Movie Kiosks Boost Inside Sales for Convenience Store Chain

NORTH VANCOUVER, BC, September 26, 2012 (Press-News.org) Movie and video game self-service kiosks are the next big profit center for c-stores owners, not simply because of revenue generated by disc rentals. Incremental sales from both the initial visit and the guaranteed return trip, as well as the potential for obvious tie-in sales from snack food, beverages, and quick meal options such as frozen pizza, make kiosks an attractive option, especially in light of recent research which shows that discs are consumers' preferred choice when renting movies or games.

Blu-ray and DVD rentals accounted for 62 percent of U.S. movie rental orders in the first half of 2012, while video streaming made up 38 percent, according to market research company NPD Group's VideoWatch VOD report, released August 2012. "Kiosks... are generating strong user satisfaction ratings, including future rental intent, price, and value, which is reflected in market-share gains," said Russ Crupnick, senior vice president of industry analysis for the NPD Group.

Expansion continues in the movie rental kiosk industry with the largest player, Redbox, adding 2,400 kiosks in first six months of this year for a total of 36,000 kiosks, and also acquiring competitor Blockbuster Express and expanding into Canada.

Another company, the privately held DVDNow Kiosks, has recently expanded into Mexico, Costa Rica, the Dominican Republic, as well as supplying Best Buy Canada with DVD kiosks that are being placed in 7-Eleven's Canadian stores.

While Coinstar-owned Redbox tends to favor big box retailers and large-chain c-stores as hosts for their kiosks, another industry player - DVDNow Kiosks - sells kiosks as a turn-key operation to any size c-store chain and even single-store owners. This gives c-stores access to 100 percent of the revenue generated by movie and game rentals and sales, as well as from advertising and cross-promotion.

"We liked what Redbox and Blockbuster had to say, but we would only have received a modest percentage of the movie rental revenue, and they wanted to place their kiosks outside our stores," said Joe James, the Director of Operations for E-Z Shop, a 28-c-store/gas station chain in South Carolina. Incurring inside sales is challenging if customers don't come into the store.

Instead, E-Z Shop purchased a kiosk outright from DVDNow Kiosks, opting to keep all of the movie rental and other revenue in-house. E-Z Shop prices its movies at $1.25 for the first night, and $1.99 for each additional night. The total employee time required to maintain movie inventory, monitor rentals and revenue, and oversee Internet operations using custom-designed software provided by DVDNow is less than three hours a week.

"In a year and nearly three months, the machine paid for itself, and that's when we ordered four more," James said, emphasizing that if the calculation had included revenue from incremental sales, new and repeat customer visits and marketing tie-ins, E-Z Shop would have recovered its investment actually much sooner.

E-Z Shop's first DVDNow kiosk sits as a focal point near the window of its c-store in Bamberg, South Carolina. "Everything displayed around the kiosk is designed to be very tempting - the popcorn, the theatre candy, the chips," said James. The numbers show people are succumbing to temptation.

"We've seen a spike in inside sales over last year in our store with the kiosk," he said.

Getting maximum traction from the allure of new release movies and games is a key strategy for E-Z Shop. Marquees on the gas station properties at the side of the highway advertise new movie release dates, and the availability of movies. Movie posters in the large glass windows of the stores remind customers again that they could easily go inside and pick up the latest hot movies, which are available 28 days earlier from DVDNow kiosks than from Redbox.

"Young people will stop their car, get out and stare at the poster in the window for a few seconds, and more often than not they'll come inside and rent a movie," observed James.

Inside E-Z Shop, the presence of the kiosks encourages people to linger. Customers can see the movies displayed in their original packaging through the front glass panel of the kiosk (unlike the Redbox closed-box design). A 32-inch flat-panel screen plays movie trailers on top of the kiosk, and can also be used for advertising. Panels on the side of the machine advertise movie specials like $0.99 movies on Tuesdays and store promotions like two Snickers for $1.

"The kiosks make people slow down and even if they hadn't come in to rent a movie, they often leave with one. When they come back to return the movie, they don't just drop it off and walk out of the store. We're getting incremental sales, especially when they have children with them," said James.

An E-Z Shop membership movie club, provided through DVDNow, helps cement the c-store's relationship with its customers, who get access to special promos and reward points toward free movie rentals for each movie they rent Software included with the DVDNow kiosks enables E-Z Shop employees to monitor the movie customer base, distribute coupons and other preferential membership perks, and even let customers know based on their previous rental preferences when a new release they might like has arrived.

When a new kiosk is introduced into a store, James sets up a popcorn stand and gives free popcorn and a free night movie rental coupon to everyone who joins the E-Z Shop movie club.

E-Z Shop also gives away one-night free rental coupons at the counter, knowing full well that the average customer keeps movies three nights.

One of the stores also has a Domino's Pizza, so customers who buy a large pizza are rewarded with a free movie rental coupon for a night. When the new release movies are no longer in demand, they are shrink-wrapped and sold for $6.99 in a bin. They always sell out.

"The beauty of our self-serve kiosks is that customers can rent and return movies without requiring any assistance from store personnel," said Scott McInnes, the Founder and CEO of DVDNow Kiosks. "And our DVD kiosks are designed to maximize cross-promotions and additional revenue streams above and beyond movie rentals ‒ opportunities for potential earnings that Redbox leaves on the table."

C-stores can insert coupons or advertising inside the original movie cases, giving customers another reason to return and make a purchase. They can also run advertisements and sell advertising on their LCD screens. James plans to take further advantage of these options, but he's already impressed with his movie-rental revenue, and the customer draw of the kiosks.

"The movie customers that return week-after-week are pretty loyal," said James. "And we do gain new customers every month."

Is he planning to add to his five kiosks with additional kiosks in his other stores? Absolutely, and in short order.

DVDNow Kiosks, Inc. allows entrepreneurs to get started it the DVD rental kiosk industry. For more information on DVDNow please call (877) 849-4272.

Website: http://www.dvdnowkiosks.com