MEI software reports provide an example where small space to sales adjustments are able to save services in a space to sales enabled machine using simple reporting. (See figure 1 on page 26).
In this example, the MEI report shows that allocating an additional column to Coke Classic will save three deliveries a year, and extend the service interval from 27 days to 36 days.
The modern glassfront beverage machines like Crane’s BevMax 4 are capable of many programming options that can manage merchandising and space to sales. Since machines like this can vend many product sizes and prices, options include offering selections like energy drinks and healthy drinks with higher margins.
One feature that many don’t know about is the “even sell down” configuration that allows the machine to be configured to sell down an entire shelf, evenly.
As an example, if the first two shelves are allocated to Coke or Pepsi, the machine can be configured to treat the entire “block” as one, and no matter what selection is made, the machine will manage selling the product out of all columns. The advantage here is that the machine won’t look empty because most consumers chose the first selection, “101”.
A general strategy for merchandising these machines is as follows:
- Consider offering higher margin alternatives when the contract allows it.
- Analyze the space to sales allocated to each product. There will likely be some products or space that is not performing well.
- Create a new planogram for the machine, and if possible, program the even sell down feature.
Glassfront snack machines provide the best example of where vending can learn from retail. There are huge opportunities for improvement for operators without major machine configuration changes.
Most operators over or under service these machines. Optimizing the schedule frequency and rotating in new products is a big profit opportunity.
The first thing you need to do is find selections that are underperforming. This is easy to do using a merchandising software tool, or even a basic sales ranking report for the machine.
Once you identify these underperforming selections, the question becomes what to do with them. What you do depends on a lot of factors.
Snack Machines: what to consider
In snack machines, the best selling products outsell the others by a huge margin. If you can add a column or add more space to the two top sellers, you can often double the service interval for a machine.
Once that is done, the focus should be on replacing other poor sellers with new products. There are two options here:
- Look at your own data and make sure that each machine is stocking good selling products that might not be in every machine. For many operators, some of the best selling products are not in all machines.
- Consider placing new products in each machine to replace the poor sellers. Many times, a new product will initially sell well, and then slows down. It is important to continuously monitor results.
Figure 2 provided by Crane Streamware on page 28 illustrates how Streamware’s merchandising tool deals with a typical snack machine.
The tool has several aspects, including analyzing category performance and pointing out what saving would be made if a recommended change were made. In this case, the tool shows that the space allocated to each category is already well balanced.
The tool also shows the difference between the best selling and worst selling products in the machine and recommends several changes.
Here are a few items still to consider:
- Price sensitivity is always a factor, and because of existing contracts, adjusting prices may or may not be an option. Studies have shown that lowering prices increases sales and makes up for margin. There are some accounts where testing lower prices may be an option, but prices are already low in vending. A better option is offering high priced/high margin alternatives like energy drinks and healthy snacks where allowed.
- The DEX protocol allows for handheld and remote monitoring solutions to change prices automatically in your machines. Many software providers are experimenting with this option, but it only works when you do not have prices printed on the machine labels. In one study I know of, taking the prices off the machine actually increased sales. In this case, the machine is configured to suggest “enter a selection to see the price.”
- Some merchandising tools have an option to lower par for products that are not selling well. In other words, the column can hold 15 candy bars, but you will save inventory costs by only stocking it with seven. This is a good idea, however, make sure your existing review process or software have some option to automatically increase the par level if that product starts selling out.