DVD kiosks offer one-stop shopping

SUPERMARKET CHANNEL GUIDE: Redbox and TNR expand to more chains

By Susanne Ault -- Video Business, 5/1/2006

Over the last several years, DVD kiosk companies have tried rolling out machines in such far-flung spots as office parks and apartment complexes., but supermarkets are proving to be some of the best customers for Redbox and TNR Entertainment, among other kiosk providers.

Grocery stores guarantee a steady flow of foot traffic. Grocers appreciate kiosks’ small size, minimal labor costs and new revenue stream.

“I can tell you that with every grocery outlet we tested, we have expanded into most of the chain,” Redbox VP of marketing Greg Waring says. “It frees up valuable space in stores, and we do all the work ourselves.”

Kiosk companies are structured around a variety of business models. Some grocers can simply lease their floor space to Redbox. Others, such as most TNR grocery clients and Redbox customer Stop & Shop, share the rental revenue.

Redbox kicked off its service in 2004 at McDonald’s, which is a primary shareholder in the kiosk company. But so far, the biggest growth for Redbox in 2006 has been its deployment of machines into the supermarket sector.

Redbox machines will be installed in 400 Stop & Shop and Giant Food locations, clustered along the East Coast and New England. The company also will spread into 130 Las Vegas-based Smith’s Food & Drug outlets this June.

TNR services only grocery accounts and expects its machines will move into 1,000 stores by year’s end. Kroger, Publix, Safeway and Food Lion’s Bloom locations are among TNR’s chain clients. Food Lion is converting 40 of its Washington, D.C., outlets to Bloom stores, each of which will offer DVD rentals.

“It’s great for customers to complete their one-stop shopping,” says Mike Drumm, new ventures project manager at Stop & Shop. “It can also be a great point of differentiation from our competitors.”