BI-LO ROLLS OUT RFID DVD RENTAL KIOSKS

DAN ALAIMO

GREENVILLE, S.C. -- Bi-Lo Holdings here is rolling out DVD rental vending kiosks to nearly all its stores using technology that is the "first successful implementation of [radio frequency identification] technology in a kiosk application in a supermarket chain," said Greg Meyer, managing director, DVDXpress, New York.

"We are moving forward with plans to be in 90% of our locations before the end of 2005," said Steve Methvin, Bi-Lo's director of store systems.

"People see self-service as a 'friendly face' at Bi-Lo," he said. "It is not unusual to see a customer check out at the self-scan lane and then walk over to the DVDXpress to get a movie."

Unlike other uses of RFID, this is not a pilot, Meyer noted, but a full implementation. The kiosks are now in 80 Bi-Lo and Bruno's locations, with over 220 more planned by the end of the year, he said.

"Video rental kiosks are just one example of smarter store technologies that help retailers build stronger relationships with their consumers," said Christine Overby, principal analyst, consumer markets, Forrester Research, Cambridge, Mass. "In this case, the kiosk allows the retailer to capitalize on an impulse purchase by making it simple for a consumer to help herself to the video she wants."

By applying the code to the DVD itself, this use of RFID with the vending kiosk enables dispensing of the original packaging rather than a replacement package that contains the digital information needed to dispense the title, Methvin said. This gives the rental customer the original box and "is one of those pleasant surprises our moms love," he said.

In the future, this also will allow the kiosks to sell off previously viewed movies. Meyer said he expects the Bi-Lo machines to start doing this next year.

The price of the used titles can be calculated based on the number of times the unit has rented, the number of additional copies available in that kiosk, and the length of time since street date, said Scott Kaplan, chief technology officer, DVDXpress.

"This avoids significant additional logistics costs since your customers are clearing out your used rental inventory to make room for the new movie releases being stocked each week," Kaplan said.

Other advantages include enhanced inventory tracking, which will improve availability of desired titles, Methvin said. By providing greater security and fraud protection compared to bar codes that can be easily counterfeited using a photocopy machine, the RFID technology provides a better ability than non-RFID kiosks to determine that the correct DVD is in the returned package, Kaplan noted.

This may be a stepping stone to other uses of RFID in Bi-Lo's stores, Methvin said. "It is teaching us the rewards that RFID can bring without having to force compliance. As other RFID projects and opportunities reach the retail sales floor, we have real-time experience with RFID. We will see the potential winners and make them our priority," he said.

Besides Bi-Lo, "DVD-Xpress currently has kiosks with other supermarkets including Pathmark, Gristede's and D'Agostino and is in discussions with several other major chains," Meyer said.

Other retailers using RFID include tests by Wal-Mart, Metro AG and Tesco, Overby noted. "Tesco also uses RFID to support its DVD business. The major difference is that it is using RFID to track inventory levels on a smart shelf, compared to a self-service kiosk," she said.

The DVDXpress kiosks hold 300 to 500 DVDs of about 80 titles, he said. The inventory consists of new releases from the past four months, along with family and classic titles. Rental prices are $1.49 for the initial rental period -- until the store closes the following day -- and 99 cents for each additional day, Meyer said. "This is less than half the price at Blockbuster for the same movie," he added.

"The beauty of the RFID kiosk is that there's a return for both the retailer and the DVD supplier," Overby said. "The retailer gains sales and the supplier gains more points of distribution. This is a clear example where the business case works for both parties, and this is critical for broader RFID adoption."

Top 10 Supermarket DVD Sell-Through Titles

Rank, Last Week; Title (Weeks Out), Studio, DVD Retail

1) N; Star Wars: Episode III -- Revenge of the Sith; Fox $29.98

2) 1; Batman Begins (2); Warner $30.97

3) 2; Bewitched (1); Sony $28.95

4) 3; Herbie: Fully Loaded (1); Buena Vista $29.99

5) 4; Cinderella Special Platinum Edition (5); Buena Vista $19.99

6) 5; Robots (6); Fox $29.98

7) 6; The Longest Yard (7); Paramount $29.95

8) 7; Kicking & Screaming (3); Universal $29.98

9) 8; Sisterhoood of the Traveling Pants (4)'; Warner $28.98

10) 9; Monster-In-Law (9); New Line $28.98

N = New

As of Nov. 6, 2005

This chart, tailored for the supermarket video market, is based on information taken from more than 1,000 supermarket rental locations serviced by Ingram Entertainment, La Vergne, Tenn.