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Issue Date: Vol. 44, No. 11, November 2004, Posted On: 11/8/2004


Looking Up


Tim Sanford
Editor@vendingtimes.net

The turnout for the National Automatic Merchandising Association's National Expo in Chicago strongly suggests that the economic recovery is underway. The mood was upbeat, and the 2004 event's innovations, such as the Leaders Forum at the annual membership meeting and the VendTec Pavilion, were well attended and well received.

If the sampling of operators with whom we spoke is an indication, the industry is keenly aware of the opportunities presented to it by versatile new equipment, new operational tools, today's unprecedented variety of products, and above all, the recognition that vending and coffee service have outgrown their origins as ingenious but "last-resort" solutions, and have positioned themselves as service methods uniquely suited to the contemporary demand for convenience, quality and value.

If we're right, the next five years will witness a dramatic transformation of both away-from-home service approaches. Such transformations have taken place before, always in the context of larger social and economic changes. It's likely that this one will be, too.

For example, the relatively new ability of vending machines to accommodate practical "merchant terminals" for credit-card payments has been catalyzed by continuing swift progress in data communications, fueled by widespread demand for everything from enhanced cellular telephones to faster Internet access. The engineering advances that have resulted from this ongoing international enthusiasm for networking have been applied to vending, effectively resolving the long-standing difficulties with card validation.

The demand for smaller, faster, more economical and more capable communication devices, of course, is the result of a population that is more mobile than ever before. This population is redefining the away-from-home market, and for that reason is very receptive to the value proposition offered by robotic retailing through unattended points of sale. Today's ultra-mobile consumer also wants the convenience of cashless transactions, and virtually every retail channel is moving to meet this need.

Three decades ago, an industry leader stood up at a seminar on the future of vending and said that our challenge as an industry is to convince the world that there is nothing about a vending machine that enables it to sell something for a nickel less. That summary was accurate then, and it is even more relevant now. We think it should be kept solidly in mind when looking at today's marketplace.

The early successes with credit-card vending, which involves a fairly high transaction cost, have been made with items that command high prices. These items include unconventional high-value merchandise, like disposable cameras, and packaged premium cold drinks, usually in 20-fl.oz. bottles. Over the past decade, vending has made good progress at enhancing perceived value by offering larger portions at higher prices. This has worked not only for cold beverages, but for snack and candy items and for hot drinks. The method has worked well for everyone from the producers of laundry products to the operators of fast-food restaurants, and it is working for vending.

However, there is an upper limit to the portion size that the typical patron will want to consume in one sitting, and there is increasing public concern over "super-sizing" as a contributor to obesity and its attendant ills. The food industry is feeling the effects of this concern. The question thus arises, what alternative methods exist for enhancing perceived value?

We think the key here is to be found in an insight conveyed by Dr. Ernesto Illy of Illycaffe fame at a coffee service seminar a decade or so back. Speaking of the international increase in demand for espresso, which is served in small cups, Dr. Illy suggested that, in traditional societies, consumption was an index of status: wealthy people prized corpulence as visible evidence of their ability to eat as much as they wanted whenever they liked. Once abundance became the norm, he said, those aspiring to higher status began to demonstrate their superiority by consuming less, but demanding distinctive quality.

We think current trends are converging to produce smaller packages of upscale products, and vending now is well-placed to take the lead in this development.


Topic: Editorial: Vending

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