Deck The Malls With Kiosks

They're looking better and better as holiday sales venues

While shopping recently at Woodfield Mall in suburban Chicago, Joan and Angelo Fosco had no idea that a little fishing would be on the agenda. Yet all it took was one look at a colorful kiosk display of "Puddle Pets," tiny aquariums filled with a choice of live tiny fish, crabs, and frogs swimming back and forth. "Let's get the kids one," said Joan. "They're cool!"

The Foscos are part of a growing trend: shoppers who delight in the variety of novelties and specialty items on sale in the center aisle of their favorite malls. Kiosks, with their ever-changing array of merchandise, have transformed once-utilitarian passageways into retailing hot spots. "Kiosks are situated right where you have to walk," says retail consultant Kurt Barnard. "You stumble into them. You stumble over them. You can't avoid them. They create a stream of impulse purchases."

That makes them a natural for everyone from giant retailers trying out a new concept to artisans hawking handmade wares to entrepreneurs cashing in on fad products. Over the past 15 years, seasonal and temporary carts, kiosks, and stores have ballooned into a $10 billion business, according to Patricia Norins, publisher of Specialty Retail Report, an industry publication. Today, about 95% of enclosed malls have a temporary retail program. "Christmas is 80% of the retail business," says Norins. "You can be sitting in a mall from January through October for the other 20%. For a lot of retailers who don't need to lock into a space, it's great."

Just ask Dan Rosenbaum, an independent operator who runs 13 Calendar Club stores in the Chicago area. Calendars are perhaps the ultimate seasonal product. The Austin (Tex.)-based company has grown from 61 stores and kiosks in 1993 to 515 outlets in the U.S. in 1999, with 271 overseas. As an affiliate of Barnes & Noble Inc. since 1996, it supplies the bookstores as well. Calendar Club, which operates from September through January, rings up average sales of $110,000 per location each season. A few, like Rosenbaum's store in the upscale Water Tower Place mall in Chicago, will gross as much as $400,000.

ONE ON ONE. The money may be quick, but it's not easy. From mid-October through December, Rosenbaum puts in 18-hour workdays overseeing staffing and store openings. Finding good managers for a five-month job--without benefits--can be tough. Still, last year, his stores grossed $4 million, and he took home $120,000 before taxes for less than a half year's work.

Competition, however, is heating up. Not only are there other calendar chains--notably Day By Day, owned by Borders Group Inc.--but other seasonal retailers as well, hawking everything from Halloween costumes to gourmet food. Marc Winkelman, president and CEO of Calendar Club, has seen seasonal rents more than triple since 1994.

Still, for certain products, nothing beats the one-on-one nature of a kiosk. When Rob Sivret, president of Seattle-based Gotta Go Inc., first tried to sell his HeadSokz patented fleece hoods through stores, the results were not encouraging. "The initial orders were terrific, but there was no sell-through," he says. That turned around when he started selling the hats himself from a kiosk where he could show shoppers how his hat design worked. "This is a product that needs to be demonstrated, and kiosks allow us to do that," he says. Sivret expects to gross $4 million to $5 million from 70 kiosks this year.

Established retailers have also found seasonal retailing worthwhile. Fifteen years ago, there were 500 permanent Hickory Farms stores. Today, there are just 39 such outlets, but they're bolstered by nearly 1,200 temporary stores in the U.S. and Canada. "We found people weren't going to malls for specialty foods. We had become a `gifter,' so seasonal made sense," explains Geoff Smith, vice-president for store operations at Hickory Farms Inc.

Unlike large retailers who are often locked into product up to a year in advance, kiosk operators are better able to follow trends, such as Pokemon and the current craze for micro-aquariums. If the fad lasts only a few months, that's fine for a temporary retailer. They can try Bart Simpson coffee mugs one year and perhaps butterfly barrettes the next.

"RELATIONSHIPS." Temporary retail also functions well as a natural business incubator. When Chicagoan Chandra Greer, a custom stationery designer and former Leo Burnett & Co. account executive, wanted to test the market for her product, she rented a kiosk in a suburban mall. "It allowed me to understand what people want, which was different from what I originally thought they wanted. And I've been able to adapt," she says. Next year she plans to open a storefront studio.

Even Avon Products Inc. and Tupperware Corp., manufacturers that traditionally have shunned retail outlets, are giving kiosks a try. After three years of research, Avon opened 49 Beauty Centers in 1998 as a way to reach the estimated 20 million women who have never used their products. So far, it seems to be working. Over 90% of sales have been to new customers, and Avon Ladies, still the company's main distribution network, have reaped a bumper crop of new leads. Tupperware Showcase kiosks are open for anywhere from two weeks to two months. "This is three-dimensional advertising," says distributor Gene Sapinski. "The standard customer either doesn't know a Tupperware Lady or has no time to go to a party. Kiosks help us form relationships."

No concept, it seems, is too large, too small, or too wacky for a kiosk. From magic tricks to fishing lures and even jewelry made from personalized grains of rice, if you can't find it down the center aisle, chances are you will soon.