Crane Machine, Coin-op, Coin-operated, Arcade Game, Amusement, Pinball, Videogame, Redemption, Coast to Coast Entertainment, Vending, Vending Machine, Gary Balaban
When it comes to cranes, the news is not so bad. Despite what some are calling "dismal" equipment sales, the category itself has not fallen out of fashion or favor with operators and players. Several factors not directly related to the current economy have contributed to distortion of the crane market, mostly in terms of new equipment sales. A significant and unexpected influx of used cranes came into the marketplace as Wal-Mart Stores Inc. and other big retailers cut back on their coin-op offerings or shuttered their doors.
Rough estimates from the field place the number of used and "pre-owned" cranes recently entering the market at 10,000 to 18,000 units. This unprecedented release of working used equipment has soaked up many potential new machine sales, causing a bottleneck in manufacturers' supply chains.
Shown here are samples (provided by Coast to Coast Entertainment) of cranes offering gift cards to well-known chains that use the brands' power to draw attention to the machines. Creative gift-card packaging (cups, in this case) adds novelty to the play experience. At far right are examples of "mono-merchandising" – stocking a crane with one specific item so that players know that if they win, it will be a prize they've chosen. Ball cranes offering single mixes often outperform those stocked with "mixed" mixes, experts say. Visit cranemachines.com for more information.
"The crane market was impacted greatly by the Wal-Mart shift 18 months ago," one manufacturer said, referring to the retail giant's shift toward replacing many traditional front-end coin-op devices with DVD venders and coin counters, as part of its latest strategy at the front of the store.
"At some Walmarts there were 25 merchandise vending machines and amusement products," he said, "and Coinstar handled over 1,200 Walmarts by themselves, and other key operators had a large number." All that equipment flooded the market, he explained, but it doesn't mean the demand for crane equipment is less-than-normal overall.
Manufacturers, though no doubt distressed by the deluge of used equipment readily available, have largely viewed it as a temporary aberration that will eventually self-correct.
"We think it'll reach equilibrium later this year, and then the demand for new cranes will increase. And we don't believe the number of crane suppliers will decrease," said Jim Dupree of Smart Industries. "Cranes have made a solid print in the concrete of this industry. We started producing them in 1987, and think considering cranes 'staple' equipment is well founded. The crane will make money as long as the operator maintains it and introduces new product with it. It will sustain its earnings, and people in the industry have recognized that."
Adding to the crane segment woes and creating something akin to the perfect storm was the sudden downturn in the economy. Consumer spending plunged in a way that seriously impacted cashboxes of even the most profitable locations. Daily headlines and broadcast news reports of economic doom and gloom prompted consumers to close their wallets – so for many operators, declining profits were at first taken as an inevitable "sign of the economic times."
However, manufacturers and suppliers began to respond to market conditions with a host of new strategies and products aimed at boosting cashbox revenue. S&B Candy and Toy Co., for instance, recently introduced its Route 66 Refrigerated Chocolate Crane. The unit includes all the features of the company's popular standard 31" Route 66 model, and boasts a top-mounted cooling unit to keep chocolate products from melting. A rear display shelf, new lighting configuration and a small claw designed specifically for chocolate merchandise help further refine the machine.
"Manufacturers are adding new features to cranes to make them more attractive to operators and players. That means making cranes that fit new niches," said S&B's Marty Luepker. "I actually had a guy come up to us at the ASI show and say his chocolate crane made 10 times the money as his regular candy cranes. This was in a boardwalk location, so he had the traffic. But what drives chocolate sales is adults – because adults eat chocolate."
Luepker and other industry pros see variety as a key to keeping cranes relevant and earning. "Cranes have to differentiate a bit. A standard plush crane looks the same today as it did 20 years ago," he said. "We didn't even show a plush crane in our booth at ASI – we sold a lot of plush, but didn't exhibit a crane for it. We had a ball crane, a jewelry crane, the chocolate crane and a candy crane, and they are driving our 'new crane' sales."
But what is driving sales at the location? The answer: the product in the machine, period. And the economic downturn may not have caused consumers to snap shut their wallets as tightly as first imagined, though it does take more to entice them these days. The simple thrill of "winning" may no longer be enough to pry those wallets open – customers must feel the prize is worth winning.
"Retail-type items of high quality are attracting attention, products that look high-end, rather than like 'carnival market' merchandise," said Katherine Braun, sales and marketing manager at Sega Amusements USA. "Right now we're definitely advising operators to use solid cases of our plush, and to not mix lesser-value and higher-quality pieces in the same machine. People think that if they throw higher-quality items in with low-quality ones, players will play more. But we've seen better sales if the machine offers only high-quality items, instead of a mish-mash."
Operators are noticing the benefits of using of higher-quality merchandise, too, Braun said. A recent stock of closeout merchandise offered by Sega sold out at a record rate. "We've never gone through our closeout merchandise so quickly," she reported. "When we offered closeouts in the past, it took four to six months to sell the stock off, but this last closeout went in two weeks. So operators are looking for higher quality, but the benefit of the closeout price."
While Braun said her firm's Disney and Marvel licensed products are consistently hot sellers, she has observed a new aggressiveness among operators when it comes to merchandising and promotion. "I would say that operators have become more picky than ever about the products. They are asking more questions, and asking for decals and posters to decorate their cranes so they're eye-catching to the customer."
The idea, explained Braun, is to create a "retail look" for the crane that attracts players in search of a bargain. "We have Winnie the Pooh plush, which is the hottest item right now. Operators tell us it's doing fantastic," she said. "I believe players are playing for that item, rather than going to the store and buying it for $25."
Gary Balaban of Coast to Coast Entertainment agreed with Braun's assessment, though in a significantly more succinct manner.
"You can't offer a crappy piece of plush and expect them to play for it 'just because' on impulse," he said. "You have to give the customer something of value that makes them reach into their pocket and take money out to play for it."
KEEP IT FRESH
According to Balaban, those operators doing best right now are those who have found "a new way of doing business," replacing the tried-and-true generic plush with higher-value items. "What I've found with my customers is that the guys who are succeeding are those who are watching the trends," he said. "Customers now want all the cool electronics and higher value prizes, like iPods, MP3 players and Nintendo Wiis – things that they know have a high value. They can equate an iPod in a machine as being worth $50 to $150, depending on the model. It's not even a perceived value – it's a concrete one."
Balaban also has seen an increased use of gift cards as crane products. "Last year, operators offered gas cards and Dunkin' Donuts cards," he said. "Prepaid gift cards give you a lot of flexibility. You can team up with a local chain, if it's a strong chain. I know an operator who teamed up with the local surf shop and he says it's working phenomenally."
Gift cards, even more than popular electronics, present potential players with a fixed product value – thus, the math of the potential payout versus the expenditure to play becomes easier for the consumer to calculate.
However, higher-value products, explained Balaban and others, require careful presentation. This factor led Coast to Coast to revamp the lighting system on its popular 31" crane, now available with longer-lasting and more efficient LED case lighting and high efficiency/high output fluorescent lighting.
"Operators have learned – although late, but better late than never – that merchandising is a valid opportunity in the amusement industry," said Smart's Dupree. "The operators with foresight to get into it properly and maintain their routes have proved that there is a big benefit to being in the crane business."
The trend toward enhanced presentation directly returns to the issue of all those used cranes entering the marketplace. Although "priced to move" and to clear out warehouse space, operators have reported that many of those used units are "classics" – that is to say that they were built a decade ago specifically for "generic" plush mixes.
"The older used cranes don't have the same features as new cranes," said Balaban. "Their features and functionality aren't suited to offering higher-value goods, and the higher values are what's drawing in customers."