Kraft Foods is completing the beta test phase of its revolutionary Diji-Touch snack vending machine this month, and by all accounts it has passed with flying colors. The next step will be a pilot of a fine-tuned version of the machine by selected operators throughout the U.S., after which it will be ready for full commercialization.
The interactive touchscreen vender, developed by Kraft in partnership with Crane Merchandising Systems, Samsung and ad agency Digitas, made its debut at the National Automatic Merchandising Association's 2009 Spring Expo in Las Vegas.
Next Generation Vending, a Canton, MA-based regional operator serving Northeastern markets, deployed the first 20 test machines last summer throughout Boston, in colleges, healthcare facilities, transportation hubs, worksites and other high-traffic locations.
"All the partners believe the test has been very successful," reported Frank Guzzone, Kraft business development manager of strategy and innovation for vending and OCS. "The sales lift has surpassed expectations, and the response and engagement levels from end users have exceeded our business assumptions."
Not only did the Diji-Touch vending machines exhibit markedly stronger sales than the glassfront snack machines they replaced in all of the Next Generation sites, according to Guzzone, but sales also climbed at all the other machines in the bank. Customers long accustomed to overlooking food offerings in vending were drawn in by the eye-catching machine displays.
SEEING IS BELIEVING
"The machines are much more engaging and attract a different type of customer," Guzzone reported. The appeal is that passersby, drawn to the eye-catching video display, see from its dynamic advertising that there is a wide array of choices available, and that they can get nutritional information about a selection before making the purchase. "And people are very attracted to using the system," he explained, "because the touchscreen interface is just like what they use on their smartphones."
The vender, manufactured by Crane Co., features an embedded networked computer and 46" Samsung LCD touchscreen display. The graphics software enables users to view the product, its details and complete product nutrition information, displayed on a virtual cube, by touching its icon on the screen to rotate it 360°.
The machines are also designed to display interactive advertising. Banner advertisements stream across the top of the screen, and full-screen ads appear when the machine is not in use.
"In addition to using promotions to increase and encourage vending sales, the ultimate goal of Diji-Touch is to assist in redefining the vending industry, and ultimately, to create a secondary revenue stream from advertising revenue for vending operators," Guzzone emphasized.
Another indication of Diji-Touch's power to lift sales during the trial was a marked jump in the check average at every test machine. Guzzone attributed this increase to the simplicity of making multiple purchases with a single transaction. The patron swipes his or her credit or debit card, or inserts cash, and the machine keeps a running balance. The customer is then prompted to choose whether he or she wishes to purchase another item or complete the purchase.
A bill recycler in the Diji-Touch vender also spurs sales, according to Guzzone, because it removes the hesitation many consumers feel about inserting a $10 or $20 note for a small-value purchase, since they receive bills rather than pockets full of change. At some college test sites, the machines are equipped to accept the campuswide student payment system, which Guzzone said is the key to catering to that kind of location.
THE NEXT BIG THING
Next Generation senior director of management information systems John Hickey echoed Guzzone's enthusiasm based on the early results. "I have never seen customers so excited about a vending machine," he said. "The ability to virtually 'touch' the products -- not just see them through a window -- is like nothing they've ever experienced. That excitement clearly translates to sales. I am sure there's a place for this machine in the industry."
Hickey told VT that every location where a Diji-Touch has been installed showed a sustainable boost in sales. Without specifying amounts, he said the increase has been "very significant" in many machines.
The trial has confirmed, as many might expect, that college students are one of the groups most enthusiastic about interacting with the vender and making purchases from it.
Hickey also noted that in transient locations, like train stations, passersby who previously didn't even consider vending machines as a source for satisfying their snacking needs have been drawn to the Diji-Touch, boosting traffic markedly. "When they see Diji-Touch, they have to stop, and more often than not, they make a purchase," he said.
The machines in the beta test -- merchandised with 54 product selections -- are stocked with Kraft snacks as well as sweet and savory products from competing manufacturers.
"The Diji-Touch machines are intended to mirror the top choices in a convenience store snack and candy aisle," explained Kraft's Guzzone. "Even though Kraft is developing the concept, it has no desire to place the industry in a chokehold by taking over the whole machine with only Kraft brands. That is not the way to serve customers with what they want, or for operators to maximize sales."
For the test's advertising component, Kraft has limited on-screen promotions to five of its products: Oreo cookies and Cakesters, Chips Ahoy! cookies, Planters trail mix and Ritz cheese sandwich crackers.
The campaign has included banner and total screen ads, complemented by additional interactive product support. For instance, when a customer touches an advertised product, an interactive color display appears, causing it to stand out from the simple product graphics on a black background used to merchandise other items. Once the customer completes the purchase, a message is displayed on the screen thanking the patron for purchasing the advertised item and promoting other Kraft products.
When the production-model Diji-Touch hits the market, Guzzone told VT, it will be enhanced with more promotions and interaction with customers in response to the items they touch. "The machine may recommend and display something else that's healthy if they bought a healthy item, for instance," he explained.
Guzzone reported that, as anticipated, the products that are advertised have shown the greatest sales lifts during the beta test. Planters trail mix, for instance, almost quadrupled in sales over the volume recorded by the original standard glassfront machines at the test locations.
The Kraft executive explained that the cutting-edge digital advertising content for the vender's display is developed and executed by a third party, New York City-based Digitas. Once the machine enters the market, Kraft will share the net profit from the added revenue stream with Diji-Touch operators. Advertisers will include not only vendible product suppliers whose products are sold through the machine, but also local businesses such as banks and restaurants.
"Anyone can build the hardware, but no one operator, no matter how big, can absorb the content management, the sales assets, ad placement, the selling," emphasized Guzzone. "We are creating a whole network system to support a fair and open business model to maximize sales and advertising potential for all involved, over the long term."
Kraft enlisted two third-party experts, The Nielsen Co. (New York City) and Strategic Media Service (Washington) to interview Diji-Touch patrons and analyze their feedback during the test period, to provide a clear determination of how consumers use the machine and to assess their perceptions of it. Blue World Inc. (New York City) is collecting and analyzing the sales data.
"We're capturing all the data and will release it when the time is right, so there will be total transparency," said Guzzone. He shared one promising early finding: that consumers' retention of the advertisements they saw displayed on the machine's screen far exceeded Kraft's expectations.
IRONING OUT THE KINKS
Along with the many triumphs Kraft and its partners hailed during the beta test, Guzzone said they encountered minor hurdles with connectivity and software integration. "This challenged us to test and re-test solutions," he said. "We are breaking ground and, as expected, we have encountered minor issues. Between the programming to provide all the data and graphics and nutritional information for each product and the advertising, there's a lot to perfect. We have been able to turn the challenges that have arisen into opportunities and improvements that will only benefit the industry for the long term."
Next Generation's Hickey told VT that the company encountered minimal operational issues in the field. Its greatest challenge was teaching its drivers the discipline to ensure that they stock the right SKU for each product "behind" its graphic icon on the touchscreen display.
"It has to be not only the right product, but also the exact package size," he emphasized. "Planters regular salted nuts, for example, can't be substituted for Planters lightly salted. In traditional machines, that's not an issue because the customer is viewing the actual product that he or she is purchasing. It's nothing major, just a matter of drivers modifying the way they do things."
The Next Generation executive is pleased to report that there has been zero vandalism throughout the entire eight months of the beta test. All the machines are located indoors, but not all are under constant surveillance, he said. "It's a testament to how well the machine works," he said. "If customers get the product they want, they're generally not going to kick and abuse the machine. The machines have been reliable enough to be in our top spots, and the fact that we're keeping them there shows that everyone's happy."
With even more "wow" factor in prospect, Hickey is certain Diji-Touch will be the game-changer the industry has long been awaiting.
"The content is limitless with the infrastructure of the screen, Samsung PC and remote connectivity," he observed. "You can do social media like Facebook and Twitter. You can have people interact with the machine as never before. It's exciting, as it is, that it's selling snacks and promoting them in a dynamic way. When people can Twitter and share on Facebook what they like and where they bought it, something that's already pretty revolutionary will be phenomenal."