Will new gen vending units make their mark on retail?

Discussion
May 28, 2015

While threatened by the backlash against soft drinks and sugary snacks, kiosks selling premium goods are promising to reinvent the vending machine.

The items now found in vending machines can range from children’s toys to designer handbags, perfumes, Apple electronics, Rolex watches, steaks, cupcakes and contraceptives, according to an article in the Toronto Star.

Linda Martin, marketing manager at Signifi, an Ontario-based developer of high-tech automated kiosks, said such vendor machines are aimed at helping retailers counter revenue losses from online shopping.

"Buying in a store has lost its luster," Ms. Martin told the Toronto Star. "People don’t like the experience of walking into a store, being asked if they need any help and then standing in a line to buy a product — it’s too slow in today’s environment."

New generation vending machines offer goods priced similar to or less than stores (due to reduced labor and rent costs), combined with speed, 24/7 availability and touchscreen technology. The "bigger, brighter, smarter and more sophisticated" kiosks also enable consumers to gain additional information on product, with some playing video and music to draw attention as people pass by.

Farmer's Fridge

Source: Farmer’s Fridge

On the splashier end, a vending machine at Mondrian South Beach features $25 fake eyelashes, $350 gold handcuffs, and the keys to a $90,000 Bentley, as well as T-shirts, sunglasses, and best-selling novels, according to The Miami New Times.

On the food side, Farmer’s Fridge has been rolling out salad-filled vending machines in the Chicago area and will expand to Los Angeles in 2016. The Los Angeles Times reports that the city already has vending machines dispensing fresh burritos, cupcakes and caviar (in Beverly Hills.)

How would you characterize the opportunity to grow premium products sales through vending machines? Do upscale vending machines present a bigger opportunity in any particular retail channel (department stores, consumer electronics, etc.)?

Braintrust
"If we are willing to let an Instacart shopper select our Wagyu beef at Whole Foods and deliver it to our home several hours later for a fee, why wouldn’t we be comfortable selecting the steak we can actually see from an automated merchandiser on the way home from work — immediately and for free!?"
"In the U.S. this is a situation where retailers will run up, place them everywhere, then watch the market flop. This upscale trend was tried years ago with Apple products in some department stores. Died silently."
"Risky and unpredictable. Freshness, whether a consumable, or a high-tech durable, the question is still there—it’s like the products are held prisoner behind the glass wall."

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9 Comments on "Will new gen vending units make their mark on retail?"

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Ben Ball
Guest
2 years 6 months ago

If we are willing to let an Instacart shopper select our Wagyu beef at Whole Foods and deliver it to our home several hours later for a fee, why wouldn’t we be comfortable selecting the steak we can actually see from an automated merchandiser on the way home from work — immediately and for free!?

Automated merchandising (“upscale vending”) is much more prevalent outside the U.S. with the poster market being Asia. There is huge upside in the U.S. Bentleys are a bit far-fetched, but electronics and fashion are likely candidates. And fresh food is going to happen no doubt.

Ralph Jacobson
Guest
2 years 6 months ago

Vending machines like these outside the U.S. are doing very well in regions like Southeast Asia. I think with the still relatively limited placement of them here, it will take a bit of time for us to adopt them. However that doesn’t mean there is no near-term opportunity. In high-traffic, densely-populated areas, these machines are definitely making their mark. They don’t even have to be only on Rodeo Drive. I see them in urban areas and high-end electronics are doing very well, for example. Even in physical stores, these units have great potential.

Tom Redd
Guest
2 years 6 months ago

In the U.S. this is a situation where retailers will run up, place them everywhere, then watch the market flop. This upscale trend was tried years ago with Apple products in some department stores. Died silently. For upscale foods do people really trust these machines after their first “Gee, that was easy” try? Ever see a vending machine re-stocking person who looked upscale?

There are always new ways to try to get in the shopper’s wallet. Some, like this one, are just dumb. Stick to the basics of retail. Serve the shooper well and sell them up. People sell better than vending machines.

Cathy Hotka
Guest
2 years 6 months ago

Vending machines make sense in an area where there’s a captive audience, like airports, but don’t expect to see them gracing the aisles in malls any time soon.

Craig Sundstrom
Guest
2 years 6 months ago

Rolex watches? Umm…probably not. The question I would think anyone should ask is, “vending machines have been around a long time, why hasn’t this idea taken off before (though, as noted, it has done somewhat better in Asia)?” Perhaps because of issues inherent with the devices: security (does anyone really think having several tens—or even hundreds—of thousands of dollars of merchandise in an unattended machine is a good idea?) and the very fact of what they are—i.e. machines. Ms. Martin’s perceptions of customer desires notwithstanding, upscale remains very much focused on personal service (quite understandably, given the money involved).

Jerry Gelsomino
Guest
2 years 6 months ago

Risky and unpredictable. Freshness, whether a consumable, or a high-tech durable, the question is still there—it’s like the products are held prisoner behind the glass wall.

Bill Hanifin
Guest
2 years 6 months ago

I can understand the placement of kiosks touting consumer electronics in the airport environment. Specific items are presented to travelers looking to fill a short term need or to replace something lost.

I do think it is a stretch to create a kiosk with high end luxury items and ones filled with keys to a Bentley are closer to an edgy new form of outdoor advertising than they are an automated vending machine.

I also think the quote from Ms. Martin, someone who works for the supplier of the kiosks, is a reminder of how careful we must all be to interpret marketing messages, article quotes, and white papers. Qualify by the source, motivation, and you will be able to assess the veracity of the message.

In this case, I don’t agree that retail stores are “too slow” to satisfy consumers. I think plenty of people frequent brick and mortar stores as “entertainment” and enjoy browsing and mingling.

Phil Rubin
Guest
2 years 6 months ago

Are retail customer experiences—even for “premium products”—so good that they can’t easily be supplanted and surpassed by a vending machine? Of course not—vending machines are analogous to online chat for customer service versus sitting in a hold queue to talk with someone in a(n) (offshore) call center!

Shep Hyken
Guest
2 years 6 months ago

I’ve seen amazing vending machines that have fresh products with nutritional information. I’ve seen vending machines that have great sales of hard goods that consumers want and need, and at a price that is competitive. It can work.

While we’ve bought food and drink in past from vending machines, it is becoming more and more common to find all types of products. I’m not sure how well Best Buy does with their airport vending machines, but the point is that they are visible and becoming commonplace. It’s a matter of the consumer being comfortable (as in trained) in using these “self service” shopping solutions.

wpDiscuz
Braintrust
"If we are willing to let an Instacart shopper select our Wagyu beef at Whole Foods and deliver it to our home several hours later for a fee, why wouldn’t we be comfortable selecting the steak we can actually see from an automated merchandiser on the way home from work — immediately and for free!?"
"In the U.S. this is a situation where retailers will run up, place them everywhere, then watch the market flop. This upscale trend was tried years ago with Apple products in some department stores. Died silently."
"Risky and unpredictable. Freshness, whether a consumable, or a high-tech durable, the question is still there—it’s like the products are held prisoner behind the glass wall."

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