The vending industry is in transition. The Automatic Merchandiser State of the Industry Report for the 2011 calendar year concluded that “aggregate vending [dollar] sales fell to $18.96 billion, taking the volume to a level comparable to the early 1990s”. The 2011 dollar vending sales declined almost 22 percent from 2006, the highest volume reported by Automatic Merchandiser. The 2011 SKU unit sales decline is even more dramatic when increases in vend prices are incorporated. For example, five years ago a vend operator had to sell four beverage cases, 96 units, each week to average $100 for a service collection; now only three beverage cases, 72 units, have to be sold for a $100 collection. Profits are down — higher vend prices barely cover the accompanying increases in commissions and sales taxes, not to mention the product manufacturers’ cost of goods (COG) increases.
The bright light in the vending industry, however, is the development and growth in the placement of micro markets. Last May an estimated 2,000 micro markets were on location. Currently this figure has at least tripled. In the next several years, how many micro markets will be placed at the current 130,000 locations replacing the unprofitable refrigerated food vending machines?
Micro markets are retail evolution
Support for this micro market growth is found in the 2012 white paper, Digital Malls: The Next Generation of Self-Service Shopping, researched and prepared by the Internet Business Solutions Group of Cisco Systems, Inc.
The Cisco white paper describes the current retailing world as suffering from high vacancy rates, declining sales, high labor costs and diminishing customer satisfaction. To meet these challenges, the Cisco white paper suggests developing and combing innovative vending machines, micro markets and virtual stores to “create a completely new retail business model — interactive, low-labor, destination ’digital malls’ in densely populated venues such as airports, universities, stadiums, resorts, large work places or residences”. The Cisco white paper projects self-service digital malls to be a $7 billion retail channel.
NAMA, our national industry association has recognized this significant opportunity to grow the industry. At the NAMA OneShow a day-long micro market seminar entitled, “Where We Are, Where We’re Going, and How to Get There,” chaired by Brad Bachtelle of Bachtelle Associates, will be held on Tuesday, April 23. In addition, a micro market super session will be led by Bachtelle on April 24 followed by a breakout session moderated by Emily Refermat, the editor of Automatic Merchandiser.
Use marketing to increase sales
Specifically, this article will concentrate on how both the micro market operators and product manufactures can partner with marketing programs and implement social media applications to identify and engage micro market consumers to increase sales.
First of all, the micro market operators and product manufacturers must look outside the “vending box” — a box traditionally designed just to service impulse sales without engaging the consumer. The micro market databases have the information to identify consumers, and their purchasing habits, to engage the micro market consumers in a wide range of social media applications designed to increase micro market sales.
Recently I attended the two day show, “Customer Engagement Technology World,” at the Javits Center in New York City. In attendance, and making presentations, were representatives from high-end clothing manufacturers like Ralph Lauren, restaurant chains such as Dave & Busters and vending/micro market product manufacturers such as Hershey and Kraft. Every educational session (I attended eight in two days) centered on using consumer data through social media to engage the consumer to increase sales, such as: “Bring Self-Service Solutions to the People: Empowering Consumers with What They Want — When, Where and How!” and “Social Media, Kiosks & Mobile: Omni-Channel Convergence to Maximize Customer Engagement.” The message succinctly was use data to engage customers and increase sales.