Vending Machines

The Future Of Unattended Retail Is Here

Automats delivered a roast beef and mashed potato dinner from coin-operated vending machines in the 1940s and 1950s. Today, self-service restaurants deliver quinoa via sleek display cases and accept plastic cards and mobile wallets via unattended checkout stations. “Vending machines” aka unattended retail has come a long way, baby – and now fuels a $120B segment of the retail market. The PYMNTS Unattended Retail Tracker, powered by USA Technologies, tracks all the trends, and profiles 14 of the movers and shakers in this red-hot space.

Ah yes. For many of us, unattended retail over the past 50 years or so conjures up those nostalgic memories of coin-operated machines dispensing cigarettes, gumballs, Cheez-Its, or soda cans. In the ‘40s and ‘50s, coin-operated eateries like the iconic Horn & Hardart’s Automats even provided the familiarity of restaurant-style eating, but with the convenience of self service.

But are those visions simply nostalgic? Or are they coming full circle?

Maybe a little bit of both.

“There was a time when market share for vending was shrinking because people were looking for a more customized experience in the store. But what’s happened with online shopping, mobile shopping and smartphones is that retailers have come to learn that they can still deliver that customized experience to the consumer without having to have a person standing physically in front of them,” explained Maeve Duska, SVP of Marketing at USA Technologies.

Today’s consumers prefer to get what they want, when they want it, and Duska noted that unattended retail enables this instant gratification – and then some. These newly modernized retail storefronts now offer 24/7 access to a variety of goods and services, just like consumers would get online – or in a physical retail store, when they were open, of course.

Duska and USAT think that this makes it the perfect time for unattended retail to flourish.

Whether it’s “upscale” vending machines, commercial laundry, kiosks, parking, amusements, or the micromarkets which enable consumers to dine cafeteria style by buying a variety of fresh food and beverage options on-the-go, it appears that unattended retail is a category that is exploding. The retail automation market is forecasted to reach upwards of $275 billion by the year 2020, with the lucrative growth rate of the retail market and a focus on ease and convenience serving as driving factors behind the expected boost.

And the category is also keeping pace with the times. Purchases are no longer confined to the cash and coin that consumers have in their pockets. Consumers can, instead, use plastic cards and more recently, mobile wallets to make their purchases. And not only has the ability to accept digital payments resulted in more convenience for consumers and cost savings for unattended retail operators, but it has ignited the category by expanding the types of products and services that can now be offered in an entirely self-service environment.

Ladies who want to ditch their high heeled shoes in Las Vegas can make a stop at a Rollasole Ad-Vend to gain quick and convenient access to ballet flats to ease those achy feet. The “Cupcake ATM,” created by Sprinkles Cupcakes allow customers to have access to fresh cupcakes at any time of the day or night. Even Benefit Cosmetics is making beauty products available on-the-go through its bright pink vending machines located at airports around the world. The vending machine possibilities today are almost endless.

Whether it’s Best Buy or Apple, they’ve all recognized what Coke and Pepsi have for years, says Mike Lawlor, USAT’s SVP National Accounts and Business Development. “They’ve put their products at the fingertip of the consumer where they work, where they play, where they transit and if there’s a need for that immediate impulse consumption or purchase, they’ll do it. The consumers that have been trained by online purchases are now doing those same types of transactions at an interactive vending machine or kiosk. When the experience is good and easy there as it is online, they’ll make the purchase in a heartbeat.” And even pay more.

Accepting digital payments frees vending machine operators from the limitations imposed by only accepting whatever cash or coin consumers may have on hand.

“All sorts of unusual and creative businesses have popped out of the ability to take credit and debit card,” Duska said.

Today’s machines carry everything from cosmetics to electronics, shoes and even hair weaves.

Not surprisingly, as innovation in the unattended retail market heats up, so has the competition. In an effort to grab and keep the attention of more tech-savvy consumers, the move the cashless payments is becoming less of a luxury and more of a necessity.

As is the shift to mobile payments.

USAT data shows that approximately 3 out of 4 transactions in unattended retail are via debit cards, with USAT predicting that the big jump to mobile payments is not far behind. In fact, according to USAT’s data, on average the usage of mobile payments in the unattended retail environment is already at about 4 percent, but certain pockets are showing even greater adoption. Colleges and universities in the sample set have seen upwards of 10 percent usage and technology-based centers in the same study show greater than 18 percent usage on average.

But accepting electronic payments is just the beginning when it comes to enhancing consumer engagement at the point of purchase. The back end systems supporting vending machines has grown more sophisticated over the years in order to help operators maximize their offerings and ensure they are selecting the right products to drive sales.

And the data collected and analyzed through vending management systems now plays a huge role in how operators craft new ways to reach consumers.

USAT extracts the data collected at the machines and then feeds it into various vending management systems, which allows machine operators to analyze their products and offerings in the same way as big-box retailers look at their space-to-sales ratio, Lawlor explained.

Duska added that this data can, in turn, be utilized to better educate operators about what their consumers are really looking for and how to more effectively reach them.

“Being able to interact with consumers – introduce a product, run a promotion, advertise – has huge upside that can now be made available to unattended retail operators – just like any other physical retailer,” she pointed out.

As the industry itself continues to grow and evolve, there are many ways in which the innovation taking place continues to take its cue from the past. The self-proclaimed “futuristic, fast-fresh restaurant” Eatsa in San Francisco is simply a modernized version of the once popular automats that made foods and drinks served via vending machines a mainstay in the U.S. While automats allowed diners to receive a hot meal in exchange for a certain number of coins, modern-day eateries like Eatsa have swapped cash for a more automated process – where patrons order on a touchscreen kiosk before paying electronically. The concept of utter convenience may be the same, but with the onset of new technologies and innovation, unattended retail is coming full circle to serve consumers like never before.

To read the full Unattended Retail Tracker, click here. 

 

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