Saturday, November 18, 2017 | Today's Vending Industry News
Learning From History: Part 2

Posted On: 5/9/2005

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Vending always has prided itself on being an entrepreneurial business, and rightly so. Despite recurrent fears that the market is saturated and the competition from national organizations is unbeatable, every generation has witnessed the growth of successful small operations into a new middle tier of well-established regional independent full-line operations. Whether the entrepreneurs buy a company, start one from scratch or inherit the old family business and take a new look at it, they locate unserved niches in their market areas and often break new ground.

This is as admirable as its proponents believe it to be, but there is a negative too. The imagination, flexibility and courage of the entrepreneur can be attended by an aversion to methodical study, or at least an indifference to its value. And vending operators are celebrated (somewhat unfairly) for their unwillingness to spend money "for anything that doesn't have a coin slot in it." That ancient judgement, while harsh, does reflect the reality that the entrepreneur must consider the impact of every purchase on the company's profitability. It is a discipline from which large organizations could benefit, but it can restrict growth and hamper improvements to efficiency as a smaller company grows.

Specifically, we think there is a large and growing need for information about what customers actually do in front of vending machines, and why they do it.

Over the decades, there have been attempts to find out. We've pointed out that the ability of many modern vending machines to capture and record the details of exactly what is purchased, and when, gives operators the ability to conduct their own market research. That capability also interests established consumer research organizations and large product suppliers, and we're certain to hear much more about it as more and more suitably equipped machines take the field.

However, there are many things important for us to know that cannot readily be determined by looking at transaction records. For example, such data will not explain why someone did not buy something, nor suggest items not presently vended that might sell well if they were offered.

As the National Automatic Merchandising Association strengthens its links with the academic world, we are confident that scholarly research techniques will be applied to vending and coffee service. Some questions that have come up from time to time over the past four decades seem especially worth exploring, and we're certain that there are others. Here's the top of our list:

(1) When a vending machine is out of order (or believed by the patron to be so), its contribution to route profitability is negative until it's returned to service: it still represents an investment, but it is generating no return. Everyone knows that "downtime can kill you." Every now and then, someone has pointed out that the real  loss is much greater. An out-of-order machine erodes customer confidence in the entire operation. The longer it remains "down," or the more often the machines fail, the greater the effect on the patrons' morale. It would be valuable to verify this belief and to quantify it. An operator attempting to gauge the budgetary impact of a preventive maintenance program, or the potential benefits offsetting the cost of a telemetry system, really needs to know the actual costs of inaction, to weigh against the expense of improving machine reliability.

(2) How do people "shop" a glassfront machine, anyway? Ever since the early '70s, when the proliferation of single-serve snacks and the increasing diversity of consumer tastes thrust the glassfront design from the margin to its present eminence, operators have speculated about the approach to stocking it that will produce the best results. Do people naturally incline to purchase the  item at eye level, nearest the pricing/credit mechanism? Does mixing up the display periodically, so customers must look for their favorites, help sales by leading the patron to a new discovery, or hinder sales by impeding and annoying the customer? Do people instinctively scan the vertical midline of the display, from top to bottom, and then start looking to left and right at the lowest shelf? We've heard all those theories, and they all make sense. But we don't know which, if any, is correct, and neither does anyone else. It's time to find out.