VendingMarketWatch Blog

It’s a cliché to say that an industry, any industry, is at a crossroad. But I’ll risk using this cliché, because this describes where the vending industry is at.

The recession has caused more vending operators to consider making serious investments in their businesses than at any time in recent history.

The best news operators have had to report recently is that the loss in sales has stopped and begun to recover slightly. Some locations have begun rehiring. Consumers in general are not freaking out about losing their jobs if they haven’t already, and have begun spending a little more freely.

During the recession, operators realized the only way to remain profitable was to operate more efficiently. In many cases, this involved reducing payroll.

The National Automatic Merchandising Association (NAMA) 2010 profit report, which summarizes 2009 financial performance, indicates that operators posted a stronger bottom line in 2009 than the previous year even though sales declined even more in 2009 than 2008. This was mainly due to the fact that operators took action in 2008 to improve profitability.

The NAMA report further notes that operators’ return on assets, which it identifies as the most important financial indicator, was acceptable in light of the economy in 2009. It notes that firms were able to gain control of their operations in a way not solely dependent on sales growth.

Most operators realize that sales probably aren’t going to recover in a big way any time soon. Many also realized the only way to improve profitability is to use technology.

Our magazine’s research indicates more operators are installing DEX handhelds. More are also investing in remote machine monitoring.

DEX has been around for years, and line item tracking gives operators a way to make service schedules more efficient. It also gives them a way to better track individual product sales.

“Open” cashless vending has also been around for a while, and more operators are showing interest in it more than ever. The hardware has improved, and the providers have more field experience to use in assisting operators with “open” cashless. This is happening at a fortuitous time, since retail commerce in general is moving to cashless.

It sounds like a cliché to say the future belongs to the leaders. But at the present time, the cliché applies to the vending industry.

This is an exciting time to be in vending.

It’s old news now, but the recession has brought the food wars back, and the restaurant chains are doing backward summersaults to get people in their doors. Most chains are offering discounts to get value conscious consumers inside.

Pizza Hut began the year offering any size pizza with toppings for $10. Taco Bell has a $2 menu featuring four different combo meals. Denny’s has $2, $4 and $6 and $8 value meals.

Burger King recently made a bid for the casual dining audience with its $8.99 ribs. It only shows how anxious they are to grab market share wherever they can.

Convenience stores recognize the opportunity to win more food sales, and they are also offering more value meals.

The vending industry has as much to gain and lose as any class of trade in this economy. While the vend food sector has taken a big hit in this recession, vending operators cannot afford to throw in the towel. The food sale is up for grabs, and operators need to think creatively how they can win that sale. It’s not just the sandwich sale that’s at stake here; it’s also the beverage and snack sale.

The range of food products for vending is broader today than ever before, with plenty of high quality, name brand products. Vend food offers the best values available to consumers.

Besides the traditional cold food machine, there are products that can go in ambient snack machines.

Many excellent food products were displayed at recent National Automatic Merchandising OneShow in Chicago.

Despite the beating that the food segment has taken in recent years, the product manufacturers have continued to offer high quality sandwiches and entrees.

Vending operators also need to upgrade their marketing to let customers know the excellent values they offer. One technique that has worked is to compare the offerings in the vending machine with those in competing fast food restaurants and convenience stores. In captive audiences, this can be done fairly easily using email and social media.

Are you getting hungry?

Did you catch the Seattles Best Coffee (SBC) bean-to-cup vending machine in the Starbucks and Crane booths at the National Automatic Merchandising Association OneShow?

A lot of you did, judging from comments I’ve received.

Starbucks, which owns SBC, has taken a close look at the vending channel. This machine could do a lot to revive hot beverage vending, which took a beating even before the recession.

The SBC product, at 12 and 16 ounces, tastes great. The machine looks fabulous.

Vending operators have long missed the boat when it comes to branding their hot drink machines, which is one reason that segment has suffered so much.

Some vendors, such as Canteen, have branded their hot drink machines with house brand  coffee. But national brands have long been missing in action.

Some observers think Starbucks is placing SBC into vending as a way to put some distance between SBC and its flagship Starbucks brand. Those who say this aren’t familiar with Starbucks’ business philosophy.

Starbucks has done more to bring SBC to market in the last year than all of its previous owners ever did combined. The brand has been introduced to Burger King, Subway and other chains, supported by national advertising.

But the onus for maintaining SBC’s reputation for excellence in vending falls first on vending operators. They’re the ones with the most to gain or lose if that brand’s reputation suffers.

More than most other product categories, coffee has been undermined by the cost-based approach vending operators take.

Diedrich Coffee introduced a Gloria Jeans branded vending machine in 2003, but got few takers.

Hopefully, vending operators have learned some things about the importance of branded coffee.

The advances in single-cup brewing technology have already allowed national coffee brands to help revolutionize office coffee service.

Branding deserves attention given the fact that other retail competitors, such as c–stores, supermarkets and specialty stores, are aggressively marketing branded coffee.

There is no good reason that hot beverage vending can’t revitalize.

When the National Automatic Merchandising Association (NAMA) announced plans to move to one annual show, they took on a big job. Planning for a larger and longer trade show that would give exhibitors one opportunity to present products and give operators a year’s worth of knowledge, all in a comfortable setting, was no mean feat.

Last week, they delivered in spades.

Most of us are still trying to dig out from under the piles of sample products, literature and notes.

Here at VendingMarketWatch, we’re in the process of covering the show through our podcasts from the show floor, videos taken on the show floor, and written reports of education sessions. Stay tuned daily.

The pleasant spring weather in Chicago helped things go smoothly.

The new wing, McCormick Place West, was a welcome change for those of us who remember the older McCormick buildings. It was easy to get to the meeting rooms from the trade show floor, and the floor was spacious and well organized. 

An elevated stage in the middle of the show floor hosted entertainment and awards. It refreshed attendees and gave a sense of unity.

The show conveyed a sense of excitement that’s been missing for several years. Perhaps the move to one show was needed to bring about an outstanding education and entertainment program. This is not to say past shows were not good, but when the association decided to switch to one show, the staff and the board of directors both realized the show had to make a lasting impression. As a result, more resources and energy were invested, resulting in accolades from all who attended.

On the first day, the government affairs symposium addressed a host of topics that will affect vending operators for years to come: calorie disclosure rules, new taxes, proposed currency changes, and more.

Operators need to realize the hard work NAMA does fighting for their interests in the regulatory arena. I’ve stated many times and I’ll say it again; any operator who doesn’t support NAMA is a cheap skate. No organization is perfect, but this is not a valid reason for not paying your dues.

The educational sessions covered a variety of topics. The best attended were cashless vending and the new vending technology standards. The fact that operators turned out for these seminars in such large numbers (It was nearly impossible to find a seat if you came late) demonstrates the growing understanding of the need for change. Cashless, remote monitoring and video screens are all making strides, giving a new of excitement at a time when we need it the most.

The keynotes by Herman Cain, Ted Koppel and Terry Bradshaw were all invigorating.

Congratulations to the NAMA staff and the NAMA board of directors on an outstanding job.