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EDITORIAL: It's An Ill Wind That Blows No Good

Posted On: 1/9/2008

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The arrival of a new year always prompts thoughts on where we've been and where we may be going. This year has opened with some alarming economic warnings, but we have a feeling that it will be a good one.

We've often noted, over the years, that the workplace service industries tend not to exhibit swift change. One cannot identify a month or a year in which electromechanical equipment superseded mechanical designs, or glassfront snack machines displaced closed-front types, or plumbed-in automatic brewers supplanted the pour-overs on which the OCS industry was built.

Nevertheless, as we've also often pointed out, the industry does change, and those changes can be dramatic when viewed over intervals of five or 10 years. A new technology is tried by a few operators with a specific challenge to which it offers a solution.

We've seen three usual outcomes of these trials. Either the innovation does not provide benefits commensurate with the effort it requires, and fails; or it solves a problem experienced only by a narrow segment of the industry. Or it gives the early adopters an  advantage over their competitors, who then adopt it themselves. And the failures can inspire improvement, and return at a later date. Similarly, refinement of a niche technology can enable it to solve more and more problems, and so diffuse out of its niche.

While the first years of this century have been difficult ones for the industry, they appear to have stimulated (or compelled) the emergence of new approaches to workplace service that hold great promise for operators working in an increasingly global economy.

The vending industry may finally have outgrown its nostalgia for the postwar market, when large factories employing thousands of well-compensated workers needed a fast and reliable way to provide food and beverages in large volumes, around the clock. Full-line vending could do this, and it is not surprising that many people in the industry and outside it came to believe that this was all it could do. Alert operators began warning, in the mid-1970s, that the full-line model was becoming irrelevant to a new economy that favored smaller enterprises dealing in information and services. Solutions were proposed and tried; but there remained a strong desire to hang on until things turned around.

Indeed, matters did improve several times. The United States manufacturing segment has been left for dead when other nations with lower labor costs started "eating our lunch." Those premature obituaries overlooked the inevitable increase of costs attendant upon economic success. This cycle is very likely to recur.

However, it may at last have become irrelevant to the prosperity of an industry that has learned how to profit from providing a more diverse menu of products and services, at a much wider range of prices, to an increasingly variegated market. It's worth remembering that many locations, attractive to operators in the immediate postwar decade, became "marginal" as operating costs increased -- and it's permissible to speculate that the introduction of machines that opened the high-volume industrial market to vending also allowed vendors to avoid grappling with those  costs.

And those marginalized locations represented a kind of market vacuum that was filled by coffee service. While vending was, unfortunately, becoming associated in the public mind with a limited variety of low-cost products aimed at a blue-collar population, the OCS business grappled with relentless downward pressure on prices for a product generally regarded as a commodity. They adapted by adding compatible products, upgrading equipment and schooling themselves in coffee quality. Vending and OCS always were two methods for meeting the same demand.

In recent years, we have seen more and more operators providing custom combinations of vending and OCS to serve a wider clientele of smaller accounts. Coffee service continues to benefit from an affluent public's renewed enthusiasm for quality.

We think it's vending's turn. Today's single-serving retail market favors fair prices for high quality, and today's technology has produced machines that can deliver that quality and accommodate those prices. As important, today's information and communications technology has given operators tools for adjusting menu and service frequency to each location's purchasing behavior, and to enable drivers to make the most productive use of their time.

This may be the year in which these advances come together in the industry at large. If they do, 2008 will be a memorable year.