Self checkout vending markets (SCVMs) continue to grow at a rapid rate. As challenged as our industry’s operating environment has become, these SCVMs are popping up nationwide and delivering outstanding sales.
Change is never easy. To offer a SCVM, the vending operator must invest in new equipment, learn how it works, invest in new products, and establish a new delivery system.
But progressive operators are finding these SCVMs allow them to provide consumers the values they want.
What do installations of SCVMs to date teach us?
The most dramatic difference over vending is the number of stock keeping units (SKUs) available to the consumers through SCVMs as compared to vending. Patrick Hagerty, president of Vistar Corp., told Automatic Merchandiser that when a SCVM replaced vending at Vistar’s headquarters, the SCVM offered about 300 SKUs, which is far more that the vending machines did. My research indicated that a SCVM carries an average of 272 SKUs.
However, just as important as the number is the quality of the SKUs available.
From my vantage point, operators are learning they must become true retail merchandisers to be successful with SCVMs. This isn’t to say the same thing isn’t true about vending. But with SCVMs, the stakes (and the potential benefits) are much higher.
The facts define the trend
According to BCC Research in Denver, Colo., in the next five years, sales volume through self checkout will grow at a compound annual growth rate of 9.3 percent compared to vending’s 3.2 percent. This 9.3 percent refers to all types of self checkout, including the systems used by traditional retailers. It’s safe to assume that the vending self checkout growth will be much faster.
If kiosk operators do not expand their product lines and merely replicate vend items, the consumers at the SCVM locations will soon become dissatisfied.
Recently I visited a location with multiple kiosks. The location manager was seeking to replace the SCVM operator because the product selection was merely replicating vending machines. The location manager eventually selected another kiosk operator who offered a wider diversity of products, especially fresh food selections.
Food selections are vital
Vending operators, who traditionally view fresh food as a burden, must become more innovative with food when introducing a kiosk and think of themselves as restaurant operators. Fresh food is not the only area where operators must think more critically about what products they use in SCVMs, but it is the most important category since it’s the area that allows an operator to distinguish himself or herself from the competition, and at the same time become a meal destination.
Have you seen what drug stores are doing with fresh food lately? I’m as picky as anyone when it comes to fresh food, and what I see at my local CVS store blows my mind. Supermarket News recently reported that drug stores are growing food sales faster than supermarkets.
Some vending operators have commented that the SCVM allows them to get back into the food business since the demise of the food machine began several years ago with the ebbing of big manufacturing accounts.
The operator must solicit food requests from the consumers. If an operator does not have a commissary, he should seek a local foodservice provider.
If fresh food sales are less than 30 percent of the units and dollars, you may be in jeopardy of losing the account to a competitor.
Pastry also requires a new approach. Operators should look for a bakery to provide pastry and baked goods. Instead of just a wrapped muffin, how about a muffin with a pad of butter and jelly and plastic knife wrapped in a paper plate? Cupcakes are also a growing product line, such as seasonal cupcakes for Halloween, Christmas and St. Valentine’s Day.