This article appeared in the C-store Self-Service Executive Summary, Spring 2006.
Margins are thin, floor space is scarce and customers try to leave fast, or just pay outside. Figure in tax pressure and regulations on cigarettes and diet trends diverting consumers from traditional snack foods and the picture is clear: Convenience stores need new attractions and revenue streams. That's why more owners are deploying bill pay kiosks.
|
According to Shahbazi, 86 percent of bill-pay kiosk users return and the demographic groups that typically use c-stores regularly coincide with the unbanked. That demographic group largely consists of new emigrants, teenagers and, sometimes, people who just don't like banks.
C-stores can receive a revenue share under the TIO system, and their clients receive about $3 per transaction. According to the National Association of Convenience Stores (NACS), a square foot of c-store floor space generates $400 in sales per year. A large TIO client in Arizona generates an average of $1,300 monthly, per store, in transaction revenues — a 61 percent jump above the average dollars per square foot.
"We're driving tens of thousands of people into convenience stores," Shahbazi said. "On a per-unit basis, we're probably between 15 and 30 transactions per day, per location."
Shahbazi said a c-store transactional kiosk turns cash-flow-positive in about six months, and at about a year customers notice and use it regularly — what he calls its maturity. At 12 months, he said, the machine is generating 70 percent to 80 percent on a per-application basis.
In a NACS briefing, Michele Hanson-Emerson, former First Data Corp. senior vice president of enterprise customer development, said services for the unbanked can take c-store revenue to a new level. She said kiosks offering prepaid wireless, prepaid store debit cards, money transfer and bill payment can be highly lucrative.
"Companies like Radio Shack are doing bill payment now," Hanson-Emerson said. "They're doing over a million payments per month for Sprint, and so it's a big, big opportunity. We're seeing results like that across the board with retailers that have actually done bill payment. That's your total solution set for the unbanked."
NACS spokesman Jeff Lenard said the unbanked population presents an enormous opportunity to draw more business into c-stores. He said financial services kiosks translate pay-at-the-pump customers into in-store customers that buy goods that have higher margins than gasoline.
Customer acceptance of kiosks is widespread, and financial kiosks offer increasingly more features. "Sixteen of these Vcoms (Virtual Commerce brand kiosks) in 7-Elevens in Arlington County, Va., offer the opportunity to pay car taxes and get decals, "Lenard said. "It's just adding another reason for customers to want to come inside the store."
