Dvd rental kiosk

Drug store chains never have been a big destination for video, with most chains carrying only a handful of the big blockbusters, the most popular seasonal titles and maybe a small collection of bargain-priced DVDs. But New York's Duane Reade chain recently added a rental format in its Manhattan stores that may become a permanent fixture throughout the chain.

Last December, Duane Reade teamed up with New York-based Moviebank USA to test DVD rental kiosks in 24 stores in the heart of New York City. And the experiment appears to be working out as Duane Reade prepares to install kiosks in more stores.

With 25 locations up and running, Moviebank cofounder Stephan de Laforcade said Duane Reade is now the Manhattan market leader in video rentals. "Duane Reade has always been the No. 1 drug store chain in Manhattan, and now they're the No. 1 video chain, at least in terms of the number of locations."

The machines stock an inventory of hundreds of DVDs, with a mix of new releases and older titles. Customers can use a credit card or debit card to pay for the rentals, with rental rates as low as 99 cents for older titles. The kiosks also show trailers of new releases on a video screen embedded in the machines.

Customers don't need to be Moviebank members to rent movies, though members do get preferred rates. Membership enrollment is available at store locations or on the company's Web site.

"Our customers have really embraced it so far," said Tim LaBeau, senior vice president of merchandising for Duane Reade. It's really, convenient for commuters to pick up their movies at stores near a subway stop on the way to work or coming home."

The rental kiosks are receiving heavy use by customers, de Laforcade said, though he could not provide details on the average daily transaction. "I can tell you that they're exceeding all our expectations, de Laforcade said.

And that number is due to increase soon. Moviebank recently opened its first rental kiosk in a Duane Reade store outside of Manhattan and will roll them out to dozens more in late spring and early summer. "We plan on adding up to 100 more locations, starting in May or June, de Laforcede said. They have 280 stores, so there's plenty of room to grow."

While the video rental business is something new for Duane Reade, at least in recent years, it doesn't appear to be a huge revenue generator, though it does pay for what little space it uses. They [Moviebank] pay a usage fee for the units in each store, LaBeau said. "And at some point, there will be a revenue-sharing element brought in."

LaBeau said the most important aspect of the rental kiosks is that they give customers an added value when they walk into the drug store. "It's just another service for our customers, and it, seems to be something they enjoy, he said. It gives customers another reason to come to our stores."

Duane Reade is Moviebank's first venture in the United States (most of its kiosks are in Europe), and the company currently is looking for new retail partners. But it doesn't seem likely it will catch on with other drug store chains, given the heavy concentration of video rental stores, including such chains as Blockbuster and Hollywood Video, in nearly every U.S. market.