Coinstar looks for the next big thing in automated retail.

Coinstar’s Redbox business began 2010 by renting out more movie DVDs and Blu-ray discs in the first three months than Blockbuster — a major milestone cast as David toppling Goliath.

Nine months later, Blockbuster had gone belly up, and Redbox was second only to Netflix as a source of inexpensive movie rentals, solidifying its place as a dominant player in the U.S. home-entertainment market.

At the end of 2010, Redbox operated 30,200 self-service machines dispensing movie DVDs for a dollar a day at supermarkets, drugstores, fast-food restaurants and other places shoppers regularly visit. Redbox took in nearly $1.2 billion last year, accounting for 80 percent of Coinstar’s total revenue.

Bellevue-based Coinstar began buying into Redbox in 2005, when it was a fledgling McDonald’s venture, and took full ownership in 2009.

Although Coinstar has since sold businesses unrelated to Redbox and its namesake coin-counting machines, it continues to look for the next big thing in automated retail.

Redbox, for example, will add video-game rentals costing $2 a day to more than 21,000 locations nationwide by July 1.

Also, Coinstar has injected an undisclosed amount of money into ecoATM, a new venture that seeks to provide a convenient way for people to get cash for their old electronic devices, such as cellphones and iPods.

Still, whether 2011 has a happy ending for Coinstar could depend on what Redbox does next.

Some on Wall Street have grown impatient with Redbox’s indeterminate plans to introduce a video-streaming service on top of physical disc rentals.

In February, Redbox President Mitch Lowe told analysts the company was getting closer to finding an online partner for an unlimited streaming offer to take on Netflix. But the company has said only that full details will be released this year.


Let the speculation begin about Walmart Market

Walmart is moving forward with what could be characterized as a roll out of its Neighborhood Market format nearly 13 years after the first unit opened in the fall of 1998. Just don’t call it a Neighborhood Market.

The company has rebranded the small format food and drug combo store as Walmart Market  and as Bill Simon, president and CEO of the company’s U.S. stores division made clear during an investor presentation yesterday, the financial returns are now comparable to those of the company’s supercenters. That has encouraged the company to move faster with expanding the based of 155 domestic Walmart Market stores.

“There are 180 that have been approved through our real estate committee,” Simon said during a presentation at the William Blair & Company Growth Stock Conference. “We expect to have about 300 of them by 2013. The number for next year is approaching 100 that we’ll be able to put in.”

Now the guessing game can begin about how many of the approximately 40,000-sq.-ft. stores the company might ultimately be able to open and the time frame in which the expansion could occur given Walmart’s resources, available real estate and an army of assistant store managers who have undergone the retail equivalent of Navy Seal training by working in Walmart’s supercenters.

Simon said the company was also encouraged to move fast because the smaller stores have a shorter development timeline than a supercenter, which means a significant number can be added more quickly.

The ramp up in expansion has been a long time coming. When the first units opened in the late 90’s the concept was viewed as a growth vehicle, and there was considerable conjecture around how quickly the concept could be expanded. However the operating model was never quite right and there were abundant supercenter projects in the pipeline. While Simon asserted that supercenters remain the company’s primary growth vehicle in the U.S. the tipping point would appear to be at hand where within a few years ground up new supercenters will become increasingly rare and small-store openings more commonplace.

Simon referenced providing more details on the Walmart Market expansion in October, which is when the company holds it annual investor conference and reveals it capital expenditures budget for the coming year along with details around square footage expansion and stores openings by format type. Simon broke with tradition a bit by revealing 2012 growth plans for the Walmart Market but these days investors are clamoring for information on how the company expects to growth given the two year slide in same-store sales. In addition to the significance of the expansion news, the timing of the disclosure is noteworthy as well. Just two weeks earlier Walmart held its annual shareholders’ meeting, which was followed by a two-hour meeting with analysts where divisional presidents and CEOs and Wal-Mart Stores president and CEO gave brief presentations and fielded questions.

Pharma Cos’ Rural Growth Doubles on Sales Push

Rural drug market grew 18.8% in FY11 against 10.9% last year

Pharma companies have seen rural market sales doubling on the back of aggressive marketing initiatives. Improved access to healthcare and rising incomes have seen a stronger perk-up in the underserved rural market over the past year. 

For the 12 months period ended April 2011, India’s rural drug market grew 18.8% compared with 10.9% in the previous year. This is a sharp jump from the growth rate in the same period of 2009, when the rural market had actually shrunk by 2.1%. In April, rural drug sales grew by 28.6% against 12.4% and 2% in 2010 and 2009, respectively, data from IMS Health Information and Consulting Services show.

Though rural markets account for a modest 18% of the . 58,000-crore domestic drug market, drug firms and analysts expect this segment to sustain the high growth rate and increase its share in the pie. Interestingly, while the share of metros — 30 cities with population over 10 lakh — in the country’s drug sales continues to rise, the smaller class I and class II-VI category towns are witnessing a decline. In the last year or so, top Indian companies such as Ranbaxy, Dr Reddy’s Laboratories, GSK and Sanofi Aventis have ramped up their sales and marketing force hiring hundreds of sales personnel to push sales to the country’s hitherto neglected hinterland. India’s largest drugmaker by sales, Ranbaxy Laboratories, increased its field force by 1,500 or 50%, the largest recruitment drive in the past decade. Apart from adding marketing muscle, pharma firms have also aligned their product portfolio for the under-penetrated rural markets, said Kumar Hinduja, acting MD at IMS Health Information and Consulting Services India.

For one, French firm Sanofi Aventis plans to double its market share to about 4% by launching generic drugs targeted at rural markets at low prices. For this, it hired about 500 people while other big players such as Dr Reddy’s, GSK and Elder Pharma also added hundreds of marketing personnel to beef up its sales network in rural towns. Sujay Shetty, director, life sciences and medical devices at consultancy firm PricewaterhouseCoopers, said companies need not realign their marketing plans because the different segments are complementary. Besides, the rural market numbers were earlier subdued because many traders used to come to big towns and cities to buy their stock, and were thus accounted in non-rural numbers.

Metros continue to grow strongly because they have huge commercial potential, while the relatively lower growths in Class I — VI towns was due to gradual decrease in patient traffic from rural areas to these towns, following improvement in healthcare delivery levels, said Hinduja. 

%d bloggers like this: