STORES Magazine - December 2008 - (Page 70)

NUTS AND BOLTS / KIOSKS Maximizing the “Fourth Wall” Third-party kiosks, vending machines drive profit for U-Pak-It BY KAREN M. KROLL hose vending machines and gift card racks at the front of many stores can be a source of revenue disproportionate to the space they consume. That’s particularly true of convenience stores, where space is at a premium. T U-Pak-It, a chain of 40 convenience stores in Louisiana, found that it was able to squeeze extra revenue and profits from a number of front-of-the-store items that keep customers coming back. Key to this accomplishment was UPak-It’s partnership with Coinstar, a Bellevue, Wash.-based provider of product lines that build out what the company calls “retailers’ fourth wall.” Coinstar offers kiosks that can count coins, as well as activate or reload debit and phone cards; vending machines for DVD rentals; money transfer systems; gumball machines and kiddy rides; and self-serve coffee kiosks, among others. It also offers services aimed at maximizing the revenues these products generate. “The array of products helps build revenue and generate better profit,” says Brad Lemoine, marketing director for Monroe, La.-based U-Pak-It. The company currently offers phone cards, DVDs and gift cards through Coinstar, and profits have increased since the company began featuring these services. Coinstar offers retailers the opportunity to sell pre-paid debit cards, such as the Green Dot MasterCard. These enable consumers who don’t have credit cards to obtain debit cards for shopping (including online purchases) for an initial fee of $5.95 to $9.95. The target market for these products is the estimated 80 million individuals in the United States without a traditional bank account. Kids are another market, 70 STORES / DECEMBER 2008 U-PAK-IT PROFITS Up 30% as parents can provide the cards as a way to learn about credit. “It provides great flexibility for consumers,” says Mike Skinner, general manager of epayment services with Coinstar. Retailers also benefit, earning a commission on each debit card purchased (the amount varies by product, as well as the size of the retailer). Coinstar also offers a range of gift cards from companies such as Borders and T.G.I. Friday’s. As Louisiana is known as the “sportsman’s paradise,” gift cards for Bass Pro Shops are particularly popular with U-Pak-It customers. Retailers can choose from a range of countertop and floor displays, depending on the space they have available. Equally important, the retailer does not have to invest in the inventory. Coinstar manages the relationship with the retailers behind the gift cards, and bills the convenience store only once the cards are sold to the end consumer. It also takes responsibility for the displays and merchandising. This lets retailers get involved in the program quickly, inexpensively and easily. “There is no risk of loss since there is no investment until the sale has been made,” Lemoine says. Uses existing POS system Coinstar also offers pre-paid long distance and wireless products from carriers like Alltel, T-Mobile, Verizon and Virgin. Once customers purchase minutes from a retailer, they tend to return often to replenish their cards, Lemoine says. Coinstar products can be integrated within a retailer’s existing POS system. That means no additional equipment is needed to process the transactions and activate the products, which is key for retailers with multiple checkout lanes. DVD Express is another option geared to the convenience store market. Like Redbox (another unit of Coinstar), DVD Express is a vending machine from which consumers can rent movies for as little as $1 per night. A customer can take a movie from the WWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of STORES Magazine - December 2008

STORES Magazine - December 2008 Contents Executive Editor's Page President's Page Wrap Rage Unraveled What Shoppers Think Courting a Comeback 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Cover Story: Navigating the Road Ahead Website Strategy Concept2Watch Online Customer Service International Marketing Green Retailing Online Merchandising Signage Operations Online Strategies Pricing Strategy Kiosks RFID Human Resources Loeb Retail Letter ARTS Update Point of View NRF News Retail Crossword Retail Industry Calendar Last Laugh

STORES Magazine - December 2008

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