Commentary

Market change always propelled us; Virtual Self-Service Innovation Summit probes the next stage

Vending's history has been a record of the convergence of new technology with new public demand. The Self Service Virtual Innovation Summit offers an overview of both forces, a perspective we'll need as we move into the future.

Image courtesy of iStock

September 21, 2020 by Tim Sanford

Everyone involved in our industry today is keenly aware of the torrent of change that's affecting our clients and customers while, at the same time, it augments the tools at our disposal for meeting their varied needs.

We've always faced challenges. This industry was formed by meeting the challenge of providing refreshments to a booming economy in the wake of World War II. The full-line vending pioneers saw the potential of a new generation of automated dispensers to deliver convenient service in a full-employment economy. The same sort of imaginative vision is required today; it requires information to fuel it, and a forum for exchanging ideas and experiences.

I could not help thinking about this when reviewing the agenda of the first-ever Self-Service Innovation Virtual Summit, an online educational opportunity scheduled for Dec. 8 and 9. It's designed to illuminate the new terrain that lies before us, and to suggest practical methods for exploring and mapping it. Vending's history has been a record of the convergence of new technology with new public demand. The Virtual Summit offers an overview of both forces, a perspective we'll need as we move into a future where vending no longer has the protection — and the limitations — of a novel and complex payment and accounting method.

How we arrived

The postwar vending industry took shape in the 1950s, enabled by the swift development of new technology and dramatic expansion of precision manufacturing capability during World War II. The end of the war returned large numbers of young people to the civilian economy, with money to spend and a desire to make more.

They entered a domestic market starved for consumer goods by a decade of the Depression and four years of wartime rationing, and an international market eager to repair wartime devastation.

American industry applied its skills and ample capacity to meeting those demands, and commodities were abundant. A workforce employed in huge factories required refreshments in large quantities during time-limited break periods, often around the clock. Talented and imaginative people recognized the opportunity.

By 1960, the successors to prewar candy and cigarette vending machines had been joined by much more complex types, able to prepare and dispense hot and cold beverages (primarily coffee and carbonated soft drinks) in disposable cups. Also taking the field were machines designed to vend portion-packed foods, both fresh and in single-serve cans. The "full-line" vending business was the "Next Big Thing," and its dramatic growth attracted the attention of product suppliers.

6 decades of innovation

The result has been some six decades of innovation, change (sometimes wrenching) and diversification. The vending industry was integral to the progress of everything from water filtration and treatment technologies through disposable containers, single-serve packaging and microwave ovens to banknote validators. It has been an exhilarating adventure, but it's over. The time has come to consider the next step.

This will include rethinking "self-service." If vending represents the near-perfection of self-service as a retailing method, our industry can be seen as building, in turn, on the introduction by a few pioneering supermarket chains of a new method for serving customers. Rather than handing one's list to a grocer's clerk who then went into the storeroom to pick the merchandise and bring it back to the counter for checkout, customers now could browse the aisles and pick their own merchandise.

This seems no longer to be regarded as "self-service," which now includes giving the customer the ability to check out and pay without human assistance. We have the postwar full-line vending industry to thank for that.

The entrepreneurs who recognized the needs that vending equipment could meet were a very diverse group: mechanically adept youngsters with good sales skills, tobacco and confectionery wholesalers, independent soft-drink bottlers and catering houses, operators running jukebox routes (who have a lively history of their own), dairies, and so on and on. The majority were local and family-owned; they knew their market areas. And they were fortunate in entering a field that already possessed a forward-thinking national trade association able to call on experts in health and safety, public relations and government affairs.

These widely-varying origins gave the vending pioneers very different perspectives on the industry, but the successful ones all shared the common understanding that "there's nothing 'automatic' about automatic retailing." Responsive, reliable and effective service was crucial to retaining clients, and to building a local reputation that helped win new ones.

Vending meets mainstream retail

It can be helpful to view the development of full-line vending as movement toward the retailing mainstream. This involved not only the progressive accommodation of an ever-wider variety of package types and sizes, but also the ability to deal with an array of new demands for more flexible payment options, more comprehensive product information and new promotional opportunities.

Those innovations were essential to meet the changing needs of a market in which large factories gave way to a much wider range of prospective locations that needed vending's 24/7 service capability but did not offer the luxury of large employee populations with limited, predictable demands. It became increasingly important to offer a broader spectrum of products in the context of new service approaches.

While all this was going on, the retailing mainstream also was moving toward us. The new demand for single-serve products for on-the-go consumption created by full-line vending in the 1960s was instrumental in catalyzing the growth of convenience stores — single-serving bagged snacks proved as popular with motorists as with factory workers, and c-stores can serve coffee, too.

At a more granular level, "retail automation" started off by replacing the mechanical cash register with an electronic terminal equipped to scan barcodes and to send a continually-updated tally of sales, by price and SKU, to a central computer. The recognition of just how this could streamline product selection, reordering and ultimately production scheduling built Walmart into a colossus, starting a new era of closer cooperation between retailers and manufacturers.

The vending industry's adoption of in-machine data acquisition and remote collection and processing systems mirrored this development. The credit card companies' recognition of the potential for "micropayments" brought new flexibility to vending as well as many other retail channels. And, of course, the Internet and wireless cellular networks are transforming the retail world.

In simplest terms, traditional vending is a means by which the customer exchanges money for access to a desired product. Much of the industry's technical and operational development has been devoted to assuring that every insertion of payment is matched with delivery of the correct product. Among other things, the complexity of doing that has made the vending machine's payment system a barrier to entry for non-vending merchants, most of whom have preferred to outsource the task to a professional vending operator. But that barrier has almost disappeared, as the machines have become more serviceable and the accounting system has been automated.

Vending becomes self-service retail

It is, then, time for vending operators to recognize that they are now self-service retailers, and to look around to see what other self-service retailers are doing.

By the same token, those retailers have a good deal to learn from us. As we try to imagine the "new normal" that will emerge as the present pandemic subsides, we all need all the good ideas we can get.

Anyone looking for an overview of the emerging self-service retailing world would do well to investigate the first-ever Self-Service Innovation Virtual Summit.

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