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Grocers Gone Kiosk

25 Apr, 2008 By: Erik Gruenwedel

A recent evening at a Ralphs supermarket in Foothill Ranch, Calif., found a group of shoppers milling around a movie rental kiosk from The New Release despite the presence of a Blockbuster across the parking lot.

“You and mom will really like it,” a girl told her dad as she pointed to Walt Disney Studios' Enchanted.

The father later commented that it was convenience and the $1 daily rental fee that persuaded him try the kiosk rather than walk across the lot.

At Albertson's, one of the few national supermarket chains that offered movie rentals, shelf space has given way to Redbox kiosks, according to Leah Rodriguez, public affairs manager for Southern California Albertson's.

The trend is the same at SuperValu Inc., the Minneapolis-based parent of Albertson's, which also owns Bristol Farms, Lucky, Bigg's, Farm Fresh, Acme, Scott's, Shaw's and Shoppers.

Rodriguez said the majority of stores were transitioning to kiosks while separately maintaining point-of-purchase (POP) displays and endcaps for sellthrough titles.

She said rental traffic had dropped over the years, making the transition to third-party kiosks an economic necessity.

“If we do have videos in stores, they're for sale,” Rodriguez said.

Rental kiosks are expected to represent 11% of the market by 2010, up from 4% in 2007, according to The Convergence Group, a Toronto-based research firm.

The Foothill Ranch Ralphs also maintained a sellthrough presence — in the frozen food aisle — with POP displays offering Warner Home Video and Sony Pictures Home Entertainment catalog fare from $9.99. Checkout stands featured new releases Juno from 20th Century Fox Home Entertainment and Cloverfield from Paramount Home Entertainment at $19.99 each.

The chain is owned by The Kroger Co., the Cincinnati-based parent of nearly 30 supermarkets and convenience stores, including Pay Less, Food 4 Less, King Soopers and Foods Co.

Jack Plunkett, CEO of Plunkett Research Ltd., in Houston, said grocery chains have exited the rental market as the industry evolved from mom-and-pop operations to national chains such as Blockbuster and Netflix that stressed convenience and selection.

“Supermarkets are using the space for better purposes, like retail banking centers they rent out to Wells Fargo and others,” Plunkett said.

He said the mini banks invite non-grocery foot traffic and give regular customers another reason to come to the store.

“Endcaps still seem to work for selling — not renting — DVDs as impulse items,” Plunkett said.

Food Lion's high-tech Bloom supermarket chain, which jump-started the kiosk experience in 2006 when it revamped 40 Food Lion stores in the Washington, D.C., area with proprietary DVD kiosks, appears to have switched course.

Food Lions stores offer only DVD sales.

Bloom, which operates 61 stores through North Carolina, had mandated customers use a personal scanner to track purchase prices to speed up checkout, including DVD purchases and rental. The kiosks performed a variety of tasks, from dispensing product information to helping customers locate DVDs and conduct $1-per-day rental transactions with the swipe of a credit card.

Spokesperson Karin Peterson said the use of scanners had been scaled back to 28 stores. She said the proprietary kiosks were transitioning to Redbox units while sellthrough remained in-store.

“We're still renting for right now,” Peterson said.

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