The World's Largest Resource for the Cart, Kiosk, and Temporary Retail Industry

Summer 2006 Ask the Kiosk Expert

Do you have any special advice on how to start a cart business in Las Vegas, targeting the 40 million annual tourists with a revolutionary, must-have souvenir of their trip to Vegas? —Vikas J., Las Vegas, NV

Looking for the hot, new product—or the revolutionary, must-have souvenir—is a lot like trying to catch lightning in a bottle. Instead, why not choose a product that is already a proven sales-generator?

There is a learning curve associated with starting a specialty retail business. Why not make the “safe bet” by getting your feet wet selling a product that has proven successful in the past? Once you have a successful specialty retail business, and a keen understanding of your customer base, when and if you come across that revolutionary, must-have souvenir, you’ll be much better prepared to roll the dice and give it a shot!

Keep in mind that your product doesn’t have to appeal to every consumer. You just need to close the sale with a small percentage of folks who visit your location in order to make a tidy profit. Las Vegas is a great market for specialty retailers. The city has solid year-round traffic and shoppers who have a “buy-it-now” mentality. That’s a winning combination!

What price point for merchandise produces the most profit for a kiosk operator? —Jerry R., Plano, TX

Most impulse items on carts and kiosks are sold in the $20 to $30 range. However, that is only a rough guideline. There are many profitable specialty retailers who sell products above that range, and some equally successful retailers who sell below that range. One top-selling product in the specialty retail industry last holiday season was a $79.95 massager. The massager was sold by demonstration—a five-minute presentation that allowed customers to try the product before buying.

The defining characteristic of a product that produces the most profit (aside from the underlying cost of goods) is not the price point, but the nature of the product itself, specifically the perceived value in the mind of the consumer. When products are demonstrated, salespeople are able to influence perceptions of value and therefore greatly influence sales. Plus, because staff can control how many presentations are made, they can control sales much more than is possible with non-demonstration products.

According to one regional mall leasing rep who manages several malls, sales of demonstration products last holiday were two to three times higher than sales of non-demonstration products in those malls.

Because demonstration products require an active approach to selling, they might not be right for every aspiring specialty retailer. But for the right entrepreneur, demonstration products are unquestionably the products that have the potential to produce the most profit.

I need to write a business plan and am having difficulty figuring realistic projected sales. Where can I find information on mall cart sales to help me with my projections? —Lisa T., Springfield, IL

Projecting sales with a reasonable degree of certainty is one of the great challenges of opening a new specialty retail business.

If you plan to buy a start-up package from a company that offers a complete turnkey setup, ask for the sales histories of other specialty retailers with similar operations. Depending on the turnkey, the offering company might be able to provide you with figures from retailers in similar venues (similar-sized malls, for example, or in a certain geographic area that might mirror where you plan to locate). Ask for operator references and make those calls.

If you are starting fresh with your own concept, check with your product suppliers to see if they sell to other cart or kiosk operators. If so, get references for other operators and call them. Also be on the lookout for other specialty retailers who sell similar products, and contact the business owners to ask about their sales histories. If you plan to operate in a mall or other high-traffic retail venue, ask the leasing manager if they know of other carts or kiosks with similar product lines, and make those calls.

Last but not least, keep in mind that when starting up with a new concept, part of what you are doing is testing the waters. You may have to proceed without having projections set in stone. But that doesn’t mean you need to start up without a business plan. You can still make assumptions about the costs for employees, rent and other routine start-up expenses. Work backwards to determine the sales levels you will need to break even, to turn a moderate profit, and to make a healthy profit.

Once you are up-and-running, at the end of each month analyze sales and expenses to see how they measure up against your initial projections. If you aren’t at least breaking even, re-evaluate your concept. If you are making a modest profit, tweak your concept. And of course, if you’re making a healthy profit right away, keep doing what you’re doing!

Where can I get inexpensive insurance for my kiosk? —John A., Cambridge, MA

There are two companies that provide insurance specifically for cart- and kiosk-based retailers: Shahinian Insurance, based in Tustin, CA and Arizona Central Insurance, based in Tucson, AZ. Both companies write policies in every state.

There are three reasons why you might consider purchasing your insurance from one of these companies:

1. The liability limits required by most malls are generally higher than standard coverage provided by most small-business policies, so a typical insurance provider will have to write a special-circumstances policy, and you’ll end up paying a lot more for that coverage. Shahinian and Arizona Central, on the other hand, write policies that are specially designed for cart- and kiosk-based retailers, and meet the liability limits required by most malls, so you’ll usually save money.

2. These insurers routinely write short-term policies for seasonal retailers. Both offer three-month policies geared to the holiday retailer and one-month policies for retailers who just want to test the waters.

3. Both companies will relay information regarding your policy to the mall leasing manager, so you don’t have to handle that yourself. The last thing you need to worry about just before opening is faxing paperwork back and forth. You want to focus your attention on the task of running your new business, and let the insurance companies deal with the paperwork.

Specialty retail is an exciting and dynamic industry that can yield substantial financial rewards—with the right planning. Good luck to everyone on the new business ventures!

Brady Flower

Brady Flower has spent the last ten years in the mall cart industry. He started and ran his first Comfort Zone cart in a suburb of Minneapolis, Minnesota in the mid-1990's selling reusable heat and massagers.Flower has operated sold different products successfully through carts in the mall on a seasonal and year round basis.Flower is a highly regarded speaker in the Specialty Retail Industry, both in the United States and Internationally. Since 2002 has taught the ONLY ongoing public seminar, "Start and Run Your Own Mall Cart or Kiosk

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