What is happening in the vending and amusement market? How can I strengthen my position in the industry? What is my strategic plan for next year? These are just a few of the questions I’ve heard asked by manufacturers, suppliers and operators alike, and it’s not surprising. The alarming economic environment magnifies the risks associated with running a business – even if there is considerable disagreement on whether the economy actually is slumping – and finding the right answers is a survival skill.
Whatever the economy may be doing (and there is no disagreement that things have slowed down), perception is reality in popular economics, even more than in marketing. Uncertainty may make you more resistant to change than ever before. It’s important to remember that the downturn will end. You’ll want to be well positioned for growth when that time comes. When your competitors cut back, there’s an opportunity to gain market share.
While consumers’ faith in the economy is shaky, their apprehension will take its toll on discretionary spending. Now is the time to bolster the confidence of your clients, so they know you believe in long-term relationships that can survive difficult times. Trusted, high-quality brands and organizations with strong core values are especially prized during periods of anxiety. During a recession, the inexperienced players tend to shake out, and many established businesses go into a holding pattern. This is the time when strategic innovation and embracing new ideas can confer a disproportionate market advantage. Studies have shown that companies that spend more on innovation during a downturn will see a greater return on their investment, when compared with those that slash spending.
What does this all mean for our industry, and what steps can we take to ensure continued success? Where should we scale back and where should we invest? What products and services can help weather a downturn? I believe the answers have been staring us the face for some time, but we’ve been hesitant to respond.
Equipment reliability, route efficiency and product popularity remain vital ingredients in the formula for keeping key accounts and securing new ones. Since the cost of doing business has skyrocketed and mainstream vending locations have become smaller (and so less profitable, if nothing else changes), addressing the needs of each specific location is paramount.
Understanding individual taste preferences is more important than ever before. Weaker items in your product mix will need to be reassessed and planograms adjusted (or developed and implemented) accordingly. This is all the more reason to be open to new technology and innovation, and to do whatever it takes to find out what consumers really want. Instead of cutting your market research budget, it will be worthwhile to devote additional effort to questioning customers; you’ll need to know how your consumers define value as they respond to the recession (or whatever it is we’re experiencing). Providing a mix tailored to each stop will save the most money, with minimum customer impact.
If you’ve been to the spring trade shows, you know that the tools needed to take advantage of these opportunities are available. And I’m sure you also know that vend prices will have to keep pace with the cost of inflation. The smart operator will act swiftly, and be savvy and economical at the same time. Let your customers know you’re willing to work with them by considering temporary price promotions on select items.
As I broach this topic I am reminded of the 1983 comedy Mr. Mom. It starred Teri Garr as Caroline, a housewife who goes back to work at an advertising agency when the economy turns down and her husband loses his job. The agency’s most important client, a canner of tuna fish, needs a campaign to sustain sales during the downturn. Caroline draws on her experience as a homemaker and suggests that “Schooner Tuna” needs to show the women in its customer base that it truly cares about them during hard times.
From this perception comes the concept of “Schooner Tuna, the Tuna with a Heart.” In the commercial built around that concept, the president of the company stands in front of an American flag and reads a statement to the accompaniment of a patriotic tune. He says that Schooner Tuna cares and is lowering its prices for the duration of the recession: “When these difficult times are over we will return to our regular pricing; but until then, remember, we’re in this together.” (My contemporaries will remember this movie; others may look it up on Google’s YouTube.)
The point here is that respecting your customer is a key to a profitable long-term relationship. Maintaining quality rather than cutting corners, and continuing to give good service to existing customers, will go a long way during troubled times. Especially in a recession, it is critical to remember your “internal” as well as your external customers, to show them that you understand their plight and that you care. Executives should spend more time with employees, clients and patrons. Managers can reinforce survivors’ loyalty by assuring staff and clients that the company has survived difficult times before.
As a business owner, I’m plagued by the same challenges that you are. And as a publisher, I depend on the success of this industry (and ultimately on a healthy economy) for the survival of VENDING TIMES. You’ll find summaries of business-building seminars, and reports on all the latest and greatest products and services, in the pages of this magazine, but none of them will make a bit of difference if you’re not willing to pay attention to your customers, take some risks and reinvest in your business. Smart companies don’t just cut back during a recession; they adjust their sales strategies, reformat their offerings, recognize their loyal employees and adapt to a changing environment.
My colleague, longtime industry observer Tim Sanford, keeps telling me that all of this “has all happened before, and more than once.” Surely he is right. And if there is a lesson to be learned from the past, it is that soundly run companies that remain confident and invest in the future to the extent that they’re able will survive, and will have a competitive edge when the sky clears.