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Issue Date: Vol. 46, No. 10, October 2006, Posted On: 10/9/2006

Coinstar Reports Successful Results Following Test Of Higher Price-Points

Hank Schlesinger

BELLEVUE, WA — Coinstar Inc. said it has completed one of the largest and most comprehensive pricing tests ever conducted in the bulk vending industry. The testing, which took place in multiple markets across the country, focused on a wide range of bulk vending products – both readily available merchandise and product lines manufactured exclusively for bulk vending – with price points set at 75¢ and $1.

According to Fred Simon, president of Coin-Op Factory Inc., a subsidiary of Coinstar, the test results were encouraging and have led the firm to continue expanding to higher price points for its merchandise; the company has set a realistic goal to re-price as much as 20% of bulk heads and 10% of cranes on location by the first quarter of 2007.

These test results may mark a significant milestone in bulk vending. In past years, operators have consistently reported consumer resistance to higher price points. According to Simon, the company was successful in overcoming that resistance to higher prices, and credits some of this success to the use of value-added merchandise.

Coinstar’s aggressive move into higher prices may bode well for smaller operators. As the largest operator of bulk vending equipment in the country, Coinstar’s upward pricing policy has the potential to acclimate consumers to paying higher prices for bulk vended products.

The new pricing policy may also pull additional products with high-perceived values into the marketplace, eliminating a key hurdle for operators in the transition to higher pricing.

Industry veterans have maintained that a primary barrier in setting higher prices has been the unavailability of merchandise with the perceived value necessary to overcome consumer resistance. While Coinstar has stated its intention to create some products for proprietary use, industry suppliers may move to create nonproprietary products that fit the high-perceived value criteria that would benefit the industry in general.

Coinstar, founded in 1991 to provide self-service coin counting machines to retail establishments, has become the largest bulk vending and skill crane operator in the country. In 2004, Coinstar acquired American Coin Merchandising Inc. and its subsidiaries – Sugarloaf Creations, a leading provider of skill cranes, and Folz Vending, the country’s largest bulk vending operator. In 2005, the firm acquired The Amusement Factory, an operator of a full line of entertainment services, including skill crane machines. Today, the multinational firm serves more than 65,000 locations, including many of the nation’s largest discount retailers and supermarket chains.

Topic: Bulk Vending

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