The little “Redbox” rewrites movie rental retail
Kiosk success underscores the retail fundamentals
The definition of retail is: a place where consumers buy a product or service one at a time off the “shelf”. While much has been written about the advances of internet retailing, there is little attention paid to the lowly vending machine. Redbox vending kiosks are generating serious cash and have changed the perspectives on movie rental retailing. The counter intuitive trend of Redbox kiosk retailing When we first highlighted the concept of “Redbox” kiosks, it just still that … an early retail concept in fact piloted by McDonald’s. There was considerable debate about whether consumers would rent a movie while at the grocery store, drug store or “Micky Ds”. Many also postulated that the convenience of movie downloads or rentals from cable/satellite TV would quickly wipe out movie rentals on DVD. Redbox is essentially a vending machine about the size of large side by side refrigerator. This kiosk can hold up to 700 DVDs, with typically 200 popular titles. Something must be working. Redbox has grown from a handful of locations to over 15,000, with 5000+ more planned this year. Both Blockbuster and Netflix are scrambling to come up with some kind of kiosk alternative. Perhaps, it is because the ubiquitous Redbox can generate as much as $50,000 annual revenue per machine, with no staffing present and minimal infrastructure. What makes Redbox so successful? From the eye of the consumer it’s as simple as: “milk, shampoo … and a $1 movie rental. Redboxes are strategically located in the highest traffic areas, where consumers shop for consumables like groceries, health and beauty or fast food. The naysayers quickly point out that Redbox success comes at the time of recession, when consumers are shopping for bargains on everything. The movie rental price of just $1 drastically undercuts the competitor pricing models. Won’t this business simply go away when the economy turns around? Perhaps, but there significant consumer experience factors with Redbox that go beyond pricing. Redbox consumer experience & execution factors that make it work · Location, location … location – Redbox is where consumers shop for mainstream consumables every week / day · Redbox was piloted and rigorously tested by McDonald’s · Redbox was purchased by Coinstar, who is a specialist in vending machines, locations and servicing them · Assortments are carefully managed and replenished based on both hit and classic titles · Consumers can quickly find hot and preferred movie titles … literally right in front of them · Consumers can swipe a credit or debit card to rent · Consumers can easily return the movie rentals to any Redbox regardless of where they rented Will Redbox meet the demand of all consumers? No. But, the Redbox concept and brilliant execution have radically changed the movie rental business for “spur of the moment” renters who literally “bump into” the opportunity for a movie night. From the consumer point of view, Redbox is a “killer app”! It enables a very efficient experience of finding, renting and returning at a movie for just a $1. No hassle with finding movie guides, scheduling downloads or recordings, or returning DVDs in the mail. Let’s see now … should I order the fries from the $1 menu, or get a movie? Redbox has made the choice incredibly easy for busy shopping moms and many overweight dads like yours truly.
