Kiosks Kash In
By George Anderson
Those temporary kiosks and carts you see set up in malls are doing a brisk business, with annual sales of around $10 billion, reports The Associated Press.
The reasons behind the success are varied, with some appealing to shoppers’ sense of nostalgia (the pushcarts of an imagined romantic bygone era) and others offering unique items not sold in malls’ specialty and department stores.
Still others open kiosk businesses as extension of an established retailer or manufacturer brand.
Hickory Farms, for example, expands from one year-round store to 542 kiosks and 176 store locations for the holiday season.
Despair.com is bringing its unique line of “glass is half-empty” posters, calendars and other goods to malls for the first time this year. The e-tailer has kiosks set up in malls in Dallas and San Antonio.
Co-founder Lawrence Kersten said, “We also know there are people who were finding our product in a mall that weren’t finding us online.”
Even Dell Inc. has hopped on the kiosk cart. The personal computer manufacturer first tested kiosks in 2001. This year, it expanded its kiosk program to 145 locations in 20 states.
Marshal Cohen, senior industry analyst at NPD Group, said the growth of the kiosk business is changing the dynamics of malls.
“Kiosks are a huge opportunity for the mall, the entrepreneur and the individual consumer. It removes one of biggest barriers and that’s the entrance and walls to the stores,” he said.
Moderator’s Comment: How big is the kiosk opportunity for established retailers who are not normally found in malls? Are there types or specific retailers
you believe would benefit from opening holiday kiosks? What are the keys to success with holiday or other temporary kiosks? –
George Anderson – Moderator
Many mall developers have created departments devoted solely to seeking out kiosk retailers who are given kiosk opportunities as a trial before committing to permanent space (protecting both parties). Malls also know that they must differentiate and get away from the sea of sameness that plagues their retail tenants – kiosk retailing is a great way to achieve that goal. Finally, kiosks are a real win for seasonal merchandise that can’t support a year-round business.
Shoppers who are already in the mall find these kiosk merchants interesting and quick and easy to survey for unique items and special offerings. I doubt if anyone comes to the malls because of the kiosk merchandising. And it’s true many kiosk attendants are on the cell phone, reading a book, off somewhere, etc. That works both ways: you can shop without interruption. That’s a plus. But if you want to buy, that’s an irritation. The quality of service, thus, is an unstable factor with kiosk merchandising.
The malls, anxious to rent out every inch of space — I’m surprise the entrance way and parking lots aren’t rented out too by now — are starting to over-clutter the malls. Eventually this could dampen the appeal of kiosks … but the jury is still out.
As a mall retailer with primarily inline stores, we experimented this year with two carts in a regional mall. We committed to 4 months, beginning in October. The first two months were terrible, despite our location in the main traffic corridor. Lots of lookers, few buyers. Only now that December has arrived, have we begun having decent sales, but not enough to compensate for the previous two months rent and salaries. I don’t think our experience is unique. I’ve talked with other cart and kiosk operators who are also complaining of extremely low sales. I believe malls often use carts and kiosks as revenue enhancers without telling the prospective retailer that they will be lucky if they make a profit. My advice to potential cart renters: don’t set up until just before Thanksgiving, and close up right after Christmas. Don’t be pressured by leasing agents who try to lock you in to 3 or more months. They are more concerned with their profits than whether or not you lose your shirt in the deal.
The best (among good) mall kiosk opportunities are for retailers who can pleasantly surprise shoppers. Retailers which are seasonal or never found in a storefront. Easter Bunny Hutch gets a kiosk at the appropriate time. Tupperware gets a kiosk to expand their “party sales” format. Fathead Wall Posters gets a kiosk to supplement its mail-order-only availability. Many, many products that depend on infomercials for sales are trying kiosks. Food manufacturers are using kiosks year-round for sampling purposes. It’s a huge opportunity. (Full disclosure, our Select Marketing LLC specializes in these types of applications.)
Kiosks conjure up excitement, create convenience, and provide surprise. There are no negatives. The thrill of open-air bazaars has survived for thousands of years for a reason. With proper guidelines, kiosks need not turn malls into Bourbon Street T-Shirt gauntlets.
Many product and service providers are also using other great kiosk locations, such as inside supermarkets and mass merchants. While we provide retailers with kiosks for car rentals, full-service post offices, cellphone purchasing, and Subway Sandwich Shops, the opportunities are endless.
We also need to expand our definition of kiosks. Are the Costco sampling stations kiosks? What about the demo stations at home shows? (We say “yes.”)
The key, of course, is traffic. Malls, supermarkets, and mass merchants are in the business of selling consumer foot traffic to manufacturers. If they can also sell that foot traffic to kiosk vendors — and those kiosk vendors create extra traffic for the manufacturers — everybody wins.
I have seen retailers successfully use a holiday kiosk strategy. They have one or two stores in a market and then expand to multiple locations during the busy holiday. It can be a very useful strategy to be in a center that may not be able to support a year-round location but can be profitable during the holidays.
I have also seen some retailers struggle by doing kiosk. Interesting it wasn’t the strategy itself that failed but rather the retailer’s ability to execute it. Adding kiosk to an existing marketing can cause local management to lose focus and stretch them too thin. Retailers who add a kiosk strategy must make sure they have the management team and processes in place to execute appropriately.
They key to success in a kiosk isn’t much different from a store. The right mix presented well with an attentive staff. Sounds easy huh? The advantage for year round retailers is that it isn’t.
Yes, there is incremental business for malls with kiosks. There is also a major downside in that they clutter the walkways, and can give malls the flavor of a flea market, which can be positive, negative, or both. Many large chain supermarkets, discounters, and department stores have found that cluttering up their aisles with too many displays and too much POP resulted in a short term gain, but long term pain, and subsequently cut back. They also make it harder for malls to control the look and feel of their shopping environments. Remember NYC of years ago when there were carts selling all types of stuff everywhere? It was a mess. Then, NYC began licensing these vendors and cleaned the problem up, to a degree.
Malls need to be careful that they don’t just take the easy money and accelerate a downward spiral.
I’ve seen reports on television as well about how well kiosks are doing, but I think the skyrocketing dollar figure is more a barometer of their sheer numbers vs. a few years ago, than an indication that this is easy money. Will non-mall retailers profit from adding kiosks? Only if their target demographic matches the mall demographic, and then it’s no guarantee. When malls are busy, I’ve seen people briefly shop “in the aisle” at a kiosk and get bumped by passers-by, and then move along because it’s uncomfortable blocking traffic. That’s what Paco Underhill calls “the butt brush factor.” This could work for not just holidays, but seasonal activities like fishing and BBQ season. But I’d make rules for the people who staff these things: No wandering off where nobody can find you; no hanging on the cell phone with your pals all day; and no music headphones and chilling out while the shoppers walk by.
I don’t have specific data on kiosks, but in general, retailers adopt either of two merchandising strategies: passive or active. The passive retailer carefully selects, stocks and displays his merchandise, and expects the shopper who may be interested, to come to the merchandise to make their purchase. This is the most common approach, and can be referred to as “getting Mohammed to the mountain.”
The alternative is to study where the shoppers are and to actively merchandise by taking the products to them. This is exactly what is happening with the kiosk – “taking the mountain to Mohammed.” It’s really a no-brainer.
Carry the same concept inside your store and you have become customer centric, rather than just pretending that you are. :>)
The great power of the kiosks is often based on the compensation system and the gross margins of the merchandise. In other words, high margin items are sold by commission-based staff. The cart owner can afford the commissions because of the margin potential, and the staff is MOTIVATED. Most in-store mall salespeople don’t enjoy commission-dominant compensation, and their behavior shows it. Furthermore, it’s easy for the cart owner to track the sales per hour of each employee, so unproductive employees are quickly replaced.
The opportunity for established retailers is significant IF the kiosk features the right merchandise, sold the right way.
In December of 1999 my company opened 12 kiosks in malls in the greater Detroit metro area. These “Yo-Yo Universe” kiosks supported an intense yo-yo promotion designed by my company, The Mackinaw Kite Co.
Briefly, we had 8 full time yo-yo professionals doing 3 yo-yo programs a day in metro area schools, had a free “Pro-Spinners Club” that was part of a broader strategy to not only sell yo-yos, but to develop serious yo-yo players.
We had several $12,000 days from individual carts and the third week of that year the combined sales of all the kiosks was over $275,000. It was a beautiful thing (-:
Which leads back to the question, and my response. Although an established retailer can do well with a kiosk they must sell something unique, interesting and preferably demonstratable, it must be displayed properly and having a proactive sales staff helps a lot.
The “build it and they will come” mentality will only end up with significant financial losses.