A Prediction for the Future of Retail Technology: The Rise of Vending Machines

Posted By The Embedded Ninja

Congratulations to my fellow ninja followers. If you’re reading this, that means you made it out of the holidays and 2012. Happy New Year!

All joking aside, happy 2013 to all of you readers that have come to enjoy the peek behind the curtain that the Embedded Ninja brings. The start of a new year for me wouldn’t be quite the same without two specific things: NRF’s Big Show (the National Retail Federation (NRF) Annual Convention & EXPO) and a technology prediction for the year to come. The Big Show, as some of you probably know, is the largest retail-focused trade show, put on every January in New York City. The books are all closed on the retail business for 2012, all the holiday decorations are down, and it’s time to start figuring out how to do it all over again. I use the show as an opportunity to analyze technology and make predictions for the year. Regarding my prediction for 2013, put on your Wayfarers for a moment (indeed, they’ve made a comeback), jump in the Wayback Machine with me and let’s talk retail technology for a few moments – specifically vending.

Now, I imagine I just got an “Ugh, really? Vending?” response from all of you readers. But go with me on this. Vending has a tremendous history throughout the world during the 19th and 20th centuries. And it is still shockingly paramount in the retail-tech world, where I predict it will only continue to grow.

clip_image002According to the National Automatic Merchandising Association, modern vending machines first appeared in the U.S. in the late 1800’s. But it wasn’t until the mid-1900’s that vending really took off. This picture, courtesy of the San Jose Library, showcases an old vending cafeteria that was all the rage back in the 1960’s. Everything was self-serve in little compartments labeled for everyone’s tastes--pies, cakes, meat, etc. The technology in this case was very simplistic, incorporating levers and doors, perhaps some temperature control. But imagine how that would stand up to today’s food servicing standards. Is there good information on how long a product has been sitting out or the regulation of temperature within a specific range to prevent bacteria from growing? Granted, credit cards were just beginning to take off, but how would you deal with payment? You get the idea.

While the vending cafeteria has died off (except for certain countries around the world, where a few remain as stylistic throwbacks) vending has gotten smaller and spread out. If I ask you to do a word association for vending, odds are you would say “soda” or “candy.” Both very common in the modern era. Technology is more current in these devices, managing payment, theft protection devices, etc. Maybe they might “call home” so the vending company can do some analysis on the device. But these are more than likely the same device that will eat a dollar and then you have to leave a note for some mystery worker to refund you for a who-knows-how-old bag of cheese puffs (which Ninjas never ever eat). These devices are certainly providing significant retail reach, but imagine how much more they could do.

Case in point: Soda machines are often filled with a specific number of beverages that have been carefully selected for a specific area, market, etc. One of the most important driving factors for the sale of soda is weather, and specifically temperature. We all know this well. You walk through an amusement park on a very hot day, and find that the price of bottled water just tripled. When it’s raining, umbrellas cost twice as much. Wouldn’t it be more prudent to be able to connect data points on the fly around weather and product mix for a vending machine that magically seems to meet the needs of the buying public? Indeed.

clip_image004When you see technology from the folks at Coca-Cola with their Freestyle device, you start getting a picture of what vending could evolve into: The experience of digital signage combined with the no-hassle provision that a vending machine brings. On a recent trip, I saw a Best Buy Express device sitting in an airport. Most of us associate food with vending, but there’s an ever increasing number of vending devices that provide other good such as gadgets, gifts, music, books, etc. In fact, in the manufacturing world, vending is often used on the shop floor to track consumables, such as drill bits. And in healthcare, vending is used quite frequently for prescription medication.

What are the possibilities here for a retailer? Imagine being able to communicate with a device so that the traditional delivery routes can be more demand-driven vs. supply- driven. Imagine having the ability to have cameras analyze how many people walk by your device before they stop and interact, and then how much interaction time it takes before they buy. Imagine offering a device that can interact in any language and take electronic currency, whether credit or debit card, or even NFC and tap-to-pay.

Based on the conversations I’ve had with retailers and technology partners, those dreams are closer than we might think. One of the key tenets of intelligent systems is allowing all the data necessary to make business decisions to flow seamlessly from the devices to the people that need it. If you need to make a better business decision about the product mix of a vending machine, whether a particular product is selling, or who is buying the product, then stay tuned.

Based on the history of vending and the expanse into different categories from healthcare to manufacturing to retail, I foresee a huge uptick in vending for 2013. And I can’t wait for NRF to see if others are thinking the same way I am. I’d love to hear your thoughts on the big technology trends for the next year and beyond.

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