Let’s Make The Case For Vending

Vending plays an important role in the lives of many consumers, and while the perception of vending as a less-than-premium venue restricts’ operators ability to raise prices, consumers are overall satisfied with their vending experiences. What many consumers need is more captivating reasons to visit the vending machines, which are much less exciting than other shopping options.

New products, equipment and technology have given the vending industry the means to meet new customer demands, but operators have been reluctant to make the necessary investment. The current recession has exacerbated the situation.

The vending industry’s resistance to change is self fulfilling. Some technological innovations that would make vending more exciting — like interactive video screens, card readers and coupon dispensers — require high upfront investment.

More widespread use of these tools would enhance vending’s value in the minds of account decision makers, most of whom remain unaware of these capabilities and view vending primarily as a convenience for their employees.

Consumer product manufacturers could provide support for such initiatives, and some, such as Kraft Foods Inc., have already invested in new vending technologies, such as the interactive “diji touch” machine.

Customer appreciation for OCS, meanwhile, has been uniquely enhanced by the recession since it enables consumers to get their beverages free at a time when they are trying to spend less money.

This enhanced appreciation presents a new opportunity for OCS operators since it presents an added benefit to their service. Operators, however, must educate customers about the important role OCS plays in strengthening employee morale and productivity since employers, for their part, are looking to cut costs.

PART 1: CONSUMERS WANT BETTER VALUES

At the start of 2009, Automatic Merchandiser commissioned Chicago-based Leo J. Shapiro & Associates to find out how consumers view vending in light of the
recession, and how they view other retail foodservice channels. The survey consisted of phone interviews with 562 adults nationwide.

The survey found that consumers were reducing spending in all channels. Two of the key findings were:

1) There is a core of regular vending users who remain more loyal to vending than other retail channels, and
2) Consumers remain resistant to paying higher prices in vending machines.

The two findings are important to vending operators. The opportunity exists for vending operators to build those relationships with better values. This could take the form of more variety, better quality, point of sale communication and loyalty rewards programs. Such initiatives require stronger communication with customers.

The finding that consumers resist pricing in vending machines is not new to vending operators. It does remind operators they need to continue to support public relations initiatives to better educate the public about their industry. The exact message and the means to convey it remain uncertain and call for creative thinking. The national trade association is a logical entity for such an initiative.

The survey also confirmed other research in reporting that overall, consumers are satisfied with their vending experiences. Most rated the vending experience equal to or superior to a store purchase.

The survey indicated consumers would be more likely to buy more if there were price promotions.

Point of sale communication is an area where technology can help, such as coupon dispensers and interactive video touchscreens. However, traditional tools also work, such as customer newsletters, static clings, break room posters and flyers.

PART 2: WORKSITE CONSUMERS’ NEEDS ARE CHANGING

Automatic Merchandiser conducted online surveys of 1,200 consumers at work about their purchasing habits from vending machines. One of the more interesting findings of this survey was the level to which vending consumers buy “better for you” products. The survey challenges a long-held view among many vending operators that consumers do not seek “better for you” products from vending.

The survey also found that most vending consumers buy more than one product at a time. This indicates that technologies that enable multiple purchases, such as cashless readers, could bring more customer satisfaction.

Part 3: product Manufacturers offer resources

Consumer product goods (CPG) manufacturers view the vending channel in a mostly positive light, although many believe it could benefit from a higher level of professionalism. CPG manufacturers recognize that vending is the only retail channel that reaches consumers where they work, which for some manufacturers is an important consideration.

Manufacturers complain that field execution in the vending channel is much less reliable than other retail channels, and that consumer sales data is practically nonexistent. Manufacturers find such data important in developing their marketing programs.

Point-of-sale (POS) merchandising options are more limited in vending than in other venues. Many CPG manufacturers view this as a big disadvantage since POS activity has proven itself important in retail.

PART 4: OPERATORS OPTIMISTIC OVER THE LONG TERM

While the current recession has delivered the most challenging operating environment ever, a phone survey of vending operators indicated that most believe the future is bright, thanks to new products, equipment and technology.

Where rising costs and limited growth opportunities have stalled investment in new technologies, recent interviews reveal a widespread acceptance that new technologies, namely cashless readers and remote machine monitoring, will eventually become commonplace.

PART 5: CLIENTS WANT VENDING, NEED MORE EDUCATION

In Part 5 of “The case for vending,” Automatic Merchandiser reported that among location managers, vending’s traditional benefit — worksite convenience — remains the key reason for having it.

The fact that most account decision makers are not aware of the more recent technological capabilities — such as guaranteed product delivery, cashless transactions and remote monitoring — indicates that operators have an opportunity to improve this audience’s appreciation of their service.

Some new technologies, such as remote machine monitoring and item-level tracking, give operators new tools to educate account managers about their employees’ buying habits and their satisfaction with the vending service.

Part 6 in the series focused on OCS. A key point was that specialty coffee is now reaching the mainstream through convenience stores and fast food restaurants. While this is happening, specialty coffee remains the least available beverage in the work place. The research identified a big opportunity in replacing hot chocolate and tea, which have limited audiences, with specialty drinks.

CONCLUSION: MAKE THE CASE FOR VENDING

The purpose of this series of articles was to assess how some key segments — consumers (users and nonusers), location managers, operators, and product manufacturers — value the current vending experience and what changes are needed to strengthen it.

The series found that automatic merchandising provides an important service for consumers, account managers and product manufacturers, but customer perception would be better if operators improved the quality of their service.

Products, equipment and technology offer tools to allow them to do this, but more commitment is needed.

Operators must recognize the important role their service provides all constituents in order to effectively make a case for vending.

‘Case for Vending’ action plan

* Develop added value incentives for regular shoppers.
* Communicate value at the point of sale.
* Form partnerships with product suppliers to improve values for customers.
* Develop a plan to use new technology.
* Market new technological capabilities.

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