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Issue Date: Vol. 42, No. 3 / March 25, 2002 - April 24, 2002, Posted On: 3/25/2002


NAMA Leaders Deliver Progress Report At Spring Expo, Assess Forces Shaping Industry's Future


Tim Sanford
Editor@vendingtimes.net

LAS VEGAS - Trends in vending and coffee service, and the strategic plans drafted by the National Automatic Merchandising Association to help operators remain on the cutting edge of the fast-changing retail market, were explored by NAMA chairman Anthony J. Gagliardi, Canteen Vending Services (Charlotte, NC) and president/chief executive officer Richard M. Geerdes at the opening session of NAMA's Spring Expo here. The session's novel "fireside chat" format favored an exchange of information and views between the panelists and the audience. NAMA senior vice-president/chief operating officer Dan H. Mathews served as moderator.

Gagliardi welcomed the convention-goers and reported that the 2002 Spring Expo  had set a record for advance registration. He led off the discussion by observing that NAMA membership represents one of the best investments an operator can make. NAMA programs benefit everyone in the industry, and NAMA services are well worth the cost of enrollment.

Moderator Mathews got the ball rolling by asking about the principal economic factors affecting vending today, and the most significant changes affecting the industry.

Geerdes suggested that the most noteworthy feature of the present economy is the rate at which change is occurring, from ongoing immigration that makes the market ever more variegated to the continuing demographic shift toward the Western and Southern regions of the country. "Workplaces today are smaller and more diverse," he pointed out. "And there are more white-collar workers; they want quality and choice, and they're willing to pay for it." Workplace service operators thus must stay in close touch with consumers, and make every effort to determine what they want, he emphasized.

Gagliardi regards packaging innovation as one of the most striking features of the vending industry at present; the continual progress made by 20-fl.-oz. cold beverages is only one facet of this. "I think suppliers now are taking more care to design packages that will work in vending, too," he said. "And I expect to see continuing proliferation of gourmet coffees. We need to respond." Also in prospect, he added, is a sharper focus on restaurant and retail brands in the vending channel.

Mathews observed that The Food Network cable TV channel was visiting the NAMA Spring Expo, which reinforced Gagliardi's point. He asked what the NAMA chairman sees as the role of branding.

"Brands are what consumers prefer, what they recognize," the Canteen chief replied. "As we add brands, we build trust and confidence, and improve our image."

The moderator asked about the impact of continual swift technological change.

"Technology is more and more pervasive," Geerdes replied. "Look at what all of us are doing now, compared to what we did ten years ago.

"We must learn to do things that we're not comfortable with," the NAMA president emphasized. "That's the opportunity."

NAMA has striven to ease the industry's forward movement into new technologies, he said, and has listened to its membership. The Data Transfer Standard, which has evolved over almost a decade, is an example. "You wanted it," he told the audience. "And cooperation was required to develop it."

STAYING INFORMED

There has been much recent discussion, here and abroad, about the possible use of cellular telephones as cashless payment instruments for vending machines, Geerdes added. "Is this the non-cash answer? We'll see," he observed. "But you must look at this. What will you do when 'getting paid' is no longer a matter of bringing coins back to the money-room for counting?"

Cashless payment systems will be implemented, in one form or another, he predicted. Cell phones, smart cards, contactless RFID transponders like the Mobil "SpeedPass" , all are possible noncash solutions. The cost of processing small transactions remains high, but is unlikely to remain so forever.

Another technological innovation that deserves study is electronic couponing, Geerdes continued; "I've seen this work," he reported.

The present need is for fully integrated software able to tie everything together , or as much of it as a particular operator wants or needs, he suggested.

And matters are going to become more complex, Geerdes observed. There already has been successful experimentation with "wearable" computer chips, and with devices that can be embedded beneath the skin. It is quite possible that such technologies could give rise to a vending machine able to recognize its customers. "The point is that you can't afford not to keep up with all this," he emphasized.

Mathews noted that there also is a need for shorter-range strategic planning, both by individual operating companies and by the association. He asked Gagliardi for an update on NAMA's strategic planning initiative.

The NAMA chairman replied that this initiative was begun in 1999 after a great deal of industry cooperation, input from members, and time and effort on the part of the board of directors. The outcome was the establishment of the Strategic Planning Committee.

LONG-TERM OBJECTIVES

"Two years into it, we had achieved about 80% of our objectives," Gagliardi reported. "We're now in the third year, and our goal is to achieve the remaining 20%. We're taking a new look and conducting a telephone survey," he explained. The Strategic Planning Committee will review the results, draft a plan for the second phase, and present it to the board of directors before the 2002 NAMA National Expo in October.

Mathews asked about the NAMA Foundation, and its role in shaping the association's strategic course.

Gagliardi explained that the Foundation was established in 1982, as a separate organization whose mission would be to foster education and gather industry data. In that role, the Foundation sponsored industry research in 1994 and 1995; and, in the latter year, its charter was expanded to include improving the image of the industry. In 1998, it commissioned the association's second Hudson Institute forecast. The culmination of efforts to strengthen industry education was the endowment of a professorship at Michigan State University in 1999.

Mathews added that NAMA's education director, Mary Krukoff, has done an excellent job of putting together an expanded series of programs for members. "Why this focus on education?" he asked.

"Because knowledge is power," Geerdes responded. "Our surveys have shown that 70% to 75% of our members regard continuing education as 'important' or 'very important'; education adds value for our membership."

In its educational programming, NAMA strives to focus on critical skills in the vending, coffee service and foodservice businesses, he explained; a major object is to improve profitability, because profitability equates to survival.

Also pursuant to its educational mission, NAMA is planning more regional programs, to save members travel time and expense. It is working with its affiliated state councils on this initiative, Geerdes explained. And the association has begun online educational programs at its website, as well as the formation of online "business communities" in which operators can share ideas and exchange information.

INDUSTRY PERFORMANCE

Mathews asked about the progress of NAMA's "How's Business?" survey.

"People always ask us, 'How's business?' So we decided to find out," the NAMA president explained. "NAMA did a 'How's Business' survey in the 1960s; today, we can do it on the Internet, and we can tabulate replies by region and other variables too." Four or five questions will be asked, and it will take an operator a couple of minutes to answer them. Participants will receive an immediate summary of results to date.

Mathews reminded the audience that NAMA also is developing a model customer satisfaction survey that members can use or adapt to improve service and client relations. Improved responsiveness will bolster vending's image, he suggested, and he asked Gagliardi what else NAMA is doing in this regard.

Member concern over the image of the vending industry was evident when the NAMA board of directors laid the initial groundwork for strategic planning, three or four years ago, Gagliardi replied; "The industry opinion was that ongoing work must by done by NAMA to improve the way we're perceived."

One response was to establish a committee, chaired by Dick Atnip of Atnip Co. (Fullerton, CA), to explore  ways in which NAMA can work with its supplier members to show vending, as well as other retailing methods, in consumer advertising. Operators have desired this sort of exposure for a long time, he pointed out.

There is also the business ethics program, Gagliardi noted. "It's controversial," he said, "but we are making progress. The next step will be an industry certification program. We need your support."

Mathews recalled that the National Automatic Merchandising Association was founded in 1936 in order to give the infant vending industry a unified voice in dealing with legislators. He asked Geerdes to outline current legislative priorities.

A major one is to promote use of the new dollar coin, the NAMA president replied. The introduction of a common currency in the European Union has called new attention to this , there is a two-euro coin, presently worth just under $2, that now circulates from Finland to Italy and Spain. Congress is interested in the issue, he said, and plans to hold hearings on the obsolescence of U.S. currency. "We will testify at those hearings," Geerdes said. "We must eliminate the $1 bill." Doing so also would save the government money, which is a more attractive prospect now that the budget surplus has vanished, he added.

EYE ON TAX LAW

Other legislative concerns include the dangers inherent in present proposals for a uniform sales tax, he continued. The swift growth of Internet commerce has aroused concern on the part of state governments over their inability to collect taxes on online purchases by their citizens. If Internet retailers are to be required to collect and remit sales taxes on purchases made by customers in 50 states, standard definitions of taxable and nontaxable merchandise, and a uniform rate, will be essential.

The difficulty about this, Geerdes noted, is that the vending industry always has had its own difficulties with collecting sales tax on small purchases made at prices that must be set in nickel increments. Accordingly, NAMA's state councils have worked diligently with state governments to find alternative methods for determining and remitting required taxes, and these can vary widely from one state to the next. Any attempt to arrive at a uniform approach to state sales taxation can imperil these solutions. If a proposal for uniform sales tax treatment is adopted, NAMA wants it to specify that each state will be allowed to maintain any existing vending exemptions , which, after all, have nothing to do with e-commerce.

And NAMA continues to oppose redesign of the $1 bill, he said. The Treasury Department also sees no need to do this, since $1 notes are not worth counterfeiting. The cost to the vending industry of adapting equipment to accept a new $1 bill would be tremendous, and the association remains sensitive to proposals for redesign.

Vending in schools also is an issue that requires continual vigilance, Geerdes added. As concerns are voiced about childhood obesity, vending machines are an easy target, he pointed out. "What we, and many others, say is that attention should be paid to the expenditure of calories, not just their intake," the NAMA president emphasized. If childhood obesity is the problem, the fact that many schools have reduced or eliminated physical education requirements is a likely contributor.

Gagliardi emphasized that these are issues of tremendous importance to the vending industry as a whole. "We must band together," he told the audience. "When NAMA asks us to contact our elected officials about an issue, we have to do it."

Geerdes concluded by observing that every industry progresses by balancing cooperation and competition. It's necessary to collaborate, through temporary or permanent partnerships, in order to achieve objectives that will be beneficial to everyone. "We all adapt to the market," he summed up. "If you don't change, you vanish."


Topic: Vending Features

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