What are the new vending opportunities?| NAMA 2022

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New technology and changing market conditions are creating new opportunities for vending. A panel during the recent NAMA show considered what role established operators can play as hospitality and retail companies explore ways to utilize vending.

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Neal Patel, Sharon Peyer and Sean Feeney explore growth opportunities for vending. Photo courtesy of NAMA.

As vending management software has evolved over the years, vending operators have more data than ever for making business decisions. At the same time, more retail and hospitality businesses are taking an interest in having vending machines to compensate for less available labor for their physical spaces.

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Can these two factors create new opportunities for vending operators? Can vending operators assist businesses that want vending machines where the vending operator serves the business in an advisory capacity?

Image courtesy of iStock.

These were some of the topics discussed during a session at the recent National Automatic Merchandising Association show at Chicago’s McCormick Place, titled, “The Birdseye View of a Changing Consumer Environment.”

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More hotels embrace vending

Case in point is the hotel industry. Panelist Neal Patel, managing partner of Blue Chip Hotels in Atlanta and chairman of the Asian American Hotel Owners Association, said the coronavirus has caused many hotels to seek vending machines since they do not have the staff to man pantries.

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“If it was not for COVID, for labor shortages, we would never be here (at the NAMA show) right now,” Patel said. “When we have unattended vending spaces at the hotel, we are paying less…we’re saving on salaries and payroll taxes and so on.”

He said this situation is here to stay.

Labor shortage drives change

“Times like these, it’s hard to find team members,” he said. “This (the vending machine) is costing me $7.50 an hour compared to $15 or $17 that I would pay a team member.”

A lot of consumer brands pushed hotels to have pantries in the past, he said, but with COVID, they ended up shutting a lot of them.

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Patel originally bought his own machines but found operating them to be a lot of work. He eventually decided to only work with operators, which saved him a lot of hassle.

“We’d rather do a profit share…because now, that’s the money we never had in our books and that can fall directly to the bottom line. It’s here to stay, and I’m excited for the future,” he said.

New technology brings opportunity

Much of the discussion focused on new roles for vending machines as the technology has evolved.

Moderator Sean Feeney, CEO of Cantaloupe Inc., then posed the question: Is there an opportunity for vending operators to help other businesses to move into unattended retail?

Panelist Sharon Peyer, vice president of connectivity and media at Crane Payment Innovations, said she sees a number of such opportunities, as vending is becoming a point of interaction for a retail space with a limited footprint.

Peyer said some hospitals don’t have the labor to operate gift shops and are looking to vending machines to sell gifts.

The huge emergence of vending data over the last six years also creates new merchandising opportunities, Peyer said, including information on consumer demand and price elasticity. If there is one product left in the machine and the machine can’t be filled for another week, should there be the capability to increase the price of that product in the machine?

“We have now the data now that we should be able to understand how to optimize pricing based on location, time of day, product left in the machine,” and route optimization and inventory management, Peyer said.

These are areas where existing operators can educate retailers about vending, Peyer said.

Peyer said CPI has 50,000 machines with screens on them — they can talk to consumers and learn what they want. They can use QR codes to survey customers in hotels about what they want.

“We have access to the data,” she said. “We need to view that data and learn about it and figure out how we as an industry can optimize the experience of consumers in the hotel environment.”

Last mile delivery

There are also opportunities for vending machines to play a role in a brand’s last mile delivery.

Feeney said vending can become part of a retailer’s supply chain. He’s had conversations with operators saying they are in the “last mile delivery” business.

“Why can’t a vending machine become part of that last mile delivery?” Feeney asked. Yelp gives you the option of picking up a soda at the nearest 7Eleven, he said, so “Why couldn’t something like that happen with a vending machine?”

Feeney suggested coming up with a new the name for vending machines to separate vending from its traditional association as a blue collar amenity. He wondered what Amazon will call its first vending machine.

Operators must reconsider established practices

But for vending operators to discover new opportunities, they need to be willing to change some established operating practices.

Feeney said for years operators would buy a machine to last 10 years and a POS device to last nine years, but operators are beginning to view these metrics differently.

“You’re going to see the pace of technology accelerate,” Feeney said. “As an industry we’ve got to have a different view of capital and investing capital.”

Peyer said much of what is sold in vending machines is driven by suppliers and less about what consumers actually want.

“You’re going to make more money if you do sell products that the consumers actually wants as opposed to the ones that give you the best rebate upfront,” she said.

Looking to the future, Feeney said alternative payment methods will be replacing credit cards at a faster pace, and he doesn’t mean crypto. Paypal, Zelle and Venmo and loyalty closed loop systems will be coming soon.

“The industry has lagged when it comes to implementation of technology,” Feeney said, noting there are still hotels with machines that only accept coins.



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