New technology, investments in innovation and a focus on a younger demographic – Gen Y (ages 18-29) – are key factors for success in the vending and refreshment services industry. This year’s State of the Industry Report (SOIR), recently released in Automatic Merchandiser, indicates that a turnaround in the industry may be coming sooner than expected.
Editor Elliot Maras reports that, “As operators felt their businesses stabilizing more since 2008 … more [operators] invested in new technology in 2011 than any time prior to the start of the Great Recession.” In addition, during 2011 operators expanded into new services more than at any time in the last four years, particularly in the area of micromarkets (self-checkout retail concepts).
Technology-based innovations, including cashless payment options, are gaining ground, according to the report. The study indicated that the percentage of cashless-enabled machines has increased consistently over the past three years. In addition, new customer data recently released by USA Technologies, Inc.®, a leading vending industry technology provider, shows that sales were 84 percent higher in machines featuring a cashless payment option for longer than one year, compared to those machines with cashless technology for less than a year. Some NAMA member operators have reported sales lifts of more than 20 percent in machines outfitted with credit/debit capabilities, compared to cash-only machines.
Industry research from NAMA (the national trade association for the vending and refreshment services industry) revealed that Gen Y is an ideal target for the industry because these consumers prefer vending over convenience, grocery and drug stores for snacks and cold beverages, and because they enjoy machines that offer a tech-based experience. These findings are from a NAMA quantitative research study among users and non-users of vending conducted by Synovate Inc.
“Technology is playing an ever-increasing role in the transformation of the consumer experience at the machine to deliver the convenient and interactive encounter younger consumers expect,” said Dan Mathews, Executive Vice President and COO of NAMA. “These innovations both benefit consumers and provide operators increased efficiencies and growth opportunities.”
Leading machine manufacturers, including Crane Merchandising Systems® and U-Select-It Corporation®, are implementing sophisticated innovations, including cloud computing, transaction flexibility and target marketing capabilities built into machines. Also, leading suppliers like Kraft Foods® are integrating facial-recognition technology into their latest vending machine prototypes. Major technology providers, including Intel® and Cisco Systems® are also entering this arena and designing solutions for vending.
According to the SOIR, the most dramatic development in 2011 was the surge of micromarkets. Designed for workplaces, hospitals, hotels and other closed environments, these self-checkout stores provide customers with an array of snacks, meals and refreshment options, including fresh salads and sandwiches, as well as chips, candy, coffee, fountain drinks and bottled beverages. The easy-to-use touch screen check-out kiosks are designed to accept a number of payment options such as credit/debit cards, stored-value cards, key fobs and more. Web-based, 24-hour surveillance enables operators to access live feeds at any time of day or night, or view recorded footage as necessary. The kiosks are also equipped with around-the-clock customer support allowing end-users to resolve issues on the spot.
According to a Frost & Sullivan research study published by Intel in 2011, “Global shipments of intelligent vending machines are forecasted to grow at a 49 percent compound annual growth rate from 2010 to 2016.”
“With these kinds of numbers, we couldn’t be more excited about this revitalization,” said Mathews. “New machines, products and technology are emerging every day, and the future of vending and refreshment services is very bright.”