Most of us probably take vending machines for granted.
Usually they are there to keep our blood sugar in check and our sweet tooth satisfied as we pace the halls of a school, hospital or courthouse.
We took a look at five ways they are evolving >
For all their convenience, however, the standard technology had grown long in the tooth, mostly unchanged over the decades.
How many times have you had to abandon a can of Pepsi because the jangling change in your pocket came up a nickel short?
It may be funny when it happens to someone else, but how annoying is that ritualistic dance of rejected dollar bills — repetitively smoothing out George Washington only to have the machine spit it back out with the motorised equivalent of “Pffffft”?
Then, of course, there is that moment of Damocles-like desperation as that Cookies ‘N’ Creme bar refuses to drop from its spiral prison, taunting you as it dangles, unmoved by any amount of pounding and shaking.
But vending machines have been undergoing a revolution, spurred by technology and a growing demand to expand sales beyond soda and snacks.
What will future vending machines look like?
Coca-Cola -- a pioneering company in the use of vending machines -- has also generated buzz recently with its Freestyle, a freestanding, touchscreen soda fountain that can offer more than 100 flavours.
Blending touchscreen and video capabilities with product offerings is an industry trend. In a way, we have health care reform to thank.
A single sentence tucked into the Affordable Care Act could cost the vending machine industry as much as $56.4 million in added costs, according to NAMA, since in 2012 it requires any business that owns or operates 20 or more vending machines to disclose the calories of the products they offer. There are approximately 7.5 million vending machines in use throughout the U.S., and more than 85% of them would be subject to the requirement.
Given the ever-changing variety of vending machine goods and the nature of spiral-stocked machines, the requirement poses a logistical challenge -- one video technology can solve.
'What people thought originally is that maybe you could just give a link to a Web site or post a sign alongside the machine that lists the ingredients for every product in the machine,' Kasavana says. 'The problem is that when someone stocks the machine, you change your menu mix, and you want to be able to update that signage easily.'
Linked to an internal database, touch-sensitive manipulations can allow consumers to get a virtual, 360-degree view of any item, rotating the product to read calorie and nutrition information.
Already, 7-inch and 9-inch screens are being built onto new machines or retrofitted onto old ones. Kasavana anticipates that 42- and 46-inch screens, covering the entire front of the unit, will soon be common.
Source: The Street.
Simplicity was once the key to vending machine success. Candy bars, chips and soda were easy to stock and sell at a decent price margin.
We are seeing a massive rethinking of what can be sold via these machines.
In Dubai, you can buy gold, and a smattering of machines in India will dispense diamonds.
Need socks or a skirt while on the road? A Boston-based company, Automatic Apparel, is selling clothes the way others once sold Devil Dogs and Twinkies.
Beer, wine and hard liquor have been experimented with, as have movie and music kiosks that download content onto a buyer-provided flash drive.
The Morgans Hotel Group(MHGC) recently offered very niche vending machines at the Mondrian South Beach and New York City's Hudson Hotel. Among the featured items: 24-karat gold handcuffs; luxury car rentals; a 'retro' Ouija board; a diamond bracelet; video cameras; bathing suits; portrait-shoot bookings; and a variety of designer fashions sold to coincide with Fashion Week in the Big Apple.
In areas where there has traditionally been a row of vending machines, Kasavana says, the concept of micro markets -- open markets with a self-service kiosk for settlement -- may take hold.
Avanti Markets of Mid Michigan describes the concept this way: 'You can now offer your employees their own convenience store in your place of business. Picture walking into your break room and having the freedom to browse through hundreds of selections before selecting your item and purchasing it at an easy to use, unmanned, self-checkout kiosk.'
'A consumer now has hundreds of choices,' Kasavana says. 'Most vending machines are limited to about 45 different items. With a micro market you can have up to a couple of hundred items and they can be fresh foods like salads and sandwiches. What you do is you shop in that area, pick out the items you want and then run them though a kiosk just like at a Home Depot(HD) or any other location where you are doing self-checkout. Instead of having a machine that has a limited number of spots now you have an open-market type of atmosphere.'
Source: The Street.
The vending industry has traditionally been dominated by independent small- and medium-sized business owner. More and more, big-name companies and popular retailers are getting into the game, and that too will change how we shop.
AVT cites the economic case for self-service kiosks. Mall stores produce about $330 a square foot per year in sales, while a kiosk can generate between $3,000 and $10,000 a year, it says.
The push toward self-serve checkout in supermarkets and the popularity of dedicated vending machines such as Coinstar's(CSTR) Redbox DVD renters are encouraging companies to push out 'nontraditional products' via vending machines, Kasavana says.
AVT, for example, has helped with specialised vending machine and kiosks for Gillette, Wal-Mart(WMT), Bacardi and Grey Goose.
Traditional vending machine mainstays such as Kraft Food(KFT) have been working with companies including Crane Merchandising Systems, North America's largest manufacturer of food, snack and beverage vending machines, to overhaul its offerings.
Even social media may be influencing the industry. Recently, Nokia(NOK) and marketing agency 1000 Heads partnered on a promotional vending machine that, activated by check-ins via the Foursquare smartphone app, dispenses customised swag.
Among the more visible examples of breaking the mould is Best Buy(BBY), with its Express machines offering a variety of electronics and accessories.
'It has been successful, but it is heavily dependent on location,' Kasavana says. 'In a college campus, airport it or business centre it is great.'
From a consumer standpoint, buying from a known retailer such as Best Buy means there's somewhere to go in case of a problem with the transaction or product. Kasavana says other, third-party sellers may find it harder to cultivate consumer trust.
'From a consumer's point of view, you don't have the same recourse,' he says. 'The chain of command is a little bit different when you have a nonbranded machine vs. a branded machine.'
Kasavana expects to see retailers increasingly jumping in on the vending machine model.
Airports are a natural location for these machines, but come with challenges.
Kasavana recalls working with Staples(SPLS) on a machine that was intended to offer the office supply chain's 25 best-selling items.
'The problem with the airport location is that the real estate is so expensive,' he says. 'The retail vendors who are there don't want to see those machines infringing on their expensive property. So what they did was put the machines in before you go through security. That's a killer. When people get to the airport the first thing they want to do is get by security, so if the machines are there before you go through it really is a problem.'
Despite such logistical issues, retail chains are likely to find new, creative ways to boost sales with vending machines.
Already, Kasavana says, there are bookstores putting machines outside their stores to offer a selection of best-sellers after closing time.
'Another unique idea is selling the soundtrack or other movies by a star when you are leaving a theatre,' he says. 'You went to the movies and saw some Tom Cruise movie. On the way out, all of his other movies and the soundtrack could be available for download or instant purchase.'
Source: The Street.
For the people and companies who make their living in the vending arena, technological advances will continue to make their lives easier and potentially more profitable.
To start with, specialised machines allow for a greater variety of fresh foods to be sold.
In China, live crabs -- dazed and chilled -- are sold via vending machines. Here in the U.S., an Alabama business, The Smart Butcher, is selling cuts of meat from refrigerated vending machines.
Business improvements are also taking shape.
'With machine being online now, you can get real-time reports of your sales,' Kasavana says. 'You can also get real-time alerts if a product sells out, if there is a bill or coin jam or if the credit card reader's not working well. Those alerts can be posted instantly, so the machine can basically call for help.'
Instant inventory and alerts eliminates the traditional, labour-intensive system of fixed routes on which drivers made the rounds of machines to refill them haphazardly.
'When we send the trucks out to replenish those machines, we know exactly what it needs,' Kasavana says. 'It minimizes the traffic.'
Real-time status reports can also be paired with software that maps out the most efficient route from machine to machine on a given day.
The move toward high-tech machines that don't require cash also provides an opportunity to upsell customers the way a restaurant or convenience store might.
'Vending is really a reverse retail purchase, and many of us are trying to change that,' Kasavana says. 'Now what you do is put money into the machine or you swipe a card to establish credit in the machine, and then you shop and get your products.' But vending machines are moving toward a 'shopping cart' method in which shoppers select items on a video touchscreen and pay after everything chosen is tallied.
'What that does is allow for multiple vends and bundled pricing,' Kasavana says. 'When someone buy a can of pop, for example, in a machine that also sells chips, it can prompt them by saying that if they make a selection of a bag of chip in the next 15 seconds there is a 10% discount, or 'Buy it now and get two for one.' It gives us a chance to do some more retail marketing, which we've never had the opportunity to do before. If we can make it more like an online experience, I think that benefits everyone.'
Source: The Street.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.