October 27, 2005

Virgin's Music Stores' Love Affair with Kiosk

By Evan Schuman, Ziff Davis Internet

The Virgin Entertainment Group is trying to push the envelope on kiosk use, with plans to use the multimedia machines not just to play video clips, audio samples and game demos but to identify customers and to handle payments.

"Our minds are racing where we can go with this," said Robert Fort, the CIO for the 17-store chain with some 1,600 employees and $225 million in annual revenue. "Virgin is definitely a company known for innovation and our demographic may indeed be much more willing to participate in all of this stuff."

The chain decided to start its kiosk experiment by putting 150 of the units into the chain's flagship store in New York City's Times Square: a 60,000-square-foot location that gets about 15,000 customer visitors on a typical day.

The store's IBM kiosks deliver their multimedia from a combination of three places: the kiosk's 80GB internal drive; about 2TB of samples on a server at a company datacenter served through a T1 connection; and multimedia Web sites (include Muze.com and Videodetective.com) streaming content to the kiosk.

Initially, music samples are just 30-second segments, but Virgin's Fort said his company is working with various record labels "so they may start to allow us to play full-length tracks."

For games, customers are just being shown screen shots, with sample games being played elsewhere in the store. But that is also under review to see if the kiosks can offer true game samples.

One twist to the system is a feature called Presence Censor, which uses light beams to identify when a new customer approaches or leaves the kiosk so that sessions can be tracked more accurately.

For now, though, the Presence Censor attracts customers because of its novelty. "We use it sort of for the Gee Whiz factor," Fort said.

One important goal of the kiosk project was to try and replicate the kind of online experience that Amazon.com delivers, with its recommended purchases and lists of other things purchased by people with the same product that is in the consumer's shopping cart.

Greg Buzek, president of the IHL Consulting Group and an avid retail observer, said that Virgin's approach makes perfect sense for them, but added that it's not especially unique.

"It's similar to what Starbucks has been doing, but for Starbucks, it's out of their core market. With Virgin, customers go there to be entertained so it fits really well," Buzek said. "For Virgin, it's a no-brainer. The nature of their store is similar to the Apple stores. They get people there for the entertainment value and touch that at the point of purchase, playing on emotion. It's similar to with good salesman in a clothing store, such as the Men's Wearhouse. They're pulling a tie and shirt to go with a suit. The next thing you know you're walking out after spending a zillion dollars."

Buzek argues that the technology that IBM sold to Virgin is not like typical backoffice IT technology. It's reason for being is less functional and more entertainment, although it certainly has elements of both.

"Other people out there are looking at these technologies where retailers are going as trying to create an experience for shoppers," Buzek said. "It's not just about them having a good service and a customer coming in and buying it. The Build-a-Bear Workshops, Bass Pro Shops and REI are places you go for the experience. Virgin Megastores are the same way. You don't go there because you just want to pick up one CD. You go there because you want to look around, soak it in and you know you may end up buying a few more things."