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Issue Date: Vol. 40, No. 13 / November 25, 2000 - December 24, 2000 , Posted On: 11/25/2000


What's In A Name?


Tim Sanford
Editor@vendingtimes.net

Back in February, we called attention to the ongoing problem that this industry faces in describing just what it sells. Everyone who has spoken with any of the analysts working to assemble vending sales databases, or who has conducted any research in vending, knows the frustration of trying to determine whether Operator A's "prewrapped pastry" is the same as Operator B's "snack cakes." This is an oversimplification of the problem, but it does illustrate the point.

For most of this century, these product definitions were not much of a problem. As long as the retailer and the supplier understood one another, it didn't matter what they called the products in which they dealt.

The revolutions in retailing and marketing that have transformed the commercial world over the past two decades have changed that. When the pioneers in new mass-market retailing took to tracking the withdrawal of specific line items, or stock-keeping units, from inventory in real time, they created a new world of opportunity. They were able to micromanage inventory, reordering only what sold best. To achieve this, they inspired the development of Uniform Product Coding (so machines could take inventory and record sales), and they transformed cash registers into networked point-of-sale terminals.

The information they gathered in order to achieve this has proved very valuable to suppliers, who can gauge consumer demand for individual items on a day to day, zipcode-by-zipcode basis. And all of this has produced tremendous efficiencies in distribution, production, market research and new-product development.

As we've been saying for most of this decade, the vending industry has the technology to place itself in the mainstream of this revolution, with great benefit to its costs and its margins. Methods by which vending machines can collect sales data for automatic retrieval predate the point-of-sale terminals in supermarkets, and their limited selectivity (compared, say, to a convenience store) makes the information-gathering function relatively simple.

Today's management software and handheld route computers make it feasible to track line-item sales. For the past five years or so, leading suppliers have been explaining how operators can use this capability to improve per-machine volume and streamline route scheduling. The remote machine monitoring systems that currently are attracting so much attention may add another refinement. The hardware and the software are available.

However, the vending industry will not derive full benefit from these new tools and techniques if that line-item sales data is useful only to the company that collects it. As more and more suppliers, unfamiliar with vending but impressed by our ability to reach away-from-home consumers around the clock, seek to develop products and sales strategies for the vending industry, they want detailed information about the vending market, presented uniformly and comparably. This is becoming available, but it is a slow process.

The situation is becoming more difficult as new products that do not fit in traditional categories are introduced, in the cold-beverage segment as well as in snacks. But there is a solution, and we think it's time the industry adopts it.

The mass retailers and the suppliers who serve them have developed category definitions that all of them agree to and understand. Those definitions are used by market research organizations. The suppliers and the researchers also serve the vending industry, and would like to do so more effectively.

The time has come for the National Automatic Merchandising Association to launch a category definition project. Its supplier members already are using agreed-upon categories in other retailing channels, and the great majority of them would be very happy if they could use them in vending too. Learning what categories are used, say, by supermarket chains is a simple matter; adapting them to the more limited range of single-serve items that operators sell also would be simple (though not as simple as it might appear at first glance).

Of course, no one would, could or should compel any operator to adopt those category definitions. Operators would do so voluntarily, as they saw the benefit of participating in the new information-enabled retailing business.


Topic: Editorial: Vending

Articles:
  • The Most Valuable Asset
  • When Less Is More
  • Market Research As A Byproduct
  • We Need To Talk, And Listen
  • Perils Of Infighting Outweigh The Fun

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