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Issue Date: Vol. 44, No. 4, April 2004, Posted On: 4/8/2004


Will The Real Vending Industry Please Stand Up?


Tim Sanford
Editor@vendingtimes.net

A question that keeps recurring is the size of the vending industry, in the United States or in other countries, or globally. It seems straightforward enough, until you start to think about it.

For example, if you consider the question from the standpoint of hardware, the "vending industry" extends from self-service gasoline pumps to railroad ticket vending machines. In nations where vending has developed as one of a variety of retailing modes, all of which are deployed by large, diversified organizations, the performance of "vending" naturally is assessed on the basis of machines in the field. It does not matter who operates them; the people who want the data are the people who produce the equipment.

This illustrates the point that no one seriously compiles information without some idea of the uses to which that information will be put. The vending industry in the United States evolved swiftly from a marginal, novelty business into a fast-growing mainstream retailing medium in the two decades following World War II. While this evolution depended on technology, it was driven by entrepreneurs who quickly learned that they had common interests. What they needed was information detailing the growth of the "vending industry" they were creating. This information was necessary in explaining the opportunities in vending to product suppliers, so they would develop new items to broaden vending menus. It also was important in explaining to governments the importance of vending's economic contribution.

For these purposes, the vending universe includes everyone placing, filling and collecting vending machines. A confiscatory per-machine tax was as ruinous to the mom-and-pop operation running a dozen machines out of the garage as it was to a national operating company; a popular new product that could be sold through vending machines was equally valuable to both.

When the new vending industry rose above the retailing horizon in the 1950s, the machine type defined the product. A candy vending machine sold vend-size candy bars. Once that type became sufficiently numerous, other compatible products - cookies, brownies, crackers, all in packages shaped like a candy bar , were developed for it. Suppliers of these things established distinct vending sales forces to bring them to the vending market.

As vending grew, technology advanced and retailing became sophisticated. Market segments were defined with greater precision, while vending machines grew more flexible, able to accommodate a wider range of products that had not been specifically sized for vending. The proliferation of retail channels encouraged the emergence of specialist brokers for each; the fragmentation of consumer desires led to a demand for a variety of merchandise that could only be met by specialist distributors.

This complex development created a new demand for information. While the vending industry naturally remained concerned with its success, progress and growth, suppliers who saw it as one of a number of "channels" wanted volumetric and share-of-market data, and this was hard to come by. The prolonged discussion of "categories," the development of in-machine line item sales data capture systems and of instruments to retrieve that data, and the application of powerful market research tools are, in large part, consequences of that demand.

But vending remains a great American entrepreneurial dream, and vending machines are available for deployment anywhere someone needs round-the-clock availability of product. To the multinational consumer packaged goods producer, the vending market is the group of operators who identify themselves as such, purchase through vending distribution channels, strive to grow, and so respond to promotions and new-product initiatives. Very reasonably, these suppliers want information about the operations they can reach. Mechanisms are being created to supply that information, with a degree of detail and accuracy that would have been unimaginable two decades ago.

But it is very important to remember that the "vending industry" extends beyond this accessible center. A few of the vast number of small operators, without Standard Industrial Classifications and with a clientele now consisting of a few family friends, are going to be industry leaders in 20 years.

Topic: Editorial: Vending

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