Is It A Vending Machine Or Unattended Retail Destination?

April 22, 2014

Vending has entered an era of V-Commerce. More than ever before, vending machines and kiosks are being used to enhance the interface between consumers, products, payment and even the equipment itself. That was the common thread at the 2014 Technology Panel, “Enhancing Technology Performance,” that took place at the NAMA OneShow in Chicago, Ill., on Wednesday, April 9. Moderated by Michael Kasavana, Ph.D., NAMA Endowed Professor, industry experts covered all aspects of how technology is allowing vending to transform into an unattended retail destination people are drawn to use.

EMV starts the discussion

Gene Ostendorf, president of InOne Technology, talked about cashless payment options, including EMV or Europay, MasterCard and Visa, which he explained will be simplified for the U.S. market so there will be no cardholder verification for vending. He encouraged operators to talk with payment suppliers if they had questions.

Ostendorf also covered the area of mobile wallets, the big three being GoogleWallet, ISIS and Nayax (which recently bought InOne). “Actual usage is still very small, but it has a promising future,” he said. Related to mobile wallet, Ostendorf discounted the use of Bitcoin in the unattended retail space. “Bitcoin has a long way to go before it comes to vending,” he finished.

Engagement is key

Bryan Godwin, vice president of Crane Merchandising Systems focused on ways vending is engaging the consumer. Using touchscreens in the vending environment allows for advertising, promotion, nutrition information and more. “Screens help us make the transition from vending to unattended retail,” he said. “It’s a digital canvas.” Godwin explained how Crane has developed retail efficiency, which means the company can now measure how successful they are converting touches to sales. From that stand point, Godwin reports that even small changes can affect retail efficiency, including font size and color on the touchscreen. Going mobile can also engage the customer as can creating compelling user experiences - on screen or with social media programs. Targeted advertising makes a machine more interactive. “Consumer analytics are here to stay as we the transition from vending to unattended retail,” Godwin said.

Mobile is vending’s ally

The marriage of mobile and vending will change static product vending to a dynamic, product experience – that is what Ron Spinella, executive vice president of Apriva, sees for the future of the industry. “These devices are offering a significant amount of capabilities,” he said. The power of the mobile device includes payment cards and stored value, loyalty /rewards programs, social vending and gifting as well as vending machine location/ products selection, availability and reservations. This last capability might involve communication with the user, saying ‘its hot outside, there’s a bottled water machine nearby’. “We have to think of vending machines as becoming a destination, instead of a supermarket,” said Spinella. That means enhancing value and creating a community of users.

While Spinella is not blind to the hurtle of which mobile device will best interact with machines, he believes the consumer will choose and it will be centered on an individual experience similar to interaction at a local eating establishment they frequent regularly. Much like a local coffee shop will know their special drink, so too will the vending machine. To reap the most benefit, the industry has to be involved in sculpting this mobile and vending future. “The industry will help develop these with the idea that it has to increase revenue,” he added.   

Technology provider must-haves

Justin Grant, vice president of Cantaloupe Systems, talked about the evolution of technology. Since the 1970s, one type of technology has been replacing another. The mainframe gave way to the PC, which morphed into the client/server which transitioned to the Web and most recently got elevated into the cloud/mobile. There’s an increasing number of services being offered via the cloud, from voicemail, email, security, camera feeds, data entry, expense reporting, etc. “These are transforming the expectations,” he said.

Grant concluded with the top 5 things an operator should expect from any cloud/mobile provider. The first was a mobile workplace, something accessible from anywhere at any time. The second was that the system was easy to use and required no formal training. Third was fast improvement – any issue needed to be fixed quickly and all updates should be seamless. The fourth was cloud and mobile optimized. This means that the solution should be created as a cloud and mobile solution, not a retrofit or technology that merely emulates cloud and mobile. Lastly, using a provider should lead to lower costs. There should be no hidden costs for the IT person, server downtime, etc.

Digital media is here

Glenn Butler, CEO of CTO Services, focused on the uses of digital media in vending, compared to other foodservice channels. In vending and micro markets, digital media is very valuable because it is interactive – it can affect purchases immediately and the effectiveness of the media can be measured. “One thing that’s even more powerful is if you can combine media with loyalty,” said Butler. Something vending hasn’t figured out is what the media is worth. Probably large format digital media would be similar to the charges for out-of-home advertising. Charges for the smaller screens would be scaled, but likely not as much as operators think due to the value of the information it can provide. “The consumer’s world has changed to a media centered world,” said Butler. Other industries have evolved, but vending hasn’t and now there is technology and retro fits out there to allow operators to take advantage of digital media.

Technology favors unattended retail

Jim English, CEO of Sprout Retail presented how changes happening in the world will positively impact vending. English believes there are four big ideas: location based content, augmented reality, convergence and the Internet of things.

Location based content refers to being sent a message or alert when someone is physically near a retail space – say a vending machine. English cited ibeacon as an example that can send you a message based on your location.

Augmented reality refers to ways technology can adjust the user’s view, giving more information about a product than what they can see with the naked eye. English gives Google glasses as an example of this evolving technology.

Convergence is a trend where consumers expect it all and at the same time. English used a recent trip where he rented a car as a perfect example of this phenomenon. As he landed he got a text message that his car was in space No.33. There was no need to go to a counter, wait in line, etc. When he returned the car, the receipt was emailed to him before the bus ride to the terminal was over.

The Internet of things is making devices talk to one another without the user being involved. A non-vending example would be a Fitbit, which automatically sends data about your body/activities to your computer and smartphone.

“Vending has always been following the trends,” said English. “Now there’s an opportunity to get ahead. The future will favor unattended retail.”

Cashless continues to increase

Mike Lawlor, senior vice president at USA Technologies, concluded the panel with a discussion on the increase in card usage, seen on USAT readers. Lawlor reports that card usage in vending has increased 115 percent from 2007 to 2014. It has also increased as a percentage of total machine sales as well as amount a consumer purchased annually. “It is driving more people to machines,” said Lawlor. “When the consumer uses their credit or debit card, they spend more.” In addition, consumers showed no push-back against the addition of two-tier pricing, where operators in essence, charge a fee for using a card at the machine. USAT data showed vending machines adding two-tier pricing showed no decline in credit/debit purchases.

On the flip side, consumers seem to be aware and reacting favorably to the “fifth vend free” promotion in partnership with ISIS mobile wallet. “The fifth vend free actually made consumers spend more – meaning consumers are aware of the reward,” said Lawlor.  The vending operator gets 100 percent reimbursement for the free vend and the number of consumers downloading it continues to increase. 

The fact that most of these technologies already exist makes the transition of a vending machine to a destination, an experience much more realistic. It is what will bring vending to top of mind for the next generation of users. Still, to create an engaging user experience at the vending machine or micro market kiosk will require a commitment from manufacturers, operators and consumers.


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