LAS VEGAS -- The National Automatic Merchandising Association continued its tradition of presenting a technology overview during the annual OneShow. Two successive panels were moderated by Dr. Michael Kasavana, NAMA endowed professor at the School of Hospitality Business, Broad College of Business at Michigan State University (E. Lansing). The theme of the two-part seminar was "leveraging technology in vending operations." The reason to do this, Kasavana explained, is to gain a competitive advantage through improved productivity and enhanced profitability. "Profit is not a four-letter word," he reminded the audience, "but loss is!"
The first session's panelists included Glenn Butler, VendScreen; Matt Caston, 365 Retail Markets; Jeffrey Mayoros, Wittern Group; Gene Ostendorf, InOne Technology/Coin Acceptors (Arrow); and Randy Smith, LightSpeed Automation.
Caston led off with a review of the progress of micromarkets, which he described as small-format unattended stores. Vending operations are adding these at a brisk pace, he observed, estimating that there were between 1,500 and 2,000 of them on location at the end of April, with new ones being placed at a rate of 200 a month.
A micromarket is built around a terminal that can recognize products by scanning them, then display a total price and accept payment. Caston said that the typical micromarket offers between 150 and 200 stock-keeping units -- seldom more than 250 -- including fresh food, displayed in reach-in and sliding-door coolers.
Commissary-prepared food has been a major driver of micromarkets' success, he reported, with operators reporting a sales lift in the vicinity of 50% to 60%. Products of all sorts can be offered for sale.
Terminals today are available to accept payment in the form of cash, debit and credit cards and stored-value instruments, the 365 Retail Markets executive explained; operators can choose the forms of payment best suited to the location's requirements. The terminal also can be equipped with a help button (or a helpline) to assist customers.
A micromarket is run under the honor system; it is unattended, and the patron must scan and pay for his or her selections. This has not proven a deterrent to placement, Caston noted.
"There was some initial reluctance, based on fear of theft," he recalled. "But there are security systems, and there is interaction with consumers." Security includes surveillance by cameras that send their images to digital video recorders and to the operator's secure website for real-time viewing. In practice, losses from theft have been minimal, running in the range of 2% to 3%, he said.
Caston emphasized that a prime objective of micromarket security systems is the assurance of food safety. Coolers can be equipped with remotely monitored temperature gauges and locking doors that prevent access if refrigeration is lost. This continual remote monitoring tracks a variety of functions, allows easy real-time access to transaction data, and triggers immediate alerts to the operator when corrective action is indicated.
Contemporary micromarkets are managed by SaaS, accessible to clients over the Internet. This gives the operator the ability to review and manage the installation with a variety of devices, including smartphones, and enables tight control of inventory.
The cloud-based management system also allows the operator to conduct a wide range of promotional programs, as other retail channels do, Caston continued. These can include seasonal and event-based promotions, and tools like "digital coupons." The use of "market cards" as payment media can associate the patron and the transaction, for loyalty and location-based incentive initiatives.
The panelist summarized the benefits operators are receiving from micromarkets as the elimination of commission payments, the reduction or elimination of subsidy requirements for foodservice, the opportunity for closer cooperation between operators and suppliers in conducting promotional and incentive campaigns, lower maintenance, and the ability to approach new clients while increasing sales to existing ones.
To realize these benefits, Caston concluded, the operator must keep an open mind, recognize that micromarkets are in fact something new and take a disciplined approach to implementing them in the context of a system designed specifically to maximize their strengths. "Remember that taking an old process and applying new technology to it just gives you an expensive old process," he warned.
Dr. Kasavana then introduced Wittern Group's Jeffrey Mayoros, who spoke on new customer interfaces for vending machines. He used U-Select-It's touchscreen iCart system to illustrate the state of the art in this fast-evolving field.
ICart is a built-in 7" video touchscreen display that replaces the traditional selector keypad. It interacts with both vending patrons and service technicians, is integrated with the machine's controller, and is backed by a central server running Microsoft's SQL database software.
Mayoros explained that a touchscreen display and selection system supported by a powerful central database offers operators a broad spectrum of new tools to meet contemporary demands, from access to nutritional and ingredient information for each product through planogram development and management to location-specific and promotional messaging. An iCart installed in an offline machine can be updated with new program information by a route driver or supervisor plugging in a simple USB memory device; the system also can transfer current data for upload back at the office.
The central database will accommodate product information and product images, too, Mayoros continued. USI's "inDEX" software, which runs under the Microsoft Windows operating system, can be installed on the office computer. It allows the operator to input, organize and store text and graphical data, from ingredient and nutritional lists to promotional and advertising material. The inDEX software also may be used to design and modify planograms.
"You assemble the information first, and then build the database," the panelist summarized. Much of this functionality is applicable to pre-iCart machines, too, if they are equipped for DEX data transfer through handheld route computers.
The iCart screen is capable of displaying a selection keypad, images and promotional material, and can rotate from one graphics set to the next. It supports screen editing by means of Adobe Systems' image editing software, with instructions supplied in Adobe Portable Document Format.
New for 2012, Mayoros concluded, is the ability to import information from the product database and change the planogram, right at the machine.
An often-asked question when dealing with adopting and integrating new technology is where to start. LightSpeed Automation's Randy Smith observed that, in order to answer it, one must know how far one has progressed along what he calls the "innovation journey."
Stages along this journey include, for example, installing a capable vending management software system, making sure that all the equipment in the field is DEX-ready, and using handheld route computers to collect transaction information from those machines. Beyond that, "are you prekitting your route orders? Are you using a remote machine monitoring system? Do you run any micromarkets?" he asked.
Operators will have different answers to the "where are we?" question, Smith continued. Once it is answered, the next step is to decide where one wants to go. "You can travel at any speed you like," he added.
Having determined where one is and where one wants to be, the third step is to calculate the cost of getting there, Smith continued. That cost is not only expressed in dollars, but also in the skills that the organization will need to develop.
The cost estimate then must be compared with a projected return on the investment in the necessary technology. In making that determination, the LightSpeed principal observed, one should figure in the value that the advances will add to the company if the owner eventually decides to sell it.
Those answers provide the basis for planning. In drafting a plan, one should consider the effect of the proposed changes on the workforce. "Will it be disruptive? How will you communicate the objectives and the benefits to your employees?" he asked. With those issues addressed, the plan is ready for review and implementation.
Preparing to implement a comprehensive technology upgrade calls for gauging exactly how the necessary solutions will work together, Smith concluded. "How well do you know your technology suppliers? What are their long-term programs? Will they partner with you?"
The essential components of a successful journey of innovation, then, are "plan, budget, communicate and partner," he summed up.
A topic that is not new, but that now is having an impact on vending, is the growing consumer and supplier interest in "digital applications." Gene Ostendorf of InOne Technology explained that, in current speech, these "apps" typically are mobile. "An operator might use a 'Web app' to go online and see how a machine is performing," he instanced.
"A customer might use a 'phone app' to make a payment," Ostendorf continued. The Google Wallet service, launched on Nexus S 4G phones from Sprint, makes use of near field communication (NFC) circuitry in the phone to make payments at terminals, initially those equipped to read MasterCard's PayPass proximity smartcards and now including other "tap-and-go" stations. MasterCard was the first card network to support the program; Visa now has come aboard, and Google itself offers a "virtual prepaid card" for Android phones. "At present, there aren't a lot of Google Wallets out there," Ostendorf reported. "But this will grow."
Other apps are written for the new generation of vending machine displays, which at a minimum can present product content information (like caloric content) and show advertising. Advanced examples of such displays include VendScreen, the InOne principal said. Models now are becoming available as OEM equipment options and as retrofittable kits.
The widespread appeal of apps, Ostendorf noted, is in large part attributable to the perception that they are cool. "But cool does not make money for you," he pointed out. "In evaluating an app, ask: Can it help your business? Can it solve a problem, like the need to display caloric content for product in a machine? Will it sell more product, or draw more customers? Will it generate additional revenue through advertising or coupon offers? Will it make your business more efficient?"
Those questions define the "rules of engagement" for operators attracted to interesting and appealing new applications, the industry veteran concluded.
The new generation of multipurpose vending machine video displays was the topic for VendScreen's Glenn Butler, who pointed out that digital media are swiftly gaining in importance at retail, both to provide information and to showcase advertisements. Digital signage is finding rapid favor; for example, Burger King has adopted digital menu boards. Interactive digital signs can be triggered by a motion sensor, displaying its content when someone approaches, or by a request for information.
But digital media can be much more than signs, Butler emphasized. "They can be used to conduct promotions and to capture data," he instanced. "They can play an important role in loyalty programs; they can collect metric information. There's a whole ecosystem there.
"What are these media worth? We don't know yet," the speaker observed. "We need scale first, to find out. And I think that, when we have scale, we'll learn that they are more valuable than many people believe."
Interactivity and versatility are among the most attractive attributes of the new digital display systems for vending machines, Butler said. Customers always have interacted with retailers in stores; they now interact over cellphones. "Vending might be the next step," he suggested. "It may seem like a small change, but it's worth your while to take a look at it."
EDITOR’S NOTE: The second part of the 2012 technology seminar was devoted to ongoing developments in payment systems and interoperability among vending-related applications and services. The panelists were Anant Agrawal of Cantaloupe Systems, Michael Lawlor of USA Technologies, Chris Lilly of Best Vendors, who chairs NAMA’s Vending Data Interchange committee, and Chuck Reed of MEI. Look for that article in VT’s August issue or VendingTimes.com.