Insights Industry Insights Hit by the Economy; Banking on Technology

       

Vending Machines: Hit by the Economy; Banking on Technology

Would you believe that the first vending machine was invented in 215 B.C. by a Greek engineer and mathematician named Hero? It dispensed Holy Water and was coin operated. Today, there are more than 7 million vending machines in use and, as we all know, technology has come a long way. In terms of vending machines, we have gone from inventive coin operated machines based in ancient temples to networked machines accepting credit cards outside convenience stores to the latest innovation of interactive vending machines incorporated Flash technology, motion graphics, high-definition video and Bluetooth capabilities. The timeline below shows the evolution of the vending machine.

SUPPLY

Innovative video vending putting a new face on machines

The new face of vending features a sleek, high-definition display with various programmable panels that control advertising, product options and interactive media. While the vending process (i.e. securing payment, selecting product and dispensing selection) has remained the same, the consumer interface has been completely redesigned to encourage more interaction. Coca-Cola’s new Video Vendor, features a large LCD touchscreen, incorporating videos, graphics, animation and sounds – all designed to create a unique experiences with the consumer. According to Anthony Phillips, the Global Brand Manager of Coca-Cola, the goal of the new vending machines is “to be eye-catching in a way that would turn heads and command attention.” Not only do the machines “turn heads,” but consumers can control a 360° view of available products with a literal touch of the screen.

Have change? No longer needed for new wave of vending machines

Cashless is the new currency of today. Instead of paper currency and loose change, new vending machines take payment with mobile phones. Merging technologies between electronic devices are changing the way consumers purchase products. Want to buy something? Mobile phone consumers can now shop with the click of a Bluetooth enabled mobile phone. These new Intelligent Vending Machines (IVMs) enable wireless connection for credit, debit and mobile phone transactions.

Telemetry enabling machines to report usage and maintenance needs real-time

A recent innovation incorporates telemetry in vending machines. Specialized software within a vending machine can transmit information remotely to a vending company, such as sales and inventory levels specific to that machine. This allows the vending companies to schedule deliveries and re-stock exactly what is needed. Telemetry can also notify the vending companies when there is a problem with the machine so they can dispatch a service technician. But telemetry is no longer a one-way path from the machine to the service provider. It is going to a whole new level. Vending machines can now be programmed, usually over a 24 hour period, to display new advertisements, interactive product screens, animation and sounds. And it is not limited to a one-to-one relationship but can be pushed system-wide.

DEMAND

Economic decline impacting industrial and commercial demand for machines

Manufacturing facilities and offices comprise the top two demand segments in the vending machine industry. Demand generated from manufacturing and industrial spaces is predicted to decline. The fallout resulting from an economy in a recession and the adverse affects of a distressed manufacturing and automotive sector has affected vending machine sales. Vending machine operators are suffering because they largely rely on a demand channel that is based on an industrial economy, dominated by large work sites.

According to industry sources, operators have been forced to reduce employee hours and eliminate positions across the industry as they consolidate routes and shed unprofitable accounts to adjust to current economic conditions. Layoffs within the businesses served by vending companies reduce same-location sales for the operator and also lower the commissions for route personnel. Vending machine operators have had no choice but to increase consumer pricing due to rising costs. This coupled with workplace layoffs has caused a decrease in revenue.

Consumers demanding more options

Vending machines used to be limited to primarily one or two products offerings – beverages and food. Consumer demand for greater flexibility and convenience has resulted in a wide variety of product offerings becoming available through vending machines.

• At the grocery store and want to rent a move? Check out the DVD kiosk from Redbox or Blockbuster.
• At the airport and realized you forgot your camera? No problem; the electronic vending machine is stocked with disposable and digital options.
• At the doctor’s office and just don’t feel like waiting in line at the pharmacy? Approximately 50 prescriptions can be had within 5 minutes using the vending machine in the office.
• In the mood for Starbucks® while waiting for the train? Look around the corner for the Starbucks vending machine.

Of course, vending machines still offer food and beverage options, but the choices are increasing to include cotton candy, popcorn, fresh ice, custom blended beverages, snacks and more.

Health consciousness shifting demand towards different options

The growing concern for childhood obesity may result in reduced sales for educational facilities, which currently accounts for more than 12.6% of demand for vending machines. According to an industry report, continued demand will be restrained by increasing health consciousness among consumers, which will limit demand for soft drinks and food choices considered “unhealthy”. However, demand will be supported by the offering of a wider variety of products such as bottled water and energy drinks as well as “healthier” options. If vending machine operators do not stock more nutritional products in the machines, they risk losing additional sales.

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