Other Nontraditional Forms of Retailing

Two other nontraditional institutions merit discussion: video kiosks and airport retailing. Although both formats have existed for years, they are now more popular than ever. They appeal to retailers’ desires to use new technology (video kiosks) and to locate in sites with high pedestrian traffic (airports).

1. Video Kiosks

The video kiosk is a freestanding, interactive, electronic computer terminal that displays products and related information on a video screen. It often has a touch screen for consumers to make selec­tions. Retail store kiosks locate items in the store and enhance customer service. They also let consumers place orders, complete transactions (typically with a credit card), cross-sell products, sell tickets, and arrange for shipping. Kiosks can be linked to retailers’ computer networks or to the Web. There are more than 2.5 million video kiosks in use throughout the world, more than one million of which are Internet connected. In the United States, they generate $20 billion in annual retail sales. It is estimated that kiosks influence $1 trillion in global retail sales annually—by pro­viding product and warranty information, showing product assortments, displaying out-of-stock products, and listing products by price. Transactions at self-service kiosks are growing by more than 7 percent in North America, which accounts for the majority of kiosk sales, followed by the Pacific Rim, Europe, and the rest of the world.31

How exactly do video kiosks work? They are self-contained, computer-style terminals through which self-service shoppers can access information and facilitate transactions. Video kiosks can enable self-check-ins at airports, demonstrate products in stores, dispense tickets, offer DVD rentals, take and transmit meal orders, and a whole lot more. Kiosk systems use hardware designs that can include numerous peripherals, such as touch screens, printers, and barcode and QR code scanners. Consumers can use on-screen keyboards for data entry, along with card readers and barcode scanners. A thermal printer is the most common output device. Interactive kiosks may have a customized, hardened enclosure or be a standard PC that has been repurposed (for example, IBM’s Anyplace Kiosk). Almost all video kiosks are interactive.32

Video kiosks can be placed almost anywhere (from a store aisle to the lobby of a college dormitory to a hotel lobby), require few employees, and are an entertaining and easy way to shop. Many shopping centers and individual stores are putting their space to better, more profitable use by setting up video kiosks in previously underutilized areas. These kiosks carry everything from gift certificates to concert tickets to airline tickets. For example, Staples has launched omnichannel stores that feature endless-aisle kiosks and consultation areas for small-business customers—or what the company calls “the future of retail.” Staples said the stores allow it to leverage its real- estate and digital capabilities. The pilot stores, in Norwood, Massachusetts, and Dover, Delaware, also serve as test labs for new goods and services. The move is part of an effort to reduce the size of its stores by 15 percent.33

The average hardware cost to a retailer per video kiosk is several thousand dollars plus ongoing content development and kiosk maintenance. Hardware prices range from under $500 per kiosk to $10,000 to $15,000 or more per kiosk, depending on its functions—the more features, the higher the price.34

2. Airport Retailing

In the past, the leading airport retailers were fast-food outlets, tiny gift stores, and newspaper/ magazine stands. Today, airports are a major mecca of retailing. At virtually every large airport, as well as at many medium ones, there are full-blown shopping areas. And most small airports have at least a fast-food retailer and vending machines for newspapers, candy, and so forth.

The potential retail market is huge. Worldwide, more than 1,200 commercial airports handle nearly 5 billion passengers each year—with North America accounting for one-third of global passenger traffic. U.S. airports alone fly millions of passengers each day and employ nearly 2 million people (who often buy something for their personal use at the airport). There are more than 400 primary commercial U.S. airports. Overall, airport retailing generates $45 billion in global sales annually, and many airports generate annual retail revenues of at least $50 million.35 Retail sales at duty-free shops throughout the world are forecast to reach $74 billion in 2019. The largest categories of goods sold are personal care and drinks.36 See Figure 6-13.

Airline-related sales at most major airports account for 40 percent of revenue; the remaining 60 percent is derived from other sources (predominantly retail sales). Most airport hubs are nearing full-flight utilization; the only way they can grow is by increasing retail income. Airports in the  Middle East and Singapore are designed to be luxury retail and family experience destinations. The  at New York’s Kennedy Airport offers luxury accommodations for pets.37 Airport stores target teenagers, women, and bargain shoppers; retailers typically pay 10 percent more rent for the airport shopping area. Domestic leisure travelers spend more than an hour, on average, waiting in airports typifies the retailing after passing security and are likely to buy food and beverages and to shop than those who spend less time at the airport. Sales at airports are expected to increase by 73 percent from 2013 to 2019.38

Some of the distinctive features of airport retailing are:

  • There is a large group of prospective shoppers. In an average year, a big airport may have 20 million or more people passing through its concourses. In contrast, a typical regional shopping mall attracts 5 million to 6 million annual visits.
  • Air travelers are a temporarily captive audience at the airport who are looking to fill their waiting time, which could be up to several hours. They tend to have above-average incomes.
  • Sales per square foot of retail space are much higher than at regional malls. Rent is about 20 to 30 percent higher per square foot for airport retailers.
  • Airport stores are smaller, carry fewer items, and have higher prices than traditional stores.
  • Replenishing merchandise and stocking shelves may be difficult at airport stores because they are physically removed from delivery areas and space is limited.
  • The sales of gift items and forgotten travel items, from travelers not having the time to shop elsewhere, are excellent. Brookstone, which sells garment bags and travel clocks at airport shops, calls these products “‘I forgot”’ merchandise.
  • Passengers are at airports at all times of the day. Thus, longer store hours are possible.
  • International travelers are often interested in duty-free shopping.
  • There is much tighter security at airports than before, which has had a dampening effect on some shopping.

Source: Barry Berman, Joel R Evans, Patrali Chatterjee (2017), Retail Management: A Strategic Approach, Pearson; 13th edition.

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