As a veteran of this industry, I am very concerned about our industry’s future. I think it is time that everyone who cares about our industry takes a good look at what is happening and consider what can be done to improve our prospects.
I have never heard as many operators who do not have a positive outlook as I have heard in the last year.
Operator product costs are rising so fast that the operator can’t get the changes implemented at the customer level to reflect the manufacturers’ prices before another price increase. These price increases fly in the face of consumer marketing that hammers continuous promotions and discounts (to consumers). As prices increase, consumers purchase less.
PROBLEMS ARE MULTIPLE
Labor costs keep rising. Many operators pay drivers a percent of sales, and every time a manufacturer raises prices, they’re stuck paying more in real terms.
Manufacturer rebate programs demand ever-increasing facings and year-over-year growth, in spite of declining same location sales.
Competition from the very small operators keeps driving up commission pressure. These small
guys don’t have the overhead needed to provide 24/7 service, but the client doesn’t always realize this or want to recognize it. All of the above beg the question: “What are we going to do that is different from what we’ve done before?”
In spite of what appears to be doom and gloom, I am optimistic about the future. There is opportunity for folks that have vision and guts. They must become more competitive as a total business entity.
WHAT THE INDUSTRY MUST ADDRESS
Here are some ideas to challenge our industry to find solutions:
- Re-engage the consumer with the vending process – where it all starts.
- Incent more folks to purchase.
- Incent them to purchase more frequently – create value.
- Incent them to spend more per transaction.
- Continue to take cost out of the operating model.
- Reduce the necessity to pay a percentage of sales as a wage scale.
- Improve the merchandising scheme and planogram of equipment.
- Reduce the need for an expensive rolling stock (vehicle) program.
- Offer the client a true alternative to ever increasing commissions – quit selling money – sell service, sell product, sell quality, with professionalism.
- Free the operator to purchase at the most competitive price in the market.
- Free the operator to purchase what the consumer wants, not what the supplier wants to sell.
- Allow for a dynamic planogram at the machine level aimed at maintaining margin while driving increased revenue.
- Provide an integrated, interactive solution that takes advantage of new technology, i.e., wireless, credit/debit solutions, DEX, pre-kitting, etc.
Our operator community is reluctant to change. In many cases, they are not very sophisticated or don’t understand how their capital costs may be returned to them over time. They may need new ways to source product.
They need sources that allow them to compete for the consumer dollar and realize a fair return on their investment. In some cases, it is because they are tired of an industry that hasn’t changed in a positive direction.
INDUSTRY LEADERS MUST WORK TOGETHER
I urge industry leaders and organizations to continue to work for the fiscal health of the operator community. The industry must also work “with” suppliers who have their own agenda and may be short sighted on the long-term health of the vending operator and their ability to meet the changing needs of the consumer.
Many supplier companies espouse and talk about “brand management.” Our brand in the broadest sense is “vending.” We need to protect it, nurture it, enhance it, and create value in it. Only then will the consumers vote with their quarters and give it a chance again. It will take time and some tough positions with suppliers.