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This Is Where It Starts To Get Interesting

Posted On: 11/27/2013

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TAGS: Vending Times editorial, vending industry, vending editorial, retail automation, vending operator, vending industry history, coin machine, coffee service, food service, Tim Sanford, vending technology, vending machine payment systems, automated data collection, micro market

Most technologies progress through spurts of innovation followed by lulls for assimilation. During the lulls, people who use the new generation of products begin with the features that resemble those of the previous generation -- their processes are set up for those features -- and then begin to explore the possibilities made possible by the new functions. During these periods, there may not be much novelty on display at trade shows, but there is a lot going on.

One example of this is the impact of improvements in payment systems and automated data collection and retrieval. The payment system innovations were, for the most part, prompted by the needs of the vending industry. Better ways to enable the sale of products at different prices from the same machine were made necessary by the advent of full-line vending, as were improvements to change-making systems. Multi-price mechanisms were joined by bill validators and proprietary card readers, and then by devices that not only could accept banknotes, but also pay them back as change. The surge in readily accessible wireless networks allowed the application of the card readers to major credit and debit cards, when the card issuers were ready to deal with small-value transactions. All of this was supported by more sophisticated software made possible by more powerful computers.

It's possible to plot these advances on a vending industry timeline, but many of them were enhanced by developments in other types of business, and in turn had effects in other fields. One that struck us, during the last decade, was the advent of self-checkout lines in supermarkets. In our first adventure with one of these, we were struck by the familiarity of the payment systems, all of which had been designed for vending machines -- and by the inability of the designers to assemble those components into anything as ergonomic and intuitive as a vending machine.

This apparently struck others too, and those others went on to develop micromarkets. That development in turn seems to have suggested improvements to the supermarket systems. This kind of thing contributes greatly to progress.

And it's not just the technology. We have observed that many people who appear on micromarket panels at industry conferences have said that they are able to do much better merchandising and sales analysis with their micromarkets than they could with vending machines -- but the micromarket features that have made these things possible were developed for vending machines and are widely available on current production machines. We suspect that many people have not gotten around to using them yet; their processes, after all, were developed for an earlier generation of less capable equipment.Perhaps their experience with the value of imaginative merchandising and the application of sales analysis to better category management and higher same-site sales will encourage them to start doing those things with their new vending machines, too.

We have long thought that the recommendation to "think outside the box" might well be taken as a suggestion to look inside other boxes than one's own. The evolution of convenience stores from very limited-menu adjuncts to gas stations into today's marketing emporia for a mobile public was greatly aided by product suppliers' expansion of popular snack lines from large family-size bags to single-serving packages in the 1960s. That was driven, in large part, by the demands of the vending industry. C-stores have returned the favor by devising effective ways to merchandise portion-packed items to a mobile public. Operators who have tried these techniques with their micromarkets may be ready to heed what they've been told for several decades by knowledgeable industry observers, and to pay close attention to what goes on in c-stores and other small-ticket high-traffic retailers.

The micromarket is the latest application of robotic retailing technology, and it is reinforcing the public's willingness to make a variety of purchases from unattended points of sale. That willingness has attracted the attention of upscale retailers, who see the value of a vending machine (or "kiosk") as an eye-catching advertising, sampling and market research appliance. Most of these gee-whiz applications to date have not had much relevance to the mainstream vending industry, but some are worth watching.

We have been pleased to observe the launch of several high-end specialty coffee vending (or kiosk) systems in the United States and the European Union. Just as coffee service operators have developed attractive turnkey programs for c-stores and supermarkets, we think alert vending operators might devise appealing gourmet coffee programs for a wide range of high-traffic retailers. A whole generation of consumers does not associate coffee vending machines with factory cafeterias, and many have never seen a coffee vending machine. It is equally tempting to think about the potential of postmix cold drink vending technology in a wider market.

We suggest holding onto our hats as we emerge from the current lull. It is going to be quite a ride.