I’ve got three questions for our industry’s suppliers and manufacturers, during these difficult times: (1) Are you in or are you out? (2) Do you still believe in the business of automatic retailing and entertainment? And (3), do you still believe in marketing products and equipment in the vending and amusement channel?
For as long as I can remember, this industry has been characterized by a tradition of responding to challenge with creativity, and I refuse to believe that we are any less resilient today. For instance, an operator friend recently told me that he is working with a Thai lady who has a catering business. She prepares fresh food for his vending location, and provides a different variety daily. He told me that the food she makes is not only good, but also pretty; she is a culinary artist and cuts the vegetables in the shape of leaves and flowers. Food operators know that people “eat with their eyes,” and this initiative has really gone over well and has enabled him to increase his vend prices. This is only one such illustration of ingenuity that I’ve seen in the vending community.
On a larger scale, online grocer FreshDirect has expanded into corporate catering in New York City, and vending is an important component of its program (see VT, Jan.). I find it interesting that they consider themselves to be in the business of gourmet catering (not vending per se), and they think of vending technology as a means for delivering quality product safely and conveniently. The menu is developed in cooperation with local restaurants, and patrons are willing to pay $7 to $10 for a meal. The wirelessly monitored machines only accept cashless payments. The specialist retailing approach – “we have a wonderful product, and we can deliver it to you through this vending machine” – is an interesting switch on the traditional proposition (“we run vending machines, and they can sell whatever you want”). Operators looking for a new business model might keep this in mind.
Specialty manufacturers who are pursuing niche markets and responding to individual needs are succeeding with this approach. For example, Star Foods has been taking advantage of the power of publicity to send out media releases across the country explaining how school administrators can use vending to maximize the value of the Department of Agriculture’s reimbursable meals program (see VT, Nov. 2008). The key here is a vending machine that can deliver a meal meeting all USDA requirements, and a cashless payment system that allows meals to be provided at different prices based on individual circumstances. The payment medium identifies the student and price tier to the vender.
Vending always has been popular with kids, and in today’s crowded, time-constrained schools, the ease, speed and convenience of vending increases student participation in the meal plan while reducing labor cost. Star Foods has formed a strategic relationship with Kraft Foods, which is prepared to help schools purchase the equipment if they will include suitable Kraft products in their meals. This is the kind of collaboration that represents a win-win for suppliers, manufacturers and operators alike.
In the area of coin-op entertainment, companies like Merit Entertainment and Incredible Technologies are banking on promotions as the key to future videogame success. Ongoing promotion is a service that enhances the value proposition that operators offer their locations, and can strengthen operator relationships with locations while building a loyal player base (see VT, Jan.). I think the concept of promotional marketing can be applied to vending locations, too – and more easily now than ever before.
So, why am I telling you this and what do these very different approaches have in common? All of them offer proactive ways to help clients and locations deal with the problems of a down economy. They also offer consumer-product suppliers real opportunities to present their offerings to a compact group of resellers who possess tremendous collective leverage. For food, beverage and product purveyors, vending has always been an inexpensive way to “blitz” the adults-away-from-home market.
This is why it surprises me that – in contrast to those examples of ingenuity – so many well-known companies have chosen to play defense, so they appear to have abandoned our industry. It’s as if they have curled up to hibernate and won’t come out until the spring thaw. Do they assume that customers will always find them, with no encouragement, because they are so well known and indispensable? I think that those who lie dormant are in for a rude awakening when the skies clear.
It is hardly shocking that manufacturers aren’t selling much equipment in a market with fewer locations and a surplus of good-working machines in operator warehouses. What is alarming is that these manufacturers are essentially saying to their lesser-known or new competitors: “Take our business, please! If we can’t hit a home run in every at-bat, we’re going to stay home.”
Even more disconcerting is that many suppliers seem to be following a different path to the same destination. The old sales model of marketing products to an undifferentiated mass of consumers whose desires you infer by statistical methods no longer seems realistic. The new approach should be designed for a diverse, alert and informed population looking for choices and demanding value in a period of economic adversity.
Forecasters view the prospect of 10% unemployment with understandable alarm; but, if it happens, nine out of 10 members of the American workforce will be employed. There always is a large audience of away-from-home consumers who need to eat and be entertained. And there are still millions of patrons who find reliable technology appealing. Operators are serving that market, and their purchasing decisions condition what all those people find available to buy.
So, when I ask the question, “are you in or are you out?” I’m not questioning necessary belt-tightening. I am asking whether you’re willing to rethink your strategy to reflect your belief in the vending and the amusement business?
Freezing all promotional expenditure is a purely defensive strategy, and so dangerous; the offensive is the only way to control the situation. So: here is the call to action:
1. Build the brand. The more visibility, the better. But don’t compromise your company’s raison d’être, its reason for being.
2. Spread the good word. Your marketing people will have to do more of that when PR departments are pared back. The trade magazines can help you with this.
3. Be positive. When the budget is cut, don’t disappear. Let customers know that your products and services will never be compromised, and that you value their business more than ever.
4. Sympathize and empathize with your customers, internal and external. Don’t go into hiding. Be forthright; making patrons and employees feel important and part of the process is especially vital in a bad economy. Above all, show up for your industry partners. Emphasize the value of your relationships, and find ways in which to meet the current challenges together.