Editor's Note: This is an expanded version of the 2012 State of the Vending Industry Report that appeared in the June/July Issue
The road to recovery has been slow in the recession, for both automatic merchandising and the multiple industries it serves.
Fiscal 2011 saw trends from the previous year continue, as the vending industry slowly recovers from the massive fallout of the Great Recession. In 2011, industry sales declined for the fourth consecutive year, although at a progressively slower rate. The 1.5 percentage point sales decline in 2011 was half the rate posted in 2010, indicating vending operators made progress in stemming the downward trend.
According to the Automatic Merchandiser State of the Vending Industry Report, aggregate vending sales fell to $18.96 billion, taking the volume to a level comparable to the early 1990s.
Aggregate sales declined while operators continued to raise prices for the second straight year, though prices rose less in 2011 than 2010. Falling sales in conjunction with higher prices indicated unit sales fell more than dollar sales, another trend from 2010 that carried through 2011. Operators raised prices both years in response to higher product and operating costs.
While the last two years were not growth years, the decline was less severe than the previous two years, which delivered a 15-point aggregate revenue drop.
The vending industry’s slower rate of decline in the last two years reflected a softening of the recession in 2010 and 2011. The nation’s unemployment rate fell from a high of 10 percent in the first quarter of 2009 to a low of 8.5 percent in December 2011.
Vending sales once again trailed overall foodservice sales, a trend that has been constant during the recession. Foodservice sales posted 2.5 percent growth in 2011, according to Technomic, a foodservice research firm.
The State of the Vending Industry Report is based on returned email surveys sent to more than 9,000 emails identified as vending operators in the Automatic Merchandiser/VendingMarketWatch database.
Operator consolidation continued in 2011, a trend that began prior to 2008. Medium size companies, defined as those with $1 million to $4.9 million in annual sales, experienced the most fallout in 2011, indicated in chart 2. Medium-size operators do not enjoy the economies of scale of large and extra large operators, nor do they benefit from low overhead like companies with less than $1million in sales.
The report found that operators with less than $1 million sales continued to gain market share in 2011, indicated in chart 2. While aggregate industry revenue contracted, newcomers continued to enter the industry.
One bright spot in 2011 was a slight gain in manufacturing customers, indicated in chart 3. Manufacturers have always been the most profitable vending accounts. Since March 2010, U.S. manufacturers added 500,000 employees to payrolls, accounting for 13 percent of all jobs created through early 2012, according to The Wall Street Journal. However, the manufacturing sector still employed 1.8 million fewer workers at the end of 2011 than it did in January 2008.
The production gain helped the manufacturing segment of the vending customer base grow in 2011, when the segment once again reigned as the top customer category for vending. The manufacturing segment, which has long been the vending industry’s largest single customer base, has lost market share to other customer segments over the last two decades.
Automotive production enjoyed its second consecutive growth year in 2011 following several years of decline. North American automakers increased production between six and seven percentage points in 2011, following a 2.9-point gain in 2010, according to The Detroit-based Automotive News Center.