Snack and candy products also present opportunities. An operator should meet with their snack and candy manufacturers to determine what additional single-serve products such as premium size products are available. Diverse single-serve products such as those sold in convenience stores will be critical to the success of the kiosk locations. Higher prices mean higher profits.
Cold drinks: more variety
Cold beverages constitute another 30 percent to 35 percent of unit and dollar kiosk sales. An operator must provide a full range of beverages, not limited as in the case of many vending sites which rely on bottler equipment. Moreover, research shows that consumers are interested in purchasing non-carbonated and specialty beverages at higher price points and greater profitability, instead of the standard carbonated beverages.
Another important consideration: is it time to consider fountain beverage service at these locations? Those of you who have paid attention know there are some exciting fountain products that should be able to integrate with a kiosk.
Milk and ice cream are another area that demand attention. In every geographic area, there are well known local dairies that provide milk and ice cream.
Coffee: 25 to 40 percent of total
Finally, the SCVM system must track all OCS consumption or sales. OCS consumption/sales at a kiosk location can be in the range of 25 percent to 40 percent of total kiosk sales.
SCVM operators must integrate their OCS brewer with the kiosk software. If coffee is provided free to the employees by the location, the kiosk system should be able to track consumption.
By tracking coffee consumption, the operator can send a quarterly email showing the value each employee receives from the location from free coffee. Beyond free coffee, the operator can also place units like the Tassimo that can offer premium coffee which the consumer can elect to pay for.
More importantly, if the consumer pays for the coffee, the kiosk should integrate the sales from the coffee equipment to the kiosk application so payment can be made using a UPC label instead of by pushing icons on the video touch screen. This has been a problem in some instances, but SCVM system providers have addressed it.
Sourcing brings challenges
By now, it is clear that product selection and sourcing becomes a major part of success with SCVMs. This can be viewed as a negative, a positive, or both. I view it as a positive since it allows the operator to seek the best possible values to provide the best possible service.
Rebates are an issue. There are many great products out there that may or may not qualify for manufacturer rebates.
Operators need to consider rebates, but I am in the camp that believes vending operators never should base their buying decisions on rebates. If operators want to be professional merchandisers, they must make product selections based on what consumers want.
On the positive side, some of the purchasing sources out there, such as convenience store product distributors, bring new merchandising expertise to the table.
At grocery stores, 65 percent of U.S. consumers consider a self checkout kiosk important and a stunning 80 percent of consumers 18 to 24 years old view all technology as an important factor in their shopping experience.
Right now, grocery stores are doing more than any other retail channel to enhance self checkout’s capabilities, and it’s important for vending operators to know what they are doing. There is nothing that supermarkets are doing with self checkout that vending operators won’t be able to do. And they may even be able to do it better.
Grocery stores are concentrating on promotions to encourage consumers to increase their purchases. One approach to this “buy more strategy” is the promotion of “build-a-meal” – arranging a chicken breast, bagged salad, beverage and dessert for a $10 price.
The SCVM operator should follow the example of the grocery stores’ “build-a-meal” and combine fresh food, a snack, beverage, and dessert to increase the consumer transaction dollar.
The kiosk system the operator selects should have the database for the operator to track the consumer/dollar/transaction and to develop loyalty programs to achieve a minimum $5 transaction level.
What vending operators are learning is they cannot run the SCVMs the same way they operate their vending machines.