Automatic innovation

Fact: Americans continue to be more time-pressed than ever, and want even more convenient solutions to buying food. Vending technology has responded to that trend, and companies are offering new machines designed to let consumers purchase everything faster than you can say "plan-o-gram."

Case in point is the Tik Tok Easy Shop, an automated retail experience unlike any other in the U.S. Opened last August near the campus of Howard University in Washington, the Shop2000 machine dispenses everything from soup to toilet paper using state-of-the-art robotic technology. It's a fully automated kiosk, a self-contained "mini" shop, which can dispense up to 200 different items of many shapes and sizes. But can this C-store in a machine really be successful long-term?

Lower labor costs: "Automated retailing will work for several reasons," states vending consultant Paul Schlossberg. "Everyone in our society is crushed for time, more so than in Europe where these concepts are already working. Secondly, this is branding of the retail store, as opposed to branding of the restaurant. Where branding is shrinking the restaurant, now we are shrinking the store, and taking the store to where the people are. Another reason it's going to work is lower labor costs. Sourcing good qualified labor is a challenge for any retail operator."

Eliminating the people factor offers another plus, he points out. "Increasingly, people don't like dealing with humans in service situations. If you look at ATMs, self-checkout in supermarkets, E-tickets, kiosks and self-check-ins, all these things are removing human contact for routine transactions," Schlossberg points out.

And the payoff can be big. "When you enhance availability, you create sales in a situation where otherwise there might not have been. If you make it easy for customers, you increase the odds that they will buy."

This concept has worked well in Europe because of its different environment. Typically supermarkets are not open 24 hours and they're often closed on Sunday. "America is the most convenience-oriented country, so for that reason, if properly deployed, properly priced and with the right product selection adapted for each location, this is a winning idea," says Schlossberg. However, even with the right location, he stresses, operators will win or lose on their product mix. Branding will also still be important.

High-volume options: An important feature of the Shop2000 is that it lets customers pull up to 10 items at a time. The Shop 24, a similar all-purpose vending machine currently used in Europe, only lets patrons pull one item at a time. "It will pick up as many items as the basket will hold in one pick. If they order more, it will deliver part of the order and then deliver the rest. It's not a typical vending machine at all," says Hettie Herzog, president and founder, Automated Distribution Technologies, Inc., the Exton, PA, company that manufactures the Shop2000. So far, she's pleased with customer reactions. Prior to the installation near Howard Univ., Shop2000 was tested at two other sites.

"For customers it's something new and amazing at first. They enjoy watching the robotics and don't seem intimidated by the machine. Its higher-priced items also don't intimidate customers.

"The Tik Tok people have tried to maintain the pricing. It's not as good as a supermarket or grocery store, but it's at least as good as a convenience store if not better," she reports. "The machine also offers upscale items—gourmet soups, sandwiches and salads—and the products' prices are very much worth the quality." The entire unit is refrigerated, which means paper goods and pharmaceuticals come out a little chilly.

Cashing in: Following the convenience trend, Michael Lawlor, senior vice president of business development for USA Technologies, Wayne, PA, says he's seeing a migration toward the addition of more cashless payment systems in vending.

"People carry less cash these days, and are used to pulling out a credit or check card. People are also very familiar with using cashless payment mechanisms in self-serve applications, paying at the gas pump, e-commerce and so on. It's not that cash and coins are ever going to go away, but the consumer is really driving this trend," says Lawlor.

"The vending industry is also selling bigger products, more traditional retail branded products and frozen items, which command a higher price point and therefore also lend themselves to cashless vending. It's a convergent trend, which makes cashless vending more mainstream," he explains.

Most of the independents as well as the big soft drink companies are going down this path, he adds. Cashless vending is also attractive to operators because it's a deterrent to crime: With less cash in the machines, there's less potential for vandalism, which is still a major industry issue.

Lawlor says that cashless payment systems have been known to drive incremental sales anywhere from 15% to 25%. He predicts that the initial penetration of cashless vending is going to be in the areas where demographics support it, such as B&I operations and hospitals. "It will also have a lot of success at locations where vending prices are a little higher than the norm, like zoos, aquariums, airports and convention centers."

Other innovations: Owings Mills, MD–based LHD Vending, Inc. has come out with a new hot food vending machine that refrigerates, stores, grills and dispenses hot dogs and serves them in a warm bun on a plastic tray, and provides condiments, too. Frankfurters are prepared in front of customers in 45 to 60 seconds.

The machine provides four product selections and is not limited to hot dogs—hamburgers, cheeseburgers, sausages and cheesesteaks can be offered.

Operators purchase pre-packed hot dog and bun modules from a commissary. The machine automatically assigns an expiration date for a new load of products and after 21 days, it shuts down that section so no item can be sold. This machine will be on the market in the second quarter of 2003.