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Equipment Makers Innovate While Operators Seek To Maximize Sales

Posted On: 9/23/2005

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U.S.A. ─ Over the past decade, equipment trends in bulk vending have proved relatively easy to track: Better equipment and more varieties of it. With new competitors entering the field at a steady rate, even long-established companies can take nothing for granted. It hasn't been "business as usual" for an unusually long time. Needless to say, the major beneficiary of these parallel trends has been the operator.

Take for instance Northwestern Corp. Even as the firm approaches its century mark it continues to innovate. In addition to adding new equipment configurations over the past several years, the company has continued to introduce a steady stream of new machine enhancements engineered specifically for the operator. These include the "Cash 'n Dash" system for its "Model 60" and "Model 80" machines. Introduced a few years ago, the system was designed specifically to cut down service time at a location and eliminate the need to scoop out coins by hand. And the "Kiosk," which was introduced not too long ago, provides a new circular configuration to maximize the number of machines per square foot.


"The majority of our enhancements are aimed at service personnel and trying to configure the machine to more locations," said Northwestern's Richard Bolen. "The trend with us is trying to make our machines more perfect. Of course, there's no such thing as the perfect machine, so we keep making them better and better."

Other companies have followed suit, as enhancements, both subtle and significant, continue to flow from the manufacturers' drawing boards to the operators' locations.

"There is definitely an emphasis on quality and improving serviceability," said Phil Brilliant of A&A Global Industries. "For instance, we've created the cashbox for the "PN-95" where all the coins fall into a cashbox, so you can just dump them into a bag. Serviceability is pretty important in the sense that time is money; the more locations you can service in a day, the more money you can make in a day. If you're doing 20 stops a day, cutting 10 minutes from each stop means a savings of three and a half hours."

Brilliant also points to the company's newly designed finger guards on chute doors and the redesign of the coin mech for the "PO" machine, which features a heavy duty front plate, tighter turn on the handle, and stronger components. And last year, A&A introduced a new locking option for its capsule machines. This new system is comprised of a rod that extends from the top of the machine down to the door to hold the cashbox closed, even if the top is removed.


There are reasons unique to bulk vending for why one is more apt to see redesigns and improvements on existing machines instead of all-new equipment and concepts. "There are limits to what you can do to a bulk head," Brilliant explained. "Because the design is so simple, there aren't many changes you can make. And, since bulk vending is founded on simplicity, it's hard to improve on that.

"The other reason," Brilliant continued, "is that the introduction of a completely new machine would require operators to carry another set of parts, which is what they don't want to do. People try to stick with things that are tried and true, so you'll find more tweaking of existing machines than launching of new machines into the marketplace."

However, will there come a time when the industry will see dramatic changes in machine design? Brilliant and others in bulk vending think that changes may come with the eventual increase in vend prices that could reach $1 within the next few years.

"I imagine that somewhere along the line, you'll see new machines or accessories entering the marketplace to account for a higher vend," the A&A executive surmised. "You might even see different types of capsules. Perhaps a 2.3-in. capsule or even a 3-in. capsule. So operators will need different wheels and housings or even a totally different type of machine."

Another force driving innovation in the industry may be the proliferation of imported machines from outside North America. Lower in price and often quality, these imports have generated sales by copying established designs. "We have copies coming in of our machines and they copy everything, even our advertising material," said one manufacturer. "The thing is, they're junk. The machines are definitely inferior, and the big operators won't touch them."

Junk or not, manufacturers find themselves in competition with cheap knock-offs of their own machines. And while they say that this has not impacted sales to established operators looking for quality machines with a long life cycle, it may have cut into their sales of less knowledgeable operators just starting out. Enhancements, in addition to lawsuits, may yet prove the manufacturers' best defense, offering another competitive edge in addition to quality.


Another continuing trend is the expansion into new types of equipment. Just a few short years ago operators were shying away from cranes and kiddie rides, which have now become standard offerings for both large and small bulk vending routes. This type of diversification has not only allowed operators to maximize the "real estate" of existing locations, but win accounts in new types of locations, such as shopping malls.

Perhaps a less dramatic shift in equipment choices over the past few years has been the emergence of so-called "interactive" bulk venders, in which the customer plays a game for a prize. "These interactive venders are definitely part of the future of bulk vending," said Heidi Olson, marketing director and product specialist at OK Manufacturing. "I see them being a more profitable choice for operators in some of their locations, where they can offer entertainment value along with a gumball."

OK Manufacturing is something of a leader in this change in bulk vending. Among the first to offer a spiral machine, the firm has continued to innovate, more recently leading the way with interactive venders, including its soccer-themed game.

"For operators, it gives them a chance to compete a little bit better against people who are going to put a small arcade piece into a location," said Olsen. "They also help operators to refresh a location. If you have a gumball machine that's been in a location for a long time, one that's dead, an interactive can bring the location back to life. It's not always an option, but if it is an option, it's a good way to go. Operators have to be creative, talk to location management to see if they can re-arrange things in a location. Sometimes that's not feasible, but a lot of times it is."

Many forward-thinking operators are beginning to take advantage of the increased equipment options over the past few years. This means not just filling a location to the brim with bulk vending and other assorted coin-op equipment to secure the real estate, but also programming a location for the maximum vends. "The idea is to program the machines to the location," said one small, Midwest-based operator. "Years ago you just had to worry about the merchandise and whether it was appealing to the customers, now you have to worry about the machines, too."


According to industry experts, some operators have started experimenting not only with adding new types of equipment, but changing out rack configurations to keep the location "fresh." This may also mean changing out the mix of merchandise offered, adding 50?-and-above products while removing some 25? items. It may also mean adding or subtracting flat vend units.

Changes in rack configurations not only signal "new" to potential customers at locations with return clientele, but can also serve to maximize trends in a product category. Particularly strong offerings from the sticker industry for several months may warrant an extra vender or two in a large location, while operators can similarly pull back when certain product categories fail to attract attention from young consumers. What this requires, say the experts, is not only a willingness to add flexibility to a location, but also a greater attention to detail in tracking sales along each product category.

For operators willing to make the investment in money, time and effort, the new equipment offerings available today can translate into increased profits tomorrow through greater sales and increased efficiencies on the route.