Tuesday, November 21, 2017 | Today's Vending Industry News
What Is The 'Vending Industry,' Anyway?

Posted On: 1/15/2006

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The annual National Automatic Merchandising Association trade show always provides insights into the vending industry's possible futures. This year's National Expo included exhibitors demonstrating everything from contactless credit/debit card readers through a modular vending machine enclosure designed for public outdoor locations to an unattended store based on a terminal that reads tags on product with a wireless scanning system and accepts cashless payments.

A few years ago, we received the prospectus for a European trade show devoted to the design of retail stores. This is a subject rather far afield from vending, but we were intrigued by some of the exhibitor summaries. The retail store of the future, with its interactive information kiosks and extensive transaction automation, sounded very much like a giant vending machine with the customers inside it.

The relationship of vending to the wider world of retailing has been the subject of continuing, although muted, discussion for as long as we can remember. For most of its history, the vending industry has applied concepts reminiscent of other retailing modes -- a soft drink made from fountain syrup and served with ice, a pack of cigarettes presented to the customer on a "counter" atop the machine, a wide range of products presented in the manner of a reach-in cooler, and so on. But of late, the exchange has started going the other way.

The whole idea of "retail automation" has been inspired by the same conditions that have made vending successful. Not so long ago, most retailing was conducted in a manner perfected more than two millennia ago: the buyer handed the seller money, and the seller handed the buyer a product. At the opposite extreme was vending, in which the buyer inserted money into a machine and received a product automatically. But now, the degrees of automation are arranged along a spectrum: the buyer may choose an item from a shelf and pay for it at a merchant terminal, without involvement by the seller other than to supervise the transaction.

We have chronicled the evolution of the vending industry as a steady movement toward the retailing mainstream. While we were doing this, the mainstream was shifting in the direction of vending. This process almost surely will continue at an accelerating pace. And the position of "vending" within the retailing spectrum of the future deserves careful thought.

The history of coffee service may be helpful in thinking about this. Modern OCS emerged in the 1960s as the cost of running coffee carts in office buildings delivering pre-brewed coffee in large insulated servers became prohibitive. The development of small, easy-to-use restaurant brewers enabled the pioneer operators to deliver ground roast coffee that the client would prepare, and price it by the brewed cup.

Unlike vending, coffee service was not based on hard-to-master technology. Once pour-through brewers proved popular, appliance manufacturers began making home models. At the time, this was viewed with fear and loathing by many operators: if anyone could buy a brewer, and pick up coffee for it at the grocery store, who would need a professional service?

But, of course, "service" was the key. As one operator told us, "The prospect may say, 'I can buy a brewer and send my secretary out for a can of coffee' -- and I reply, 'If you had an insect infestation problem, you could send your secretary out for a can of roach powder. But you'd probably call in a professional, because you can find a much more profitable use for your secretary's time.'"

Vending equipment is becoming easier and easier to maintain, and alternative automated retailing systems are appearing in defiance of traditional retailing channels. The vending operator increasingly is being denied the tactical high ground of technical complexity. But good operators never have believed that their ability to keep vending machines running is all they have to offer.

There is an ever-wider market for automated retailing systems. At this point in history, the vending industry can move imaginatively to address that market. If we don't, someone else will.