomfortable feelings toward
technology, lack of human interactions, risks of service failure and employee resentment are
often cited as the downside of SSTs (Curran et al., 2003). Probably, because of the problems,
only about a half of consumers expressed their satisfaction with this self-service experience
(Alcock and Millard, 2006). Individuals tendency in using a new technology was an
important driver in behavioural intentions toward SSTs (Lin and Hsieh, 2006). Lack of
human interaction is another problem of SSTs, which may be more significant in a high-
service-context business such as hotels. Hotel guests felt kiosks were useful but felt employee
service was more important (Beatson et al., 2006). It may be because the guests prefer
personal contact in relating room conditions or services. Employees support is also
important in the use of self-check-out kiosks in a supermarket (Anitsal and Paige, 2006). That
is, coordinated human interactions are essential for the successful operation of retail kiosks
(Rowley, 1995). Well-trained employees can provide quick and effective assistance when
customers have problems while using kiosks. In this way, retailers can reduce possible
service failure in the use of kiosks.
Based from the previous study in this region, there are many SST have been
successfully deployed and they are working accordingly to their main goal or purpose.
However, there are some issues came together during the implementation. The summary of
benefits and problems towards the firms can be seen in the Table 1. SSTs are being used in
retailing does show great potential for success. However, this success does not mean that all
companies will successful when using kiosks. Facilitating kiosks are costly. The basic
interactive kiosk is approximately RM15,000 with CPUs excluding software and the price
increases for different type, sizes of touch screens and other customized features. In addition,
there will be other costs for printers and note acceptance component for payment, which
range from RM2,000 to RM10,000; while the software fee ranges from RM20,000 to
RM50,000 and the licensing fee per kiosk ranges from RM150 to RM500. In order to
compensate for this investment, retailers need to adopt winning strategies.
That shows as an evident that the company created a financial return as a result of
satisfying and retaining customers. Therefore, the previous study suggested that the five
factors may influence consumer commitment toward the company. Satisfaction may mediate
the relationship. Satisfaction was an antecedent of consumer loyalty (Mano and Oliver,
1993). Other than that, there is also another study of SSTs suggested the experiences with
SSTs would increase consumer satisfaction which in turn positively affects commitment



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Benefits Problems

Provide publicity for the companies

Enable difficult-to-reach prospects to gain
access to information about the company, its
products and service. Help to increase sales
by:
Another avenue of doing business
Doing of business after office hours
Increasing awareness of companies
products and services

Help to relieve manpower shortage or reduce
manpower use

Generate revenue from advertisement places
on kiosks and lease of space


Customers resistance to the new technology

Poor system design which means a need for
frequent changes

Poor support and maintenance of kiosks by
retailers whose premises the machines are
located

Inappropriate locations of kiosks which
affect usage of the machines
Table 1 - Benefits and problems towards the firms

(Eriksson and Nilsson, 2007). Hence, the accompanying propositions each of the factors are
interface design, accessibility, employee readiness, promotion, and fulfilment influenced
customer satisfaction. These 5 key success factors in a company successfully operating a SST
were based on an interviews made by the research with five employees in the selected
company and the study found five key success factors. They were:
1. Interface design: well-designed interface which is functional and easy to use
2. Accessibility: visible location for easy access
3. Employee readiness: trained and motivated employees who can effectively serve
kiosks users
4. Promotion: store advertisement and announcement to encourage kiosk use
5. Fulfilment: fast delivery with no failures


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As shown in Figure 1 with the accompanying propositions, each of the factors: interface
design, accessibility, employee readiness, promotion, and fulfilment influenced customer
satisfaction. Consumer satisfaction is proposed to have two levels, satisfaction with the
kiosks and satisfaction with overall service. All five factors affect satisfaction with a kiosk
and satisfaction with a store. Both satisfaction levels directly affect consumer commitment
toward a store.


Figure 1 - Impact of Retail Kiosks on Consumer Satisfaction and Commitment

Other than that, the research has shown some of issues that can be relate to the context
of Malaysia environment. Here are some of the findings bases from of interview in couple of
companies. In the first company, some of these machines are prone to damage due to shifting
of the machines in and out of the supermarkets. Sometimes the touch screen feature of the
machine can lose its sensitivity. As a result, there can be no response to the user's commands.
Also, some machines changed when they are being shifted as the processors are damaged.
Thus, they would also not react to the users' inputs. For the second company, there was
problem where they encountered some customer took their goods with paying, as the store
assistants do not always have the time to oversee users of the SST.
Hence, the strategy for a SST to success in retailing may be determined by customer
adoption initially but consumer satisfaction and commitment will be a more meaningful
indicator, as well as positive financial returns. There are previous studies were focused on
Interface Design, Accessibility, Employee Readiness & Promotion Fultilment
Satiscaftion with Kiosk & Store
Commitment toward Stores


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retail use and few researchers investigated the influence of factors on the success of retail
kiosks; in other words, the impact of kiosks on consumer commitment. Those studies were
conducted on a specific function in detailed retailing situation such as self-scanning devices
or check-out system in supermarket. The applications are diverse and SST is now being used
in different retail sectors in other more develop nation.

Conclusion

Self-service technologies are being use in Malaysia but they are not emerging in
retailing industries although retailers in overseas have adopted this concepts produce better
customer services. Kiosks for retail applications have a huge potential but they are not
successfully deployed locally. Therefore, there are some negative factors that could be use
based from the previous research and findings although they were not done in this studys
location. The summary of the problems can be seen in the Table 2.

Interview Problems in implementation
Company 1 Prone to damages, kiosks lost its sensitivity
Company 2 Kiosks do not accept payments
Company 3 Same as the factors considered when designing kiosks
Company 4 Presentation of information, vandalism, user friendly feature
Company 5 Slight modifications need to be done to ensure user friendly
Company 6 Inconvenience caused during maintenance
Table 2 - Summary of the problems

Most firms faced the possibility of the machines being vandalised. The interviews
from the previous study also showed that promotion was usually done on a very small scale
or not at all. There are also a lot of firms find that these SST provide another alternative in
which the firm can provide services to their customers even after office hours. The feedback
that these firms received from users was that users generally accepted the kiosks well.
Overall, the organisations feel positive about the implementation of kiosks. They are able to
derive some benefits from the kiosks, although most of the benefits are intangible. To the


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organisations, implementation of kiosks is a strategic move that will provide long term
benefits to the business.
As point out from another previous study and research, 5 key success factors has been
found to be the strategic issue for integrating SST in retailing where it focuses on the success
factors. The significance of the findings is the exploration of the success factors for
multifunctional kiosks in the context of a retailing which previous studies has not been
attempted in Malaysian environment. The kiosks in the study exemplify the maximized
utilization of retail kiosks in a department store setting. While other department stores in the
U.S. use kiosks with limited functions (i.e., price check-up), some company provides a
variety of services, such as product search by brands, sizes, and colours and transaction
services. For them, a kiosk actually can serve as a sales person conducting multiple tasks.
This illustrates the possibility of kiosks to not only other department stores, but also to
different retail sectors.

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