Recession? Don't Forget the Industry's Bigger Issues

Another summer of discontent befalls the vending industry.
This year’s State of the Vending Industry Report, which reflects 2008’s activity, does not capture the full decline that most of our readers have suffered. The recession that hit hard in the fourth quarter of 2008 got progressively worse in 2009.

There has been some hopeful news about the economy in recent weeks, but most of it has little immediate impact on the vending industry. Many economists expect unemployment will get worse before it gets better.

The State of the Vending Industry Report on page 28 puts the recession in perspective by noting that the industry’s long-term negative trend predates the recession. Every vending operator should be more concerned about the industry’s failure to modernize in an environment where competing retail channels have created new customer expectations.

Most operators acknowledge increased competition from convenience and grocery stores, coffee houses and fast feeders. Those sites are revamping their product presentations, offering much improved quality and variety with multiple price point choices.

None of these competitors are luring consumers with lower pricing.

The economy has been as tough as it can get, but even in the prosperous times of the last decade, the vending industry did not experience any meaningful growth.

Vending’s key equity — convenience — has been neutralized because many consumers have issues with the quality of the vending experience.

A major vending equipment manufacturer conservatively estimates the average age of vending equipment in the field to be 11 to 12 years old. With an equipment fleet of this vintage, is it any wonder consumers are growing increasingly wary of the vending channel?

CAN 12-YEAR-OLD MACHINES DO THE JOB?

In lieu of the new forms of competition indicated above, can 12-year old vending storefronts with limited curb appeal, reduced product variety and cash-only payment options compete with the alternative retail environments mentioned?
As an industry, we’re not only losing customer sites due to shifts in employment population, but per capita spending is declining.

At the beginning of this year, Automatic Merchandiser began a series of articles titled “the case for vending” detailing customer perception issues and ways to address them.

We have also profiled vending operators who have been using new technology, modern vending equipment and an up-to-date understanding of customer needs. The company profiled on page 12, Golden Brew Beverage in Odessa, Texas, is one such example.

As long as vending value propositions feature reduced product pricing, high location commissions and aged equipment, consumers will continue to support alternative retail destinations.

Vending operators need to do some serious soul searching.

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