Kmart tests electronic coupon kiosk, other new technologies - K Mart Corp - Operations

Discount Store News, June 17, 1991

Kmart Tests Electronic Coupon Kiosk, Other New Technologies

TROY, Mich. - Kmart is testing an automated electronic couponing kiosk in nine stores through which shoppers can receive coupons for as many as 24 different products.

The test marks the discounter's pioneering use of TSS Ltd.'s interactive terminals in the full-line general merchandise store arena. Coupon dispensing programs using devices from a number of technology vendors are common in the supermarket and drug store fields.

Kmart's "Right Now Coupon" program is being piloted in eight Detroit area stores and its experimental technology store in Sayville, N.Y., with expansion of the test to other stores under study, a spokeswoman said. The discounter has already completed the first eight-week test cycle, but declined to report results.

(Ralphs Grocery, which has been using the terminals under the Ralphs Savings Spot logo in its 24 San Diego area stores, reported that participating "manufacturers are realizing redemption rates averaging 40%," Kevin Davis, vice president of marketing for the supermarket chain, said.)

Kmart's kiosks are inside the store's entrance, so customers can select the specific coupons they want prior to shopping. The coupons can only be redeemed in the issuing store, with all but one offering in the first eight-week cycle expiring June 12. A cigarette coupon for a three-pack purchase expires Sept. 30.

TSS Ltd.'s interactive terminal uses a photo touch key-pad showing the 24 items. A shopper touches a picture of the desired product and receives a computer-printed coupon within three seconds.

Two other types of couponing programs are also being used by supermarkets and drug stores. One is a menu driven interactive terminal in which shoppers first select a merchandise category and then pick a specific product. These kiosks also include a video screen that shows ads for the available coupons.

The other is a counter-couponing program. This involves the electronic register printing a coupon from a competitor of the item a customer has purchased. The aim is to induce the shopper to try the competing product.

Kmart's in-store coupon program is part of a full-service advertising and promotional package that the discounter developed for the participating manufacturers. Products include goods from traditional supermarket and drug store vendors like Coca-Cola (20 cents off coupon), Cheer detergent (50 cents off), Maybelline makeup (50 cents off) and Kodak Gold 200 film ($1 off for a three-pack), to discount store items like Dutch Boy gallon paint ($2 off), AT&T #210 Trimline phone ($5 off) and Kmart's private label Beverly Hills Blues athletic footwear ($5 off).

The Detroit stores are also testing a tie-in coupon feature as part of the program. The terminal prints the desired coupon and, where appropriate, another coupon for a related product - a low calorie sweetener as the bonus to a diet product coupon.

Kmart signed up the participating manufacturers, with the cost of the coupon savings coming from "corporate funds and co-op funds," the spokeswoman said. TSS Ltd.'s income comes from renting the terminals at an undisclosed price.

Kmart's test doesn't involve other terminal technology. This includes a target marketing feature that requires the shopper to enter a phone number - later used to identify the customer - prior to receiving a coupon. The information is used to track a customer's potential buying pattern. A shopper interested in purchasing disposable diapers is likely to have an infant and be a candidate for promotions for baby clothing, car seats and related products.

A magnetic stripe reader can be added to the kiosk as part of a frequent shopper program. The magnetic reader would trigger the printing of coupons for participants in the frequent shopper program.

PHOTO : Customers can choose up to 24 coupons with Kmart's automated electronic couponing kiosk which is in nine of its stores.