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Shopping Centers Today -> May 2003
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RETAILERS, MALLS TURN TO NONCORE MERCHANDISE
BY IAN RITTER
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| Retailers want to increase their offerings. If a machine will sell them, all the better. |
Self-service kiosks, from photo machines to postage stamp dispensers, are now a fixture in many malls and may become more common in stores too, as a tough economy and sluggish sales push retailers to try new things.
Malls are making between $1,000 and $3,000 per month on such machines, says Kathy Steude, a Cocoa, Fla.-based consultant to vending companies. And retailers want a bit of the action, notes Howard Davidowitz, chairman of New York City-based retail consulting firm Davidowitz & Associates.
“With the pressure on retail in a terrible economy, everyone is going to do anything to raise productivity,” he said. “Everyone’s looking for some type of add-on.”
Self-service kiosks are especially attractive, because they are a revenue source that does not incur labor costs, he said. The stores interested in these machines range from the smallest newsstand to the largest retailer in the world. The latter already uses many self-service machines that sell candy, soda and toys.
“When you walk into a Wal-Mart, it’s the first thing that you see,” Davidowitz said.
Rod Witmond says he would love to ink a deal with Wal-Mart. Witmond, a vice president in charge of online technology at Hayward, Calif.-based Neopost, says he will start pitching his self-service postage stamp dispensers to retailers and malls this year. There are now seven Neopost machines in operation in corporate offices in Southern California and Chicago, he says.
Consumers using the Neopost kiosk don’t have to deal with the inconvenience of getting back handfuls of dollar coins as change, the way they do at the cash-only vending machines found in the post office, Witmond says. And though some retailers sell postage on consignment, business owners often find it inconvenient and unrewarding, he adds.
“They aren’t having a great time doing it, because they’re not making money,” said Witmond. “It’s a pain.”
Neopost will explore renting or selling its machines. “The malls and the retail stores are clearly the next avenue I’m looking at,” said Witmond. “It’s an added service on-site, and it’s right there where people are going every day.”
Many retailers and landlords are looking for new self-serve kiosk ideas to put in their spaces, said Dan DiCillo, director of new business development at Developers Diversified Realty.
“These will proliferate everywhere,” DiCillo said. “A landlord or tenant is trying to create noncontroversial revenue-generating ideas.”
The Mills Corp. is among those focusing on self-service machines in its centers. While it is reducing the actual number, it is increasing the quality of the mix.
“We’re trying to make the common area look better,” said Deborah Georgetti-Piro, group vice president of Main Street retail at Mills. “We intend to do less, but get better operators.”
One operator that Georgetti-Piro says she favors is Hudson, N.H.-based Fantasy Entertainment, which makes old-time photo booths look archaic. One of the company’s booths, called Portrait Studio, takes a photograph and then simulates an artistic rendering done in pencil, charcoal, watercolors or oil paint. Another model, called Foto Fantasy, offers a wide variety of dramatic backdrops to its photos. A booth in Washington, D.C., provides a digital image of the White House or the Lincoln Memorial in the background, for example.
Fantasy Entertainment says it has booths in 1,500 U.S. malls. The company leases space from landlords and shares the machine revenues with them, according to Kathy Cooney, Fantasy Entertainment’s marketing manager. The company also places the machines at theme parks and other tourist destinations, but mall settings are especially attractive because that is where its target customers congregate, Cooney says.
“The products tend to appeal to teen and tween girls, and the malls are a popular destination for the audience,” said Cooney. “The malls are clearly a mainstay for us.”
Meanwhile, Sony Electronics is working to get more of its Picture Station digital photography printing machines into malls and stores. Currently, the company has about 1,000 units in stores and malls, including The Forum Shops at Caesars Palace, Las Vegas; and Mall of America, Bloomington, Minn. Early in March Sony Electronics, based in Park Ridge, N.J., signed a deal to put 800 units in Kinko’s stores across the country.
“By far, retail was our first choice” for kiosk placement, said Deborah Szajngarten, a Sony Electronics spokeswoman. “It’s a picture destination.”
The Sony Picture Stations enable customers to download pictures from a digital camera and then print them in a variety of formats. Businesses pay $11,000 for a standard model and $6,000 for a desktop version. The buyer of a Picture Station pays 32 cents per digital print to Sony and sets its own price to charge consumers for the machine’s use.
The stations, Szajngarten says, are a destination in themselves for customers going to stores. “Our customers are reporting very high volumes, as many as 300 prints per day,” she said.
Sony says it has not yet signed a deal with a retail landlord to place kiosks in common areas of malls, but it is in discussions to do so, according to Szajngarten. “If people would normally go to a mall for a photo outlet, they would go there for a digital output,” she said.
Such kiosks are important revenue generators for landlords. Georgetti-Piro says landlords collect between 20 and 50 percent of a machine’s revenue, depending on the product.
Steude, the Florida-based consultant to vending companies, says the key to making self-serve kiosks generate revenue is visibility. “If it’s placed correctly, it will make a lot more money,” she said.
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