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Winter 2014
Kiosks on the Rise

An increase in the number of kiosks in the specialty retail industry gives retailers increased space to sell more products and a plethora of merchandising options.

Every year, Specialty Retail Report receives hundreds of entries, from around the world, for our annual visual merchandising recognition program, Visual Victories.  These entries represent a broad range of product categories and types of units—RMUs, kiosks, temporary stores. They give us a special vantage point to observe industry trends. As the submissions have flooded in over the last few weeks, our team has noticed an interesting trend—more kiosk entries than ever before. This increase mirrors a corresponding rise in kiosks in the field. On a recent mall tour in Miami, we were surprised by the almost overwhelming increase in kiosk units. I set out to talk to both retailers and mall developers to confirm the rise in kiosks’ popularity. These discussions revealed the exciting benefits—and some challenges—associated with designing an effective retail kiosk.

First, what is the difference between an RMU and a kiosk? Sharon Loeff, Specialty Retail Consultant at Shopworks, Inc. in Scottsdale, AZ, puts it this way: “An RMU (retail merchandising unit) is a piece of equipment that evolved from the standard 3’x6′ pushcart. It’s a freestanding unit. Today’s RMUs are normally supplied by the developer and they measure 4’x6’ 4’x7’ 5’x8’ and 5’x5’. A kiosk has traditionally been a unit with a larger footprint, made up of separate fixtures that are specific to the retail use. Historically kiosks have been worked from the interior but  designs have evolved into open walk-through configurations. The retailer is usually responsible for buying the kiosk unit.”

Arleen Dalton, Vice President of General Growth Properties explains kiosks’ increasing popularity: “We see retailers requesting larger units because this larger footprint is conducive to more sales, branding opportunities and diversity in the common area. From the developer perspective, it allows us to create a sense of ‘place’ for customers.” Dalton adds that GGP and kiosk retailers are working together to add special amenities for customers—such as seating areas and phone-charging stations—near the kiosks. These encourage customers to stay in the area a bit longer to take a break and then shop again.

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Biting into food

Dalton says that she has observed an uptick in food-based kiosks. “The advantages we see for retailers to sell from kiosks includes, adding unique uses such as food that would not work from an RMU,” she says. During her travels over the last six months she has seen many food concepts executed on kiosks: meatballs, cupcakes, frozen yogurt, smoothies, salads, sushi, popcorn, pretzels, and even a cronut (a cross between a croissant and a donut) kiosk.

Karen Larson, Director of Specialty Leasing for Urban Retail Properties, LLC says she too has seen many more food kiosks popping up at Urban Retail Property’s centers. “We have a lot of permanent retailers coming out of food courts into the common areas on kiosks. Kiosks offer the advantage of 360-degree visual for customers walking by,” Larson says.

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Additional space

Kiosks also provide a larger footprint for retailers, which enable them to increase sales. Sal Babbino, co-owner of NYS Collections says, “As a company, we are evolving from RMUs into more custom kiosks.” He explains that a kiosk helps sell three different price points of sunglasses more effectively while maintaining an upscale look. He adds that kiosks lend more options for signage and to have a distinct look that helps the business stand out.

Dalton points out that Cellairis and NYS Collection were the first two RMU retailers she saw upgrade from RMUs to kiosks. Now, she says many other retailers are following suit to open kiosks in order to gain more merchandisable space. Some of the product categories making the transition include hair straighteners, health and beauty-based products, Dead Sea products, manicure service providers and wireless cellphone accessories.

Branding opportunities

Dalton says that kiosks also offer larger retailers and brands the opportunity to have a strong marketing presence and to sell merchandise. “Retailers and big companies such as Keds, L.L.Bean, Microsoft and Sony have opened kiosks in GGP properties over the last year,” Dalton says. “We have tapped into anchor stores to open kiosks. Macy’s has come out on a kiosk for the holiday season,” Larson says.

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Kiosk design evolution

Larson says that one of the elements she loves most about kiosks is that they stand out more because they are visually appealing and unique. Their designs also give consumers a sense of permanency.

“RMU retailers love to add products. Getting them onto a kiosk gives more visual impact for the consumer and gives the retailers more space to tell their story,” Larson says.

However, Loeff expressed concern over kiosk designs that do not take consumer-buying behavior into account. “The customer loves service when shopping from a store, not necessarily from an RMU or kiosk. People have a ‘personal bubble’ and they don’t like their personal space invaded,” Loeff says referring to kiosks with walk-through options.

Loeff has seen kiosk sales diminish as much as 40 percent when customers have to walk through the kiosk to shop it. “The trend to create a walk-through kiosk is a lose-lose proposition for the retailer,” she says, “The general population will not walk through it, however, the majority of mall developers are demanding this type of design. It is hurting retailers and ultimately hurting developers because they benefit from retailers’ higher sales.”

To overcome customer apprehension, Loeff suggests that effective kiosk merchandising have what she calls, “a hook on the outside.”

“For example, the Calendar Club kiosk works because their employees don’t have to have a ‘hard sell.’ They have enough inventory on the outside to give customers a chance to browse and to make a buying decision on their own before committing to walking inside the kiosk,” Loeff points out. She worries that developers tend to approve kiosk design before products are added. She suggests that kiosks be designed and built so that consumers can shop the products without feeling intimidated. “An empty kiosk looks beautiful, but it can look tragic after the kiosk has been merchandised,” Loeff says.

According to Loeff, two additional mistakes that retailers and developers make is placing products near the floor of the kiosk and upgrading retailers from an RMU to a kiosk without enough inventory. “That is when the larger kiosk space is no longer enhancing the common area,” she says.

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Cost considerations

Loeff also expresses concern about the cost of building a custom kiosk unit. “Retailers come to me and say they can’t spend more than $10,000 to $12,000 for a unit. That price tag limits all aspects of the kiosk design. It limits the manufacturer from designing a really great unit for the retailer,” she says. Loeff does add that multiple kiosk units make the process more efficient and less expensive.

“It’s important to note that developers are requiring retailers to use higher end materials which is also impacting price – those materials include solid surface counter-tops and better lighting (LED). The average kiosk unit we’re designing is in the range of $18,000-$30,000,” Loeff says.

She points out that it is tough for retailers to commit to building an expensive kiosk when they are not assured of more than a one-year license agreement. Loeff even feels that three years may not be enough and the retailer is never guaranteed that term.

However, Dalton, says GGP is responding to the needs of kiosk retailers, “We are offering kiosk tenants slightly longer leases to give them an opportunity to make the capital investment on the units.” Rent numbers were not shared with Specialty Retail Report.

“Kiosks are the natural evolution of the RMU market,” Larson says, predicting that we will see a lot more kiosks popping up in the future.

Patricia Norins

Patricia Norins serves as VP of Specialty Retail & Publications at the International Council of Shopping Centers (ICSC). Considered the authority on specialty retail, she has been tracking the industry for the past thirty years. Norins is Publisher of Specialty Retail Report, the voice of the specialty retail industry (carts, kiosks and pop-up stores). SRR has a readership of more than 75,000 each quarter.
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