'V-Engineering': A roadmap to progress for vending
- More items sold – When the consumer is not constrained by a deposit or pre-authorization, there is a tendency to spend more than otherwise would be committed resulting in more items being sold per machine.
- Multiple product purchases – Since the consumer is not constrained by a prepayment in advance of item selection, there is an opportunity to make numerous purchase selections without having to initiate additional transactions.
- Higher average sales – Multiple product sales will result in higher average transaction amounts which will simplify machine audits and greatly reduce transaction costs for both cash handling and electronic processing fees.
- Bundled promotions – The ability to engage the consumer in multiple product purchasing provides a foundation for promotional opportunities not otherwise available; for example, offering the consumer purchasing a cold beverage the option of receiving 15 cents off the price of a snack food item if purchased together.
- More payment options – With payment following selection, the vending operator is able to offer more settlement choices without requiring pre-authorization or risk of exposure to mis-authorization charges based on purchase selection (e.g., cash, credit/debit card, gift/prepaid card, mobile payment, PayPal, Google Checkout, etc.).
- Replenishment cycling – Higher sales may lead to more frequent replenishment but will enhance product freshness while improving productivity as more products will be handled each machine visit, thereby lowering the cost per product replenishment expense.
- Data mining – Having more and better information about products with complementary sale potential (i.e., identification of which products sell well together) ensures machine menus have optimal sales mix derived from an analysis of multiple product purchases and/or bundled purchase promotions.
Altering the retail sequence in vending to closely parallel traditional retail shopping will contribute to additional advancements by providing a pathway for changing the consumer’s vending experience.
Digital media evolves
An increased level of interactivity between the consumer and digital media in most retail environments has been proven to effectively increase traffic, sales, profits and loyalty. The recent implementations of video screens and digital signage have been proven to positively impact customer purchase behavior at the point of sale (POS).
Digital signage is typically defined as high definition content containing text, graphic, and video components. As a result of advancement in video distribution and display technologies, digital signage is becoming a point of emphasis for self-service providers, including vending operators.
The fact that a video presentation screen can also serve as a touchscreen input device makes applications even more relevant by providing a platform for promotional upselling to an already engaged customer. The real opportunity for the vending channel may lie in the fact that this roadmap element has the potential for merchandising products in the machine as well as revenue sharing from saleable advertising spots.
Digital media, expected to become an integral part of the vending landscape, is currently available from machine manufacturers and industry technology suppliers for new machines as well as retrofitable for older models. Screens can range from single-line LED display to a medium-sized LCD screen to a large touchscreen design.
Despite the richness of data that can be displayed and captured by an LCD unit, it likely will be the paid advertising model, implemented so successfully at other retail locations (e.g., post offices, gas stations, and quick service eateries) that will serve as an adoption motivator for the vending industry.
The fact is incremental revenue, derived from digital broadcasting, can make a significant contribution to profitability. A second motivator is likely to be in response to impending government regulations mandating the disclosure of nutrient and ingredient product information.
Digital user interface
Similar to the objectives of other forms of media campaigns, vending machine-based digital programming should strive for three goals: 1) influencing a POS purchase decision (promotional), 2) extending brand image (informational), and 3) enhancing the customer experience (entertainment). From an operational perspective, digital media is very appealing as it enables instant updating of product availability, pricing, descriptors, add-ons, modifiers, nutritional and ingredient information, as well as upselling opportunities (bundling and coupling).
Vending operators can use digital media in an attempt to increase revenues while enhancing the consumer experience by delivering targeted messages where and when they seem to matter most; at the point of purchase. Traffic volume and sales data by time of day (often referred to as day parts) are basic elements used to evaluate media success. Generally, there are three techniques used to determine the impact of digital media on point-of-purchase behavior. These factors being:
Sales correlation
Intelligent marketing refers to providing the consumer relevant messaging at the point of purchase based on an analysis of personal profile and day part. Matching POS transaction data to digital content will generate a correlation index between sales and product-specific messaging. Different messages will likely have varying impact on purchase decisions, and understanding how unique broadcast content influences consumers from various demographics can be important to menu engineering.
