These are the Best and Worst of Times

Jan. 14, 2008
The Way I See It

If you think you can sit out the “technology challenge” we’ve been writing about for the past few years, read the report on page 28 on Quickstore24™. While you wait to decide to invest in new customer benefits and operating efficiencies, new players are entering the fray.

Time will tell how successful this particular company is. What’s evident is that new concepts are finding acceptance among our customers. And no one’s waiting for your call.

Quickstore24™ is not the first company to present new customer benefits to the marketplace or to use an unconventional business model to do.

Filterfresh introduced the single-cup coffee brewer in the 1970s by working around the established OCS operator community and granting exclusive territories to dedicated franchisees. And we all know where single-cup is today.

New market realities

New market realities, such as new technologies, higher operating costs, smaller customer work sites and more specialized technical support all make it necessary for industry players to consider alternatives to the established business model.

These are both the best of times and the worst of times for automatic merchandising. Many existing players see these as the worst of times because the traditional operating model is no longer profitable.

Some new players see these as the best of times since technology provides new benefits that customers are or soon will be willing to pay for.

A new day is dawning

Vending’s task is to seize the day and redefine its value. No other retail channel can connect consumer product marketers to as many locations at the time of consumption as vending.

New technologies such as remote machine management, cashless capability, location-specific menuing, interactive video touchscreens, and point-of-sale promotional coupons can all help redefine automatic merchandising. New business models may be needed to make this happen.

Quickstore24™’s “2 for $1” proposition is going to throw many of you for a loop, but don’t let it throw you too far.

Is your objection “operations based” or “market (customer) based?” Either way, technology, supported by a new mindset, can provide a solution.

Yes, “2 for $1” pushes the envelope. But what about location commissions?

Despite continuing pressure on operator profitability, commissions continue to rise, based on a review of the National Automatic Merchandising Association (NAMA) operating ratio report.

A new pricing model, as part of a new set of customer benefits, deviates from accepted operating procedure. But higher location commissions, in the face of lower profits, is accepted business as usual.

Does something about this picture not make sense to you?

None of this is to say technology solutions and new business models are easy. The road is wrought with pot holes, which even the most careful players can fall into. You need your customer to show you the way.

Know thy customer

In his article on the recent Self Service & Kiosk Expo on page 22, contributing editor Paul Schlossberg notes the self serve kiosk industry is wrestling with the same very issues. He echoes a comment made by the Self Service & Kiosk Association’s executive director at the recent NAMA expo:

Before introducing a self service concept, it is necessary to understand the customer’s need. That’s what it’s all about.