Ever since the full-line vending business matured in the late 1960s, much of the industry’s ongoing conversation has concerned the need to persuade the public to purchase higher-priced merchandise from vending machines. This generally has been seen as a technical challenge, and has been addressed by a three-pronged effort to increase the versatility and convenience of the payment system, the ability of the machine to hold product packages of different sizes and shapes, and the management information systems required to audit vended sales at varying price levels. All of these efforts have been extremely successful.
We think it’s time to consider another aspect of the question which has not received a lot of attention in recent years, though alert operators have mentioned it from time to time. We recall one of them, during the dark days of the mid-1970s, reminding his colleagues at a state association conference that price improvement surely was a desirable objective, but at the same time, it was important to keep in mind that many vending patrons had to keep a close watch on their food and beverage expenditures because they just didn’t have a great deal of disposable income.
Companies supplying the retail market today recognize this. Recent news stories have reported on major consumer packaged goods suppliers’ adjustment of product mix, pricing and promotions to address the concerns of a market worried about actual or potential loss of employment, tighter credit and general economic uncertainty.
The desire of American consumers for a wide variety of choices is widely known, and vending has responded with higher-selectivity machines. A few operators have observed that part of "variety" is a range of prices, and they have sought out products that can be vended at low prices. The profit on each of these items is low, but they build traffic. Even customers who are buying a higher-priced selection like to know that the lower-cost alternative is there.
People who get paid monthly, like soldiers, are familiar with a cycle that has been summarized as "steak on the first of the month; bologna sandwiches on the 31st." The moral of this, for a retailer, is that it’s a good idea to offer selections that will appeal to the prospective purchaser at any time of the month. Someone purchasing a bologna sandwich on the 31st is likely to notice that there’s also steak on the menu, and to come back and buy it as soon as possible.
Operators who have attended the seminars conducted at National Automatic Merchandising Association conferences by Bachtelle & Associates will recall that studies have demonstrated a correlation between the number of different price-points in a machine and sales of the highest-priced items it offers. It does not require much imagination to grasp that a customer who sees items offered at (say) six prices between 45¢ and $2 will be more likely to consider the $2 item that he or she would if most of the slots were stocked with 50¢ merchandise.
A long-standing complaint by operators is that the public has become conditioned to think of vending as a last resort. We think that this is less true of the younger members of the public than many veteran vendors believe; a complaint we have heard more than once from new members of the workforce is that they enjoyed comprehensive vending service while they were in college, and they’re saddened or annoyed by its absence in the workplace. In many cases, of course, this can’t be helped; but we think that today’s away-from-home consumer is very willing to be pleased by a vending machine, if the vending machine is prepared to satisfy a need or gratify a desire. And even someone driven to the vending bank as a "last resort" wants to buy something. It certainly is better to make that sale than to lose it.
This bears on many of the observations made by operators evaluating convenience stores as their real competitors. Of course, convenience stores can sell $5 merchandise and, usually, accept credit cards. So, now, can vending machines. And of course they have more shelf-space; but much of it is devoted to items like bread, paper towels, motor oil and adolescent-themed trinkets. In our experience, what they frequently do that many operators simply do not is offer items at a variety of prices.
Almost four decades ago, we spoke with an operator in California who instructed his route drivers servicing large locations on Fridays to load one column of the candy machine (as we recall, a then-very-new National Vendors 21CE) with a large premium boxed product priced at 50¢ and affix a column identifier suggesting, "Bring something home to the kids." This worked, although it certainly involved extra effort and additional care in tracking sales.
It often has been observed that the vending industry grew out of an economic downturn, when large locations no longer could afford to hire cafeteria workers. This industry has survived by serving people during bad times as well as good, and we think it still can. The tools for doing it never have been better nor more plentiful.