Vending

How a shifting retail landscape challenges convenience services

A panel of industry veterans tackled this question head on during a session at the NAMA show Wednesday in New Orleans: 'The future of convenience services: Are you a retailer?'

Image provided by iStock.

August 19, 2021 by Elliot Maras — Editor, Kiosk Marketplace & Vending Times

When the National Automatic Merchandising Association began using the term "convenience services" in place of "vending" and "refreshment services" several years ago, it was recognizing a change in its members' primary focus. That change was driven by consumer demand to be serviced when and how they want — a demand fostered by retail competition.

In the past few years, with physical retail expansion into e-commerce and vice versa and the growth of delivery services, channel distinctions have been blurred even more.

Which raises a question for today's convenience services operator: "Are you a retailer?"

A panel of industry veterans tackled this question at the NAMA show yesterday at the Ernest N. Morial Convention Center in New Orleans, in a session entitled "The future of convenience services: Are you a retailer?"

Lines are blurring

Sean Feeney

"We've seen those lines blurring between vending and traditional retailing; they really essentially collided together," session moderator Sean Feeney, CEO of Cantaloupe Sytsems Inc., said as he kicked off the panel talk.

Session panelists, which included two convenience service operators and one operator who has moved to the product supplier side, agreed competition from other retail channels has raised customer expectations and created a need for more versatile offerings.

Meeting this challenge requires making better use of data and finding ways to improve employee compensation, mandates that are not easily addressed in the current business climate.

"Today we're certainly more consumer centric, trying to do a better job of understanding the consumer," said panelist Marc Whitener, CEO of Norco, Louisiana-based Refreshment Solutions LLC.

Marc Whitener

Location managers remain the "gatekeepers" to the end users of convenience services, Whitener said, but consumers are exerting more influence on what products and services the gatekeeper is requesting. This trend began several years ago with the desire for healthier alternatives.

Suppliers want consumer data

"We want access to the consumer," said panelist Josh Rosenberg, speaking from the position as a product supplier. Rosenberg is a former convenience services operator who now consults for product manufacturers and marketers and is the outgoing NAMA chairman. He is CEO of Threeboysstrong LLC based in Austin, Texas.

Rosenberg pointed out that e-commerce companies like Amazon and food delivery services are doing what convenience service operators already had been doing: picking, packing and delivering goods to consumers.

Josh Rosenberg

"We (convenience services operators) were doing this long before they ever thought to participate," Rosenberg said of e-commerce and food delivery services, which he termed "platform" companies.

A challenge and an opportunity

"I believe with the use of the right technology we can quickly accelerate and participate in this broad retail landscape like never before," he said. "But I also believe we have to, because there are no captive audiences any more as much as the HR manager may want to control the consumer; they can still have that food delivered to their door, and that HR manager is being forced to allow that to happen. So we have to take control."

Panelist Mark Stein, owner of Mark Vend Co. in Chicago, said the expansion of micro markets and pantry services has enabled convenience services operators to have a much broader variety of product, which enables them to compete on this new retail landscape.

The challenge now, Stein said, is to improve predicting and meeting consumer needs.

Mark Stein

While Amazon has become a bigger competitor, Stein said the bigger impact is the expectation Amazon creates among customers.

Whitener said convenience services operators can take a cue from Amazon by partnering with other service providers. Convenience services operators can provide delivery for other service providers and retailers.

Uncertainties pose challenges

When asked what his company is doing to address some of these challenges, Stein said the current uncertainties caused by the pandemic make it difficult to strategize.

"It's so uncertain from my perspective what happens after we rebuild," he said.

One opportunity convenience services operators have is to expand into food delivery, Rosenberg said. Those with commissaries can turn them into ghost kitchens, even partnering with national brands.

He acknowledged, however, that the convenience service operator's current capital infrastructure — large route trucks — makes this difficult.

The operators agreed that it is necessary to improve compensation for employees, given the current labor situation.

"We need to pay them more and we need to pay them a lot more," Whitener said.

At the same time, he doesn't want labor to account for a greater portion of revenue, which requires improving productivity. He believes data will play an important role in accomplishing this.

The panelists agreed the pandemic has accelerated changes in consumer work habits.

"The nature of work has changed," Whitener said. "Folks will work less stationary, more on the move. What I think that means for our industry is we have to learn the consumer."

How much work habits will change remains a big unknown at the current time, however.

"In Chicago we're very much holding our breath and waiting to see what the nature of work looks like," Stein said. "Whether our client base comes back five days a week or three days is going to have a huge impact on the scale of our business. I don't think the clients themselves know exactly how it's going to shake out."

Photos courtesy of NAMA and LinkedIn.