Although Redbox kiosks have been available in other parts of the country since 2005, downtown Iowa City has recently caught on to this distinct retail operation.
Redbox Automated Retail LLC, is a chain of self-service DVD kiosks. Now, the company’s officials have brought the machine to Kum & Go, 323 E. Burlington St.
The Redbox strategy could be a smart one, local officials said.
Nancy Abram, a UI marketing adjunct lecturer and the IMU marketing director, said the innovation of the American retail industry continues to lean toward customer service, especially in terms of effectiveness and suitability during a harsh economic climate.
“When it comes to retail operations, Americans love convenience,” she said. “They got the value equation pretty locked up and both [Redbox and Netflix] are major changes in the way that DVDs are accessed.”
She said she expects to see continued growth in the high-value and high-option part of the retail-entertainment industry. Brick-and-mortar stores such as Blockbuster must become even more innovative in customer service and accessibility if they are to survive the recession, she said.
According to Redbox public-relations representative Chris Goodrich, in the second quarter of 2009 the subsidiary amassed a profit of $189.9 million — a 110 percent increase over the same period last year. Goodrich cited the convenience of the new method and its popularity to the general masses as a reason for the augmentation.
“Redbox’s success is driven by our great value and convenience,” Goodrich wrote in an e-mail. “Our unique combination of features — $1 per night price point with no late fees, rent-and-return-anywhere policy, and online reservations — has been very well-received by consumers.”
Located in select Walmart, Walgreens, McDonald’s, and leading chain grocery stores, Redbox kiosks are stationed in 48 states across the country. The stations carry more than 200 titles and 500 DVDs and only require a debit or credit card and some identifying information. There are roughly 10 Redbox locations in a 5-mile radius of the UI.
Rental fees are $1 per day, and movies are due at 9 p.m. the following day. A $1 charge plus tax is applied for every day the DVD is not returned, and if the movie has not been returned in 25 days, customers can keep the DVD.
Students seem to be on board with the Redbox trend. Senior Marina Katsnelson has been a frequent user of Redbox since she found a kiosk at the Coralville Walmart.
“It’s cheaper, and I like the convenience of it,” said Katsnelson, a former Netflix subscriber.
Katsnelson said she was not only drawn to Redbox for the low rental fee, but also because she could rent as many films as she wanted at a time, unlike Netflix.
Kum & Go store clerk Jeremy Jacobs has seen a recent surge in business flow at the downtown location since the Redbox was installed last month.
Jacobs, who uses Redbox, said he assists some customers unfamiliar with the machine during all hours of the day.
“Just yesterday, I helped a grandpa and two kids,” he said.
Despite its popularity with consumers, Redbox faces corporate challenges. It is in a litigation battle with Warner Bros., Universal, and Fox studios over DVD accessibility and pricing. This Hollywood friction stems from major studios losing profit on Redbox’s $1-a-day policy.
“The biggest obstacle that [Redbox is] going to face is accessing the rights to the hottest movie properties given the fact that it is selling for $1 a day,” Abram said. “That would devalue the [artistic] property.”