Vending machines might still be most readily regarded of as a convenient way to grab a chocolate bar or soda, particularly in North America, but new technology on the block is looking to change that perception and open up an alternative retail avenue at the same time.
According to IBISWorld, the global vending machine business is valued at roughly US$11.3 billion, with more than 90% of vending revenue coming from snack, candy and beverage sales. But those related revenues have been dropping, while the sales of non-food products are on the rise.
And at the forefront of the biz in North America is ZoomSystems, a manufacturer of vending machines that specialize in dispensing impulse-buy items with higher price tags. “What we are doing is creating a new channel for brands and a way for retailers to reach consumers,” says Gower Smith, founder and CEO of the San Francisco, California-based company. He positions the machines as “automated retail” and says his company is striving to create the “most productive small-format retail stores on the planet.”
ZoomShops are currently located in airports, casinos, bus stations, malls, and even on highway exits throughout the US. Mega-brand Apple and electronics retail giant Best Buy have partnered with the company to offer their goods through the point-of-sale system that spits out product at the touch of a screen.
“For example, the only way you can buy an iPod at a US airport is through a ZoomShop,” says Smith. “We are putting these stores where the consumers are.”
And as consumers become more comfortable with online shopping, they also become more familiar with ZoomShops’ interactive interface and benefit from the on-the-spot delivery of goods. “There is not a huge growth in consumer spending, but there is a change in their behavior,” says Smith. “We are bringing fast, easy convenience to consumers and the brands that they already love.”
Roughly 1,000 ZoomShops have been set up throughout the US, with a handful in Japan and inroads are just being made in Europe. As a private company, Zoom Systems does not talk publicly about its financing models, but Smith notes that Zoom licenses its proprietary software and technology and charges a monthly fee to operate the machines. As an added incentive, the machinery’s software offers retailers and brand owners deep metrics about its consumers and their buying habits.
On the kids front, Gower sees the technology spurring growth in the market because the consumer base is already very comfortable with online shopping. It’s a cultural shift also noted by Jeff Thibodeau, VP of operations for Dayton, Ohio-based Innovative Vending Solutions.
“A lot of the younger generation would rather go purchase something from a machine than have any human contact,” Thibodeau says. “It’s funny to say, but it’s true.”
Innovative Vending Solutions has more than 20 different new-style vending machines installed across the US and has pending deals in Canada, as well. Areas with good potential, Thibodeau says, are machines that offer spirit shop merchandise at high schools, and others filled with infant products.
“A lot of schools really don’t have the budget to open up a full retail shop, so a machine makes sense,” he says. “We have a baby-products machine in the Kansas City airport. It’s a concept that we think works, and we are certainly looking for partners to take it further.”
Innovative Vending Solutions offers different models, including leasing the machines to smaller clients and engaging in a revenue-sharing setup with larger brands. There is also a monthly fee for software and credit card processing. The machines themselves can range anywhere in price between US$6,000 and US$20,000 each.