Retail

How Retailers Could Turn Smart Vending Into A $15B Market By 2025

How Smart Vending Could Become A $15B Market

As technology reshapes the way buyers access goods and services, consumer expectations are moving targets, and merchants that hope to survive can’t afford to fall behind. In the unattended retail space, vending operators are also becoming more aware of the shifting behaviors of their shoppers and the need for swift and digital payment options.

Vending machines that have implemented cashless technologies saw significant sales growth, according to a study cited by the PYMNTS Unattended Retail Tracker, with the most impact observed on units that took in under $2,000 a year. On those machines, gross sales rose 110 percent in the 18 months after the addition of cashless options.

From Reis & Irvy’s to Vengo, merchants and technology companies are reinventing the world of vending technology through smart devices. These are just some of the ways firms are changing the way consumers buy goods, ranging from frozen yogurt to modern-day vending machines.

The estimated value of the global intelligent vending machine market by 2025 is $15 billion. And digital disruptors are putting a new spin on vending machines. The first big change Vengo made to the vending machine, for instance, was its size – its version is a little over two feet tall, a little less than three feet wide and exactly six inches deep, in comparison to a six-foot tall machine. The wall-mounted machine also has a 21-inch screen for consumer interaction, and comes ready to accept near-field communication (NFC) contactless and card payments. Vengo Labs CEO and Co-founder Brian Shimmerlik told PYMNTS in a January interview, “We love shrinking down, and bringing the design and technology a whole new flavor. That smaller size opens up whole new markets, and gains access to spaces that have never had a retail experience [as] a part of it.”

The projected CAGR of the global interactive kiosk market from 2019 to 2027 is 6.1 percent. In India, for instance, Amazon is gearing up to roll out kiosks that will let consumers buy hardware, including its Kindle eBook reader, Echo, Fire TV Stick and its smart speaker. The eCommerce retailer reportedly plans to install 100 kiosks in malls across India by the end of 2019. The company has been testing kiosks for a couple of years now, and has been operating four of them for longer than a year in Karnataka, Mumbai and Ahmedabad. An Amazon spokesperson said in an emailed response, “We do not speculate on our future road map, but we’re always looking at ways to provide the best experience to our customers.”

Reis & Irvy’s will roll out 100 kiosks in Australia this year. The news came as part of a report that the company had tapped Nayax Australia to supply remote machine monitoring and cashless payment systems for its frozen yogurt kiosks. Troy Bingham, managing director of Reis & Irvy’s Australian licensor Froyo Robotics, said per reports, “We only work with blue-chip suppliers and, as Nayax Australia leads the market in payment solutions, we felt it’s a natural partnership.” Nayax Australia’s Managing Director Dylan Winik said, according to the report, “We are excited by their futuristic approach to frozen treats vending, and believe their choosing Nayax shows their understanding of the Australian landscape, where cashless payment is the norm for most customers.”

The increase in per-transaction spend at vending machines within 18 months of adopting cashless payments is 7 percent. In fact, the move toward cashless has set in motion any number of initiatives, from retail concepts like Amazon Go to event venues. Mercedes-Benz Stadium in Atlanta went cashless in March, accepting credit cards, debit cards and mobile payments. The company also deployed several machines that let customers exchange cash for prepaid Visa cards. AMB Group Director of Corporate and Marketing Communications Heather Sautter said in a previous interview that card use has remained higher than mobile, but noted that mobile use has been growing dramatically year on year.

The expected CAGR of the global parking meter market from 2018 to 2025 is 6.97 percent. And the parking industry is seeing investments: In 2018, ParkWhiz announced it had taken in an additional $5 million in equity to its Series D financing, bringing its total funding round led by NewSpring Capital to $25 million. The additional funding came from strategic investors such as Amazon’s Alexa Fund, Purple Arch Ventures, Alate Partners and Chaifetz Group. The money was to be used to expand the company’s Arrive parking network, which offers friction-free access to parking lots in select markets. In a press release at the time, Amazon Alexa Fund Director Paul Bernard said, “The Alexa Fund was created to support companies building compelling products and services that leverage voice technology, and ParkWhiz is a fast-growing company that fits that profile perfectly.”

From parking to frozen yogurt, retail verticals of all sorts are experiencing disruption through innovative technologies such as apps and unattended retail. Retailers looking to improve their customer appeal would be well-served to monitor smart vending in particular, as the space is forecasted to grow by 12 to 14 percent over the next few years.

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