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David King, CIO of the $2.7 billion Regal Entertainment Group with theaters in 40 states, faces a challenge that is a combination of arithmetic and consumer incentives—that is, to get the throngs of movie-goers through the concession lines before their movies begin. However, beyond staggering movie start times and trying to get people to arrive earlier, Kings nontechnology options are limited.
“Weve tried many different strategies to try and encourage people to come to the movie more than around 20 minutes before the movie starts, but it really hasnt moved needles. Everyone still comes around 20 minutes before the movie starts,” King said.
“If the auditorium that is showing the movie holds 500 or 600 people, then 500 or 600 people need to go through the concession stand lines in 20 minutes,” he said. “Once the time for the feature to start approaches, they will leave the lines and go back to their seats in order to watch the beginning of the movie as opposed to standing there and waiting in line to get their refreshments. Its a matter of getting a huge mass of people through as quickly as possible in a short window of time.”
King is quickly coming to the same conclusion that the huge German grocery chain The Metro Group recently came to: The product-selection-and-distribution (for groceries, scanning) portion of a transaction must be physically separated from the payment part.
“I think its pretty significant. We have a major challenge with handling payments today,” King said. “Even at a concession stand where people are buying popcorn and Cokes and hot dogs—where there are very low levels of ticket quantities—people are using plastic, promotions, coupons, gift cards, loyalty cards, cash and a whole variety of other payment methods. Thats what is creating more of the holdup at our cash registers.”
King is exploring various tech options, including contactless payment credit cards, kiosks, at-home-prepay, lobby prepay and “anything to move the payment component of the transaction away from the actual delivery of the service or goods or tickets or food. Were experimenting with several of those types of things, trying to get the customer experience correct and to satisfy the security guys and those types of people. Its a major concern.”
The security concerns involve the recently changed PCI requirements for credit card transactions and how to push those transactions through quickly but still be fully compliant. Changes with wireless requirements in the new standard pose a particular hardship to a theater chain, where mobile payment stations could benefit from flexible wireless connections.
King discussed both the wireless dilemma and the payment separation challenge during a recent Web audiocast. The CIO discussed both the payment separation challenge as well as how his chain is affected by the PCI and wireless changes.
Part of the problem is perception versus reality among consumers. Ironically, points out IDC Manufacturing Insights analyst Pete Abell, the perception issues play doubly with the payment separation challenge.
In the beginning, Abell said, based on his experience making such a change at a Chicago retailer several years ago, consumers resent the move because its creating two separate lines and consumers tend to assume that it will take them more time and be less convenient. But once deployed, Abell said, everything flipped. Not only did the retailer enjoy a substantial time savings—through accelerated checkout lines—but consumers perceived the time savings for them as even greater than they were. “By separating the places, you definitely did speed up the consumer,” he said.
Beyond contactless payment, King said his chain had tried concession pods to try and disburse traffic. One unsuccessful effort involved creating express lanes, which were restricted to either those who phoned ahead or to loyalty card members. What went wrong? The chain underestimated the anger of people in the other lanes, the ones who had to wait longer. As the movie start times approached, those in the regular lines got more upset and resentful.
“We created such animosity from the rest of the people who were standing in the other lines, it ended up being a bad situation and we werent able to solve how to deal with it,” King said. “This is for those who arent allowed to go through the express line, even if their movie is starting. Now theyre becoming grumpy. How do you manage through that scenario? We dont have good solutions yet.”
Some options come from sports arenas. “Were even going to be experimenting with some things that are ballpark-like, where people will take orders in the auditoriums and have food and refreshments delivered to them,” King said. “In a variation on that, were looking at something called hawking, which is like the guys who walk up and down aisles in a ballpark with Cokes and a tray that has a strap around their neck and they sell Cokes out of the tray to the patrons.”
Some of the prepayment options—such as having customers preorder and pay for their refreshments on a Web site at the same time they are purchasing their tickets—have typical restaurant challenges. How early should a hot dog be made so it will still be hot when eaten? Ice in beverages will melt and dilute a drink if its made too early. What about no-shows or customers who arrive late? During a snowstorm or other difficult weather, the number of no-shows—or customers who make a last-minute request to see the movie at a different time—could be substantial.
Will the Saturday night movie become a 21st century e-commerce purchase merged with a 1950s-era hot dog vendor walking the aisles before the movie starts and during intermission? Whats next? Bringing back drive-in movies except that the films are digitally beamed in from satellites and are played on the cars navigation screen?
The entertainment changes today are already threatening video-rental chains. I half-expect to see Blockbusters new TV commercials featuring the old lonely Maytag repairman. (“Come rent from us. Were lonely. Nobody needs us anymore. Remember our old waiver of late fee campaign, the one where late fees were replaced with automatically charging your credit card for the full purchase price of the movie? We were just kidding. This time well really waive the late fees. Heck, well waive all the fees if you just visit sometime.”)
Its even hitting music, with Tower Records financial problems marking the likely beginning of the end of physical music stores.
This brings us back to the Regal challenge. (By the way, I would be remiss if I didnt point out that having a chain called Regal with a CIO named King is a wonderful gift for writers everywhere.) Concession stands are, in theory, very simple retail operations, with very limited inventory. Its merely the wide range of payment options that makes them complex, along with the very tight time window of a movie theater.
If the concession stands could just take and fulfill orders, they could easily handle the onslaught. So moving payment away from purchase makes a lot of sense. But retrofitting a very old system and theater and conditioning people to act differently is difficult.
This is especially true when one looks at what a movie theater has become today. On the marketing diagrams, it is one of the most blatant examples of pure experience.
It will not be long before first-run movies will be easily available for a fee on every cell phone, cable system and satellite dish out there. Therefore, movie-goers will not be going solely for the film. Its the experience of watching it with friends in an audience of hundreds of strangers, laughing, crying or getting scared at the same moments.
That means its going to all be about comfortable seats, top-quality audio and video systems (smell-aroma? movement that is synced with what is going on in the film? appropriate temperature and other changes?), and superb customer service. In short, it needs to create an experience that a DVD player cannot re-create.
King and his counterparts are right to be scared of long lines, cold hot dogs, watered-down soda and stale-tasting popcorn. In a business that will soon be 99.9 percent experience, even one bad payment experience can be devastating. Nowhere is a CIOs role more critical.
Evan Schuman is retail editor for Ziff Davis Internets Enterprise Edit group. He has tracked high-tech issues since 1987, has been opinionated long before that and doesnt plan to stop anytime soon. He can be reached at [email protected].
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