Consumers' use of currency has changed in recent years, and vending machines that are not equipped to accommodate consumers' current habits are losing sales. That was a message from the first half of a two-part presentation during the Southeastern Vending Association Convention in Destin, Fla. on cash recycling and cashless payment in vending.
Chuck Reed, marketing director at MEI, presented research his company had done on how currency acceptance affects vending sales. He began by noting that 50 percent of the vending machines in one survey were in an "exact change" mode one third of the time.
The key benefit of having a bill recycler on a vending machine is that it keeps a perpetual mix of bill denominations in the machine.
Bill breakers have long been in used vending banks to make change available to consumers. However, Reed noted that bill breakers tie up a lot of capital. "The idea is to get rid of the bill breakers," he said.
He reviewed how currency carrying habits have changed.
Eighty percent of consumers carry one dollar bills or $1 in change. Only 50 percent carry $3 in bills or coins, while 60 percent carry a $5 bill, 40 percent carry a $10 note, and 65 percent carry a $20 note.
Given these habits, Reed said that limited bill acceptance at the machine will cost sales, particularly when the machine has items priced above $1.
Reed said 16 percent of consumers don't have cash on hand to make a $1 vend purchase.
The role of a bill recycler is to give the consumer denominations they are likely to use to make a purchase.
Making denominations available at the point of sale also enables multiple vends, Reed said.
He noted the following findings for machines offering $1.25 price points: $5 bill acceptance yields a 12.4 percent sales lift; $10 acceptance yields a 3.2 percent sales lift; and $20 acceptance yields a 3.5 percent sales lift.
Reed noted that MEI's VNR was designed to promote recycling capability.
He noted that recycling is especially important in "closed" locations where consumers have less opportunity to leave the site to get change. He said recycling results in higher sales in these sites than in "open" sites.
Recycling also reduces the total money float in a machine if the bill acceptor dispenses higher denomination bills.
Reed said 60 percent of the machines in a vending bank should have a bill recycler.
He noted that there is a 15 percent sales lift when either a bill recycler or cashless reader is present.