Beyond Recession: Leaders Position for Growth

Cautious optimism” best describes vending operators’ expectations about the economy in 2010. Most believe the decline that hit them in 2008 and 2009 has bottomed out, and that sales will begin to recover, however gradually, in 2010. But that doesn’t mean a lot aren’t hopeful for a good year.

A recent operator survey revealed many operators expect 2010 to be a good year. The more optimistic among them are not relying on customers to rehire a lot of employees, or for employees to begin spending a lot of money in the break rooms. These optimists believe that the changes they have been making during the downturn have enabled them to improve their bottom lines.

More importantly, they believe the changes will position them for growth when employers begin rehiring in a big way, which economists claim is destined to happen at some point.

A recent Automatic Merchandiser online survey sent to a random sampling of vending and OCS operators nationwide revealed 83 percent believe their businesses will improve in 2010.
While reader surveys do not accurately reflect the views of all operators, the survey does confirm there is a group of operators who are optimistic about the future.

Surveys designed to measure investment plans typically result in forecasts that are more optimistic than the industry norm. This is because the more optimistic operators are more likely to complete a survey than the less optimistic ones.

Automatic Merchandiser also conducted random phone interviews with operators nationwide and confirmed that many operators have evaluated their operations in response to the current recession and believe they have positioned themselves for success.

A similar 80 percent majority say they have made some strategic changes in their companies, as indicated in chart 3 on page 30. The largest single change reported was expanding into a new geographic area, cited by 19 percent, followed closely by acquiring another vending or OCS business, cited by 18 percent.

The majority of respondents do not plan to add new services in 2010, as indicated in chart 2c. Among the 42 percent planning to add a new service, most plan to add OCS.

About 80 percent also said they are investing in new technology, indicated in chart 2d. This marks one of the most positive forecasts for technology in recent years. More operators recognize they need to invest in new technology to succeed, and many are doing so despite the unfavorable business climate.

Technology providers have long noted that vending operators have been slow to adopt new tools to enhance the customer’s vending experience and to make managing a vending operation more efficient. When the recession hit, operators looked to reduce costs, not add them.

The economy’s impact on operator willingness to invest in technology is hard to determine. While operators have been slow to invest in technology in recent years, investment has gradually increased, surveys have consistently indicated. The most likely explanation is that investment has grown as operators have become more knowledgeable about the technology.

Another reason is that over the years, a group of recognized technology providers has emerged.

Operators interviewed about technology said they realize that benefits of remote machine monitoring and cashless transaction capability, the two leading areas of investment, will allow them to operate more profitably.

The two technologies are closely related, since the hardware required for remote machine monitoring oftentimes supports cashless transactions, and vice versa.

Remote machine monitoring (RMM) in particular has been recognized as a technology needed to support pre-kitting routes. Many operators have been able to improve route productivity by pre-kitting routes in the warehouse.

Cashless vending was cited as the most common technology operators are adding.