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Issue Date: Vol. 47, No. 2, February 2007, Posted On: 2/7/2007


UPFRONT: An Industry And World Undergoing Transformation


Alicia Lavay
Alicia@vendingtimes.net

I had the pleasure of attending the Amusement Trades Exhibition International in London, England at the end of January. Although I’d been able visit this show for 16 consecutive years, the distractions of business ownership forced me to skip the past two. Yes, I too am guilty of getting bogged down by the daily grind, and need to be reminded of why I am in business in the first place. The ATEI show was an excellent reminder.

Frankly, with the grim industry mood of late, and Western European currencies impractically strong, I really wasn’t sure what to expect. And I wasn’t sure that this trip would be worth its weight in pounds – given that the pound’s rate of exchange has risen to $2 U.S.!

The show floor was crowded and the mood upbeat, as U.S. music and game manufacturers are enjoying a strong export business (those weak dollars are good for our exporters). The bulk vending industry also appears to be riding this bandwagon; I never saw so many U.S. bulk vending manufacturers and suppliers exhibiting at this show before. I’m not sure what this means for our industry, but I would guess that high-denomination coinage has widened the market for bulk vending and increased its appeal, not only in the UK (which replaced its £1 note with a coin in 1985) but throughout the European Union – the t2 coin is worth about $2.60 U.S. You can vend very attractive bulk merchandise when the customer finds it easy to pay $2 or more for it, with a single coin ... but, that’s a different column for another month.

I was also struck by the conflict between the gaming and amusement industries in the UK. A variety of pay-to-play games that offer patrons the chance to win small, or large, prizes are legal in Great Britain: Amusement With Prize (AWP), Skill With Prize (SWP) and so forth. It’s not uncommon to see such machines in local video game arcades. The government is inclined to accuse the arcades of attracting unsavory characters, and views with alarm the supposedly insidious effect of ordinary pay-to-play games on innocent youth, yet permits casinos and legal gambling to a much greater extent than the U.S. does. According to some operators I spoke with, this odd bias is hurting the traditional coin-op amusement market in Great Britain. Could this be an opportunity for a more family-friendly entertainment experience, a more positive image and a larger market?

Smoking bans also have reduced traffic in London’s bingo parlors, in much the same way as they have affected bar owners and street operators here in the United States. Most bingo parlors have pay-to-play games or bell/fruit machines, and if the patrons go outside to smoke, they aren’t patronizing those machines. The bingo parlor is an institution that seems to attract a wider demographic in the UK than does its counterpart here, and a substantial number of its devotés appear to be smokers.

A point that also deserves attention is the strength of our U.S. dollar. When discussing my experiences with our editorial staff – “debriefing” them, as our editor likes to say – I referred to the dollar as “weak.” I was thinking of its ability to purchase hotel accommodations in London this year, compared with the situation a decade ago. At that time, $1.66 U.S. would get you £1.

This provoked some objections. I was reminded that the U.S. dollar has been “weaker” than many Western European currencies, most of the time, since the 1970s, and that the pound actually was “stronger” against the dollar 35 years ago than it is now. The present situation, then, seems to say more about the respective rates of price inflation than anything else. A truly weak dollar would work against Americans seeking to buy imported goods, including those from Japan, South Korea and Taiwan, and this certainly does not appear to be happening today. And the People’s Republic of China has controlled the exchange rate of the yuan to make Chinese exports even more competitive . Many U.S. manufacturers and suppliers (and those in other countries, too) have seen this as a great opportunity that makes it easier for them to compete in today’s market.

And, looking at the exhibits and the exhibitors, I also was reminded of how this opportunity and other interrelated developments are rapidly changing our industry – and just about everything else. In merchandise vending, especially refrigerated food and traditional hot beverages, both North America and Western Europe have been affected by the transformation of the industrial sector. Many manufacturing enterprises in the developed world are keeping their research, development, design and prototyping functions at home, while “outsourcing” production to less-developed countries with skilled workforces, low wages and government policies promoting industrialization. This is dispersing the industrial workforce, here in the United States and in other “first world” countries, into smaller, more specialized facilities less suited to traditional full-line vending service than the classic factories were.

In a related process, the old “blue-collar” mindset and preference profile is disappearing. Today’s market rewards the versatile operator adept at customizing menus of products and services and modifying them rapidly when necessary. Above all, success has come to depend on meeting the value expectations of a customer base that is much less hostile to innovation – even favorable to it – but far more demanding and diverse. These new patrons will pay a fair price for products they want and service that’s trustworthy, efficient, fast and (ideally) fun.

This social transformation also affects the music and games industry. The street location model of the 1950s and 1960s was the neighborhood tavern, and that tavern’s characteristic patron was the urban worker who stopped in faithfully for a beer (at least) on his way home. Today’s patrons are more varied, but they tend to include more family groups, more youngsters and more adults who used to be “young upscale professionals” before they grew up. These people are finding the recreations and the music they like, and operators who understand those tastes are finding them to be good customers.

So I returned with a feeling of optimism and a sense that things are not as bad as they sometimes look. We are indeed in an industry, and a world, undergoing transformation, but that doesn’t mean there aren’t opportunities to be had.

 


Topic: Upfront with the Publisher

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