Consumer profitability takes a dramatic shift from physical storefront to automated retail kiosks that are redefining the retail shopping experience. – By John Cataldi
In the past, the majority of vending sales focused on the “Four Cs” — coke, candy, coffee, and cigarettes. Today, generations Y and Z also known as the millennial and social generations, respectively those born between 1977- present, can interact with the vending machine as a full-service retail fulfillment experience as opposed to the impulse buy of yesteryear. In today’s tech savvy world, vending machines are no longer just for the Four Cs — they now offer a full range of products and services. Today’s mobile consumers are purchasing media, electronics, venue tickets, as well as paying bills, and even paying for parking through a combination of vending and mobile devices.
According to the Vending Times 2012 annual report, the presence of traditional Four Cs vending machines decreased from 185,000 locations between 2007 and 2012, and sales from traditional vending machines sank more than 14% to $49.2 billion in the same period. The major exception to this rule has been highly specific retail opportunities such as DVDs, e-cigarettes, electronics, and luxury goods. Those brands and retailers who have land grabbed high traffic, well-placed automated retail kiosks have seen incredible success, including increased profit and market presence. This sector has added over 40,000 of “new era” retail vending machines from 2009 to present.
According to Best Buy spokesperson, Jeremy Baier, over the past 9 months Best Buy Inc. has installed product kiosks in airports, hotels, and college campuses. The benefits of Best Buy kiosk locations include: no employee costs, a fraction of the overhead, low investor costs, increased brand recognition due to high traffic placement, the ability to address the consumer’s desire for instant gratification, and of course, maximum profits. Best Buy kiosk locations outperformed their big box store locations by an estimated 2,900% given per unit sold.
Other benefits reported by luxury brands and retailers from CoinStar to Xbox are:
- Open boutiques quickly with minimal structural impact
- Generate retail sales 24/7
- Provide internet savvy consumers a wider varity of quality brand name merchandise
- Turn remnant space into a revenue centers
- Increased lease revenue by 20 to 40%
- Offer clear and engaging consumer transactions
- Provide loyalty programs
- Offer social and mobile media advertising
- Access inventory and logistics management remotely
In our electronically, interconnected world the value on human interaction seems less of a consumer need. The value is increasingly being placed on the overall customer experience. According to a 2013 survey by Motorola, over 50% of consumers believe they are better informed than the sales associate and therefore, are becoming increasingly comfortable with sales transactions that do not include human interface. This is extremely evident in the world of ecommerce (online and mobile) and appears to be the trend in this micro-retailing environment as well.
In a semi-downturned economy it is difficult and expensive for brands and retailers to grow awareness and maintain a strong ROI while having to maintain their limiting physical space and competing with pure onlie retailers like Amazon. The answer may just be the micro-boutique, which will help retailers gain a competitive edge, without the high cost of maintaining a physical presence.
Sources: Industry Interviews, Wikipedia, National Retail Federation, The Wall Street Journal, Zoom PR, Red Box Annual Report, Block Buster PR, Best Buy PR, and American Retailer
John Cataldi
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