Retail

How to find good locations for unattended retail

Kiosk operators mostly rely on traditional methods of finding locations, like word-of-mouth, in-person selling, business locators, exhibiting at trade shows, direct mail and traditional advertising, but social media, Google Maps and location intelligence software are also in play.

Image provided by MagNet Analytics.

May 8, 2023 by Elliot Maras — Editor, Kiosk Marketplace & Vending Times

With consumer preference for self service on the rise, opportunities for automated retail have never been better. The unattended retail option offers brands an opportunity to reach consumers in more locations with a more favorable ROI compared to a traditional attended store.

Which is why nearly every retail category has expanded into self-service.

However, once a business has a product and a machine capable of marketing the product, the next question is where to place the machine. Besides having a product that consumers want to buy, the product must be available in a location where it is accessible to a buying audience.

With the advent of Google Maps and location intelligence software in recent years, the tools for identifying prospective locations for kiosks are greater than ever.

A recent informal survey of kiosk operators found many are relying on the more traditional arsenal of word-of-mouth, in-person selling, business locators, exhibiting at trade shows, direct mail and traditional advertising — although social media, Google Maps and location intelligence software are playing a bigger role.

Factors to consider

Given the multitude of tools available for finding the best locations for a self-serve kiosk, operators need to have a location targeting strategy based on key factors such as:

Who is the target audience?
Where is the target audience clustered geographically?
What locations are available within the geographic area?

Gathering this information requires research. Kiosk operators interviewed for this article agreed that gathering this information takes time but does not necessarily require a large investment.

Company websites and social media pages are great places to learn about prospective locations for kiosks. These sites can provide information on what types of consumers patronize the locations and sometimes even provide the decision maker's name.

In addition, Google Earth can provide pictures of the exteriors and interiors of prospective locations.

Driving around the geographic areas where locations are based can also be helpful in determining locations to call on.

Location data counts

Random interviews with self-serve kiosk operators indicate that most agree that gathering data about prospective locations is important.

Teddy Sanchez

"That homework really helps you fine tune the location," said Teddy Sanchez, co-founder and CTO at Optimal Station, which specializes in customizing vending machines for use in automated retail, inventory control and event marketing. Sanchez encourages his kiosk operator clients, most of whom are brick-and-mortar retailers looking to expand their brand, to use a hand counter and spend five or six hours counting traffic at a location.

To demonstrate the importance of identifying the right location for a machine, Sanchez offered the example of a client selling handheld luggage scales called ballanza which he sold for $20 in hotels near airports.

A machine in the lobby netted 200 sales per month. However, moving the machine 15 feet away from the lobby to the staircase killed the sales.

"It was no longer 100% visible," Sanchez said. "A customer would have to ask for a scale to be directed to the machine. That shift alone – 15 feet – changed the whole trajectory of the business."

"The right location can make a difference — 10 to 15 feet can make the difference of 200 or 10 people passing by the machine," he said.

Sanchez further noted that the amount of traffic needed for a location will depend on the price of the product being sold as well as the value of such a product to the people at the location.

For example, if you're selling a $200 pair of sunglasses, the ROI will be good with five sales per day, depending on the location.

Optimal Stations' kiosk operators in both the food and non-food spaces are targeting transportation hubs (including airports), military installations, hospitals and other medical offices, Sanchez said.

Locations for CBD and vape kiosks include bars and restaurants within a five-mile radius of a college campus. Vapes do especially well in bars with as few as 30 regular patrons.

"The footprint of the traffic doesn't have to be a thousand people," Sanchez said.

Traffic: more than volume matters

Eduardo Alvarez

Eduardo Alvarez, owner and CEO of MagNet Analytics, which builds and operates small footprint kiosks selling impulse electronics like mobile chargers and headphones in high traffic locations, said the type of traffic a location has is more important than the amount of traffic.

"Not all traffic is equal," Alvarez said. "The customers that we're targeting are the customers that have the need for the product on the spot. It's just a spontaneous decision that they have to make because they forgot their headphone or that they need to charge their phone."

An airport VIP lounge has very little traffic but the customer is "highly qualified because they are captive," Alvarez said. "If they have no other option to find that product that they need, then you don't need that much traffic." He has operated his kiosks in train stations, airports, city landmarks and amusement parks. Sports venues near train stations are also good locations.

The software in his kiosks allows Alvarez to know how many people engage with the kiosk and how many make a purchase.

The fact that malls have a lot of traffic shouldn't blind operators to the fact that the customer mindset in malls, as opposed to transportation hubs, is very non-spontaneous, he said.

"They're not the spontaneous buyer and they don't need anything," he said. "If they need anything they'd rather buy it in the shop, but they're not in a rush."

The negotiating process is another important factor to consider.

Most of the locations Alvarez works with — train stations — are managed by property management companies and require a lengthy selling process. Getting permission to place a kiosk in an airport can take as long as three years, he said.

Know the consumer mindset

Pharmabox, a machine that offers OTC medical and personal care goods, also relies heavily on impulse purchases, noted company founder Alejandro Rodriguez. "People always forget something," he said.

Alejandro Rodriguez

Rodriguez echoed Alvarez's point about the importance of the consumer mindset at the location. In airports, machines located outside the security gates do not do as well as those inside the gates. This is because customers outside the gates are time pressured while those on the inside are less so.

Rodriguez agreed location data is important, adding that some locations such as hotels and colleges are able to provide data on how many people are onsite, which is a traffic indicator.

Rodriguez, who employs a full-time salesperson, also relies on email lists available for purchase, contacts from trade shows where the company exhibits, as well as information from company websites and social media pages.

The company's most important sales tool, however, is customer referrals.

The pitch also matters

David Ashforth, a former vending operator and president of Digital Media Vending International Inc., which provides customized vending machines, said finding locations is usually not the biggest challenge most of his clients face. Most of Ashforth's kiosk customers are brick-and-mortar retailers looking to expand their brands and need help explaining the benefits kiosks provide to prospective customers.

To assist them in this area, Ashforth provides literature on the benefits of vending machines.

Most of his operator customers are already familiar with their local malls and other high traffic areas. The only sales tool he usually recommends for identifying prospective locations is Google Maps.

David Ashforth

"Often Google Maps is a really useful tool to just scoot around the whole area and just remind them about all the other areas in their city," Ashforth said.

Do business locators help?

The interviewees were lukewarm on the use of business locators, one of the oldest selling options in traditional vending. Business locators usually offer locations in exchange for a flat fee.

Rodriguez of Pharmabox said one or two out of every 10 locators he has worked with have delivered satisfactory locations.

"I often find that locators have their own agenda other than finding them the location," Ashforth of Digital Media Vending International said. Many of them are trying to sell their own machines.

Operators should recognize, however, that good business locators do exist, and many successful vending operators work with them.

Location intelligence arrives

Those operators who are so inclined can hire a professional location intelligence service, a relatively new industry that makes use of technology such as smart devices and sensors that track human activity around locations.

Location and geographic information services can collect, store, analyze and visualize data, including foot traffic, to measure optimal locations for operating a business or providing a service.

Maria Mullen, a strategic advisor with THinc Partners, which provides consulting for automated retailers and other companies, has used such services finding locations for self-serve kiosks.

"Once you have a higher level idea which markets are going to be appealing for your product based on demographics … industry demand, whatever, once you have that kind of information and the geographic information, the foot traffic information actually helps you get down to the next level … which are the exact locations within a market that you should be targeting," Mullen said.

Maria Mullen

For example, "If you're looking at Safeway or Albertsons, there are a lot of different outlets even within a certain zip code," she said. "How do you choose which Albertsons location you prefer to place your kiosk in? That's where foot traffic helps."

Once the location is identified, a visit to the location can determine specifically where the machine should be placed. Considerations include where the shoppers enter and exit the location and utility and Wi-Fi availability, Mullen said.

Finding the right locations is an important part of building a successful kiosk business. A certain amount of customer and location research makes the task easier.

Photo credit: LinkedIn

Retail