Vendors and Suppliers, Let's Fix This Channel

Everyone in business is feeling stressed these days. For many of us, the only consolation is knowing that we’re not alone; we’re all in it together. This being the case, it’s time for the different industry segments to start thinking collectively.

Operators think consumer product manufacturers are unconcerned about their well being because of the recent price increases, which have been unprecedented.

Product manufacturers are frustrated working with an industry with unreliable field execution and a serious lack of consumer-level sales data. Other retail channels have left vending in the dust in these areas.

RECESSION BUILDS ON SETBACKS

The recession has only exacerbated some long festering problems in the vending industry.

Vending sales have been declining for some time because the established operating model is no longer efficient in a customer base not dominated by heavy manufacturing. Sloppy business practices born of an earlier prosperity have long been rampant. When the current recession hit, the bottom simply fell further.

In response to this situation, Automatic Merchandiser decided to make a “case for vending.” The idea behind this series of articles that began in January is to remind readers why our industry exists; what benefits it provides to operators, customers, manufacturers and consumers. In the process of researching the series, it has become evident that there is a case to make for vending, but so far, almost no one is making it.

THE CASE FOR VENDING IS REAL

The case for vending is real. Vending machines are reliable, easy to use, aesthetically pleasing, and offer good products at a reasonable price. More importantly, they offer a convenience, which in today’s world represents a premium equity. Time is a greater commodity for today’s harried consumer than for the factory worker of yesteryear.

The vending bank is the most prominent retail venue serving the consumer where he or she works. It represents the biggest venue with a captive audience.

But because the industry has failed to develop an efficient way to deliver the values consumers are seeking, it has surrendered its unique equity to other retail channels.

It doesn’t have to be this way.

Consumer product manufacturers must recognize that vending, a single-serve channel, potentially represents one of their most profitable businesses. They must resist a tendency to retreat from the channel due to the current situation. When the channel comes back, they need to be positioned for growth.

Many product manufacturers have treated the vending channel as stepchild. This attitude is partially responsible for the poor returns they are getting; the recession has only intensified it.

OPERATORS MUST THINK LONG-TERM

Operators must recognize that for product manufacturers to commit resources to their channel, more reliable field execution is needed, along with better consumer sales data. This is where investment in technology comes into play. Product manufacturers cannot justify allocating resources to a channel that doesn’t provide these things.

Once the vending channel can deliver the same level of reporting and on-site execution as other retail channels, operators and product manufacturers alike will find themselves on a stronger playing field.

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