Mall Kiosks, also known as Retail Merchandising Units (RMUs) or Retail Kiosks, have been around since the mid 1970s. They’ve remained a popular way for retailers to test the waters before settling into a location, because of the lower overhead and flexible leases they offer. However, starting a kiosk (or rather starting a successful kiosk) isn’t as easy as it may seem. In this article, we’ll go over the steps to getting started, popular mistakes to avoid, and easy tips that will set you up for future success.
Location, Location, Location!
The most important decision you’ll make when you decide to start a specialty retail business, is where you’re going to set up shop. Unlike static stores which spend time and money crafting a loyal fan-base, the most successful kiosks capitalize on consumer impulse. The best way to predict the spontaneous behavior of your target customer is patient observation. Follow these steps to choose your location:
- Identify your target customer
- Find where they’ll be
- Visit that location and see how they behave
- Identify how you would best fit into that ecosystem
- Be there. First.
Say you’re opening a kiosk that sells medium-high end sunglasses. You’ve identified that your target customer is 30-50 year old women in a certain neighborhood. Opening your kiosk at the beach nearest to that neighborhood may seem like the right move, but you find that everyone at the beach already has sunglasses. You go to the largest mall in the area, and find that there are several sunglass kiosks near the stores those women frequent- but none of the women seem to stop.
Then, you find a cluster of stores on the way to the beach. It’s by no means high end – the main attraction is a convenience store with water bottles, snacks, anything you may have forgotten on your way to the beach. They have sunglasses – but not the kind your target customer would ever be caught dead wearing. You stop and watch women hopelessly try on a few pairs before accepting the fact that they’d have to squint. Here is your spot. Your target customer is here, they’re in the mood to buy something that feels like a bargain but looks high end, they’ve forgotten their sunglasses, creating demand, and you have no real competition.
Pick Your Poison
After you’ve chosen where you’re going to set up shop, you need to decide what your physical store will look like. This will largely be determined by the location, as well as by what you’re selling. Your three main options are Carts, In-Lines, and Kiosks.
Carts are “freestanding units provided by the mall in a common area.” Phone jacks and electrical access are often provided
Initial Investment: 2,000 – 8,000
Kiosks are “provided by the tenant – at the tenant’s expense – to be used in the common area.” again, you have access to phone jacks and electrical outlets. It’s your kiosk and you get to design it – but you will have to get your design approved by mall management before it’s built.
Initial Investment: 9,000 – 10,000
In-Lines are permanent stores that have been vacated. They have walls and a storefront, providing slightly less visibility than kiosks and carts. However, typically you’re also less prone to stolen and damaged product.
Initial Investment: 2,000 – 10,000
The biggest day-to-day differences you’ll notice are size and rent. A less-known difference is that the lease lengths can vary between the three as well. Make sure you ask these questions before you settle on a style”
- What type of storage is available? Is there free storage, paid storage, or a combination of the two? Do storage fees vary by lease type?
- If you plan on leasing during the holiday season, it’s important to clarify how much your rent will be. Rent goes up for anywhere from 1-3 months surrounding the winter holidays, which can be an impossible expense if you’re not prepared
- What lease lengths are available? Am I able to re-sign my lease at will, or will I lose my spot if someone claims the spot before I do? What are the penalties for forfeiting my lease early if something happens?
Once you’ve picked the perfect vessel, found your ideal location, and crafted a business plan, there’s one very important thing left to do. Get accepted. Every mall will have slightly different criteria, but the main goal is to show the mall that you would improve the customer experience, drive traffic, and maintain high sales. Make a business plan and be prepared to sell yourself.
These are the things you’ll need before you get started:
- Have a unique concept and business proposal
- Valid business license/tax I.D. number
- Certificate of Insurance naming the mall as additional insured with the designated limits (and sometimes the property owner as well)
- Meet with the visual merchandiser, Short-Term Leasing Representative or Mall Manager to discuss your concept and finalize any design elements.
Every mall will require that you have General Liability insurance. This protects both of you in the case of third-party injury. For example, if a kid is running through the mall, smacks into your kiosk, and their parents decide to sue, you’ll be covered. There are three parts of your insurance requirement you’ll need to be familiar with in order to get the right policy.
- Coverage determines which types of accidents your insurance will protect against
- Limits are how much money your insurance will pay out. For example, if you have a $1M General Liability policy, up to $1M in damages will be covered.
- Endorsements are the extras that your mall or property management company may add to your requirement. They often don’t change the price of your policy, but it’s important to include them in your certificate of insurance. For example, most malls require that you list them as an “additional insured,” meaning that your insurance covers them as well.
The easiest way to make sure you have the correct coverage is to purchase a pre-built Mall policy. These come pre-made with $1M General Liability, as well as your mall and property owner listed as additional insured. (Read Mall Kiosk Insurance 101 to learn more).
Another benefit to buying policies tailored to vendors is that they can be purchased for the length of your contract, rather than a full year. For example, if you’re only working during the holiday season, you would only have to pay for 3 months of coverage.
If you have a broker you like but want to make sure you get the right coverage, you can use this script as a guideline for your conversation:
Hi, I’m required to buy General Liability insurance with a limit of $1 Million for my upcoming contract with [Mall Name]. I would like my policy to begin on [Date] and end on [Date]. I’m required to list both [Mall Name] and [Property Management Company Name] as additional insureds, and will need a certificate of insurance by [Date] to secure my spot. Is that something you can provide me with?
If they have what you need, make sure to ask about short-term policies, as well as proof of insurance sharing. Many insurance carriers make you call, come in to their office, or find a fax machine to get your certificate of insurance. Seek companies with Live COIs, which can be easily shared online.
Mistakes to Avoid:
No matter how well intentioned or prepared business owners are when they begin there journey, everyone makes mistakes along the way. Luckily, we’ve rounded up some of the most common mistakes that vendors make, so that you can benefit from their experience.
Assuming it will be easy.
This is the most difficult and necessary part of starting a business, but it’s particularly important in the service/retail industry. Before you begin, think critically about whether you have the skills, ambition, and above all personality that it takes to successfully operate a retail business. Talk to people who have done it, test the waters a bit, and assess whether this is the right path for you before you’re out 6 months worth of rent.
Jumping in blind
Develop a business plan. For one, it will make your life a lot easier once you become profitable. But perhaps more importantly, it starts your relationship with the mall on the right foot. Property managers want to know that you’ll be an asset to their business, especially if your rent is partially sales-based. To secure top spots, and avoid burning bridges by looking unprofessional, make a business plan.
Thinking the product “sells itself”
Nothing sells itself. Even the most ingenious inventions often have to have equally ingenious marketing campaigns behind them for anyone to take note. In other words, you will not sell phone cases simply by displaying every one you have on a massive tray. Make a compelling display, choose your best products, and remember that everything you do is an advertisement not only for your product, but for your brand identity.
Undercutting larger stores
Unless you have an extremely niche product (think pillow pets), there will be plenty of competition – you’re in a mall after all. You won’t beat the department stores or big box retailers on price, but you can win by standing out with a unique product feature, excellent customer service, or capitalizing on your brand as a small local business.
Taking the mall at face-value
Malls are constantly renovating, closing, and redecorating. Before you set up shop, check your mall’s 5 year plan. If they’re planning to redo the floors or open a new food court near your stall, foot traffic could all but stop for months at a time. That kind of blow can be devastating, especially for new vendors.
Following your competition
When you’re trying to find your customers, don’t flock to places that already supply your product. Rather than creating competition for yourself, find a void to fill. For example, if you sell hair products, don’t choose a stall outside of Aveda. Instead, think about where those same customers might shop when they’re in the right head space to buy your product. Try a stall outside of a MAC store, where your customers will be in the mood to splurge on self care, but aren’t presented with many options that compete with yours.
Opening your kiosk
When the physical kiosk is ready to go, you’ll need to make sure you have the behind-the-scenes work done as well. Even if you don’t think you’ll be busy at first, make sure to have a POS (Point of Sale) system and a structured bookkeeping plan for when the dollars start rolling in.
Now you’ve done it, you’re ready to open, and it’s time to decide what kind of experience your customers will have at your business. One of the benefits to a micro-commerce experience is that you (or your employees) can provide highly personalized service to each individual customer. Think about your core clientele and what they’ll respond best to. For example, if your target audience is somewhat impulsive, try engaging with potential customers as they pass by, and inviting them to try something new. If your audience is more calculated, make sure to have clear visuals they can digest at their own pace as they pass by. If you’re selling food, try using fans to waft the smells around your kiosk. Most importantly, when someone comes to your kiosk, make sure they have a memorable experience.
That’s it, you’re ready to start your kiosk! When it’s time to fill your insurance requirements, head to Bunker for a pre made Mall Kiosk policy – or reach out to talk to an advisor about what you need.