Technology Has Challenges, Pioneers Understand

Sept. 3, 2008
The Way I See It

Technology — cashless transaction and remote machine monitoring capability in particular — has been cited as our industry’s greatest hope. The factor that will not only revive automatic merchandising from its current slump, but will make it more relevant to consumers and take the industry to new heights. The big unanswered question is: how long will it take operators to reach “critical mass,” enabling this brave new world to unfold?

“Critical mass” is defined as: “An amount necessary or sufficient to have a significant effect or to achieve a result.”

Early forecasts were optimistic

There were some optimistic forecasts about how long it would take operators to adopt new technology. The Mintel Group in 2006 predicted half of all vending machines would accept card payments by 2009. Back in 1998, the Hudson Report predicted remote machine monitoring would be commonplace by 2013.

In the case of cashless vending, the visionaries didn’t know that consumers need to become accustomed to using card readers in vending machines, and this is not a short term process. The process has been lengthier than many expected.

The Mintel report was not without merit, however. It accurately predicted that card use fees and hardware costs would drop. In addition, retail prices for vend products continue to rise, making card use more attractive to consumers who are carrying less cash for daily spending.

Consumer acceptance takes time

Vending operators who have installed cashless readers have found that while customer response is slow for the first several months, cashless purchasing accelerates measurably by the second year.

The faster the industry can educate the consumer, the sooner the rewards will be forthcoming. For the industry to educate the consumer, vending operators must take the first step of investing in technology. Once a “critical mass” of consumers becomes exposed to cashless vending, the market will reward operators who offer this benefit — in a timelier manner.

This is why pioneers like Mack Wilbourn, the subject of this month’s cover story, are needed. He has invested aggressively in technology at a time when the rewards are long in coming.
Pioneers aren’t motivated by industry altruism, however. When the buying public grasps the benefits of new technology, the operators providing it will be the first to reap the rewards.

Focus on merchandising

Wilbourn’s background in retail foodservice made him a student of merchandising. When he landed the Atlanta, Ga. airport vending account, he took a critical look at the visual presentation of the vending banks. He upgraded the headers, adjusted the product selection to customer demand, and went full blast with new technology.

Wilbourn was surprised to learn that vending was lagging behind retail foodservice in adopting new technology. As he sees it, technology is more critical in unattended retailing.

In studying the different technology packages available, he found that some providers have integrated different features into one system: cashless readers, graphic touchscreens and remote machine monitoring. As technology has evolved, it has allowed operators to maximize their investment.

The brave new world is coming, thanks to a cadre of pioneers like Wilbourn who will be first in line to cash in.