A big highlight of the Southeastern Vending Association Convention in Destin, Fla. last week was a panel discussion on the future of vending that included representatives of three of the industry’s largest companies: Dennis Hogan, CEO of Canteen Vending Services Inc., Tom Barlow, senior vice president of vending and wholesale for Coca Cola Refreshments North America, and Brad Ellis, president of Crane Merchandising Systems.
Marc Whitener, owner of Refreshment Solutions in Norco, La., organized the panel and acted as moderator.
Whitener began the session by reviewing the fact that unit sales have declined in vending in the last decade, resulting in lower profit margins and higher levels of capital depreciation. He asked the panelists for solutions.
Barlow said his company has recognized the need to make vending relevant to consumers. He said more flexible payment options will be a big help.
Ellis said vending must differentiate itself beyond price. He said that one problem is vending is a hard service for location managers to measure. He also noted that the money paid in commissions needs to be reinvested in the service.
Ellis said he spent time with a large vending customer and learned that location commission was the number one factor in deciding what company to use.
Ellis also noted that the company was never informed by their service provider about the technology that improves the quality of service.
He further noted that the decision makers wondered among themselves why they were receiving commission to begin with. “This is a systemic issue,” Ellis said. “We as an industry are our own worst enemies.”
Hogan said another issue is the declining number of manufacturing locations in the last five years. He said manufacturing has fallen from 40 percent of the locations to 25 percent. The fact that vending has been able to adapt to this change indicates its versatility.
“How do we change the discussion from an economic one to innovation?” Hogan asked.
Much of the discussion focused on how long it will take to get the industry to adopt cashless payment technology.
Hogan said his company has added 15,000 cashless readers in the last two years. He said cashless usage rose from 18 percent to 28 percent in the last 12 months, and he does not believe the gain reflected cannibalization of cash sales.
Barlow of Coca Cola Refreshments said the Google Wallet, which will enable smart phones to buy products from vending machines and other retail outlets, will be a boost to vending. “We see that coming quickly,” he said. “To get there, we’ve got to get the basic units installed.”
Barlow also thinks interactivity has great potential. He said once purchases are made using the smart phone, it will be easier for consumers to redeem rewards from the vending machine. “We think there is a great opportunity to connect with the consumer and the Internet in a 2-way dialogue,” he said.
Whitener raised the challenge of the high cost of cashless. He asked the panelists what they consider a reasonable cost for cashless transactions.
“It’s less than it is today,” Barlow immediately responded. He noted that the total cost is currently as high as 15 percent per transaction.
Ellis, who agreed the rate of cashless adoption has been very slow in vending, said mobile payments will eventually drive competition among credit card providers, which will push the transaction costs down.
Hogan of Canteen Vending Services said one positive sign is that supplier partners are engaged in making cashless vending a reality.
Whitener then asked the panelists how they decide to deploy capital.
Barlow said Coca Cola has struggled for the last five or six years to determine how important vending is to the company overall, but has decided that vending is important due to the number of customer interactions it represents. “There is a lot of upside in this industry and a lot of organizations realize it,” he said.