APPLETON, WI — Peter Becker of What’s Up LLC is something of an expert when it comes to the topic of increasing vend prices. Several years ago, he helped pioneer the concept of premium merchandise as the industry transitioned to the 50¢ vend, and his firm introduced some of the first electronic items in non-mix varieties with its Blinky Rings product line.
Facing the next uptick in pricing, Becker sees a two-fold problem for operators. In a consumer marketplace where impulse purchases of more than $1 are common, he said, price points aren’t the only barrier hindering sales – the act of making the purchase itself may also be a deterrent. He explained that bulk products not only need to be worth their vend prices, they must also be worth the effort of acquiring change if a bill changer isn’t readily available.
“Often times, it is a two-step process to make a sale, rather than just a straight impulse purchase,” Becker said. “We’re asking the consumer to acquire the change and then buy the product. If they can’t reach into their pockets and pull four quarters out, they have to ‘hold that thought’ and go get some change.”
Despite this “two-step barrier,” Becker said that the industry’s move to higher price points is inevitable.
“Inflation, which has somewhat eluded bulk vending for years, has begun eroding profit margins for both operators and suppliers,” he explained. “Petroleum prices have reached record highs in the last few years and have probably had the biggest impact on profitability.
“Almost every facet of the bulk vending industry is sensitive to the cost of oil; the cost of capsules, the cost of freight to deliver capsules to suppliers, ocean freight, freight to deliver product to operators and the fuel costs operators expend every day to run their routes. Even the cost of Sticky Hands is dependent on the price of oil, and so are poly bags and corrugated boxes used in the production.”
Added to these across-the-board cost increases has been standard impact of inflation on all other goods and services, Becker related, and added that from the supplier standpoint, the only cost that has remained stable over the last few years has been that of labor to fill capsules.
Rather than wait for the elimination of the $1 bill and public acceptance of a widely circulated $1 coin, Becker sees the potential of bill changers and equipment that accepts $1 bills or credit and debit cards as a more viable option. Additionally, he said, new payment systems could help operators expand beyond standard capsule sizes and begin using equipment that allows for the retail of larger merchandise with higher values. “The answer probably lies within all of these options,” Becker noted. “But we all have to be prepared for the investment required – operators and manufacturers alike – whether it’s the cost of converting traditional coin mechanisms or that of designing and developing a new dimension of equipment. These innovations could provide the flexibility needed to take us into a secure future.”