Diversification in Vending:  A Changing Industry

David Llewellyn, Chief Executive of the AVA, discusses how the vending industry has diversified during the pandemic.

In the last year, consumer behaviour has changed considerably as a result of the COVID-19 pandemic, with all industries needing to adapt and evolve in order to meet new demands and routes of access. The vending industry is no exception, adapting to cater for new working and retail environments.

At the AVA’s recent AGM, AVA Chair, Gillian White, said: “Ultimately, consumers still need and want vending services. Therefore, providing the industry is able to embrace new technologies and reinvent itself for the current landscape, the industry will continue to not only survive, but thrive.

“Automated retail is absolutely here for the duration. While no one knows exactly what the new normal will be for the working environment, we do know that consumers will be out and about once more, and the vending industry will be ready and able to meet the demand when needed.”

With offices, leisure centres and hospitality venues closed for much of the past 18 months, the vending industry has diversified drastically to cater for such sudden and stark changes. In addition to a rise in cashless vending and an increase of ‘micro-markets’ across the UK, companies have also developed their service offerings by developing own-label products and delivery services.

The rise of cashless vending

Since the arrival of COVID-19, we have seen a rapid acceleration in the adoption of cashless technologies, with coin-based vending machine operators and manufacturers being encouraged to consider integrating cashless solutions to their machines.

Despite appearances, vending has always been driven by technological developments. The plain metal box people associate with vending has changed in significant ways over the years, from the addition of screens to provide enhanced product information, to cashless and even contactless technology.

At present, almost half (47%) of all non-free vending machines now support cashless payments, which is a 235% increase in the last three years, according to the AVA’s recently released 2020 census. Cashless payments are now also stretching further than just contactless card payments, as payments by smartphone devices have increased by 27% in the last three years.

The latest AVA census also revealed that where credit card or cashless systems are fitted, two thirds of sales were cashless, which shows a clear demand for cashless options and in response, the industry has seen a significant growth in cashless-only machines.

While discussing how COVID-19 has impacted business operations, Fiona Chambers, Director and Owner of SV 24-7 Vending, said: “Over the last year, it has been important to look at this potentially negative situation and instead, treat it as an opportunity to develop our business. We decided to use this time to refresh our equipment and ensure all of our vending machines are fitted with card payment technology.

“The future of vending is digital, and it is vital that the vending industry is able to adapt and meet the needs of customers, now and into the future.”

Future of the ‘go-to’ market

Whilst it appears that the UK is well on its roadmap out of lockdown, it is important for us to recognise that the workplace is going to change, and businesses must ensure they are prepared for the ‘new normal’.

Going forward, we are going to see a much greater level of flexibility from employers, and this will likely have an impact on what services businesses choose to offer within the workplace, especially regarding catering and refreshment options.

As consumers grow more comfortable with cashless catering and other types of retail technology, this also opens the door for more unattended retail markets, such as micro-market vending – a custom designed vending market or mart with a self-checkout kiosk. The 2020 AVA census showed there are now 200 new micro-markets in operation since last year, with around 320 now installed across the UK.

At the recent AVA AGM, Tom Williams from Coinadrink, shared an insight into the areas of business development which have been the focus over the last year. He said: “In our business, we have seen a huge growth in ‘express refreshments’, which includes the installation of micro-markets, new smart fridges and an increase in fresh food services.”

According to Tom, the average product selling price for micro-markets is 20-30% more, compared to traditional vending. This has meant that for Coinadrink, they have seen a 350% increase in sales compared to the previous vending offering. This increased revenue clearly demonstrates the demand for unattended retail and micro-market services, and in fact customers are inclined to spend more, which is something that the vending industry must consider going forward.

As well as a growth in micro-markets, the vending industry has diversified further during this time. Coinadrink for example, relaunched its own label coffee offering called ‘Café Casa’ in 2020. It became more important to have a product that is available for every market – whether that is coffee bags, pods or capsules, or ground coffee suitable for machines. Before the pandemic, the business’ own label offer equated for just 3% of sales, however following the rebrand last year, it is now already delivering 15% of online and wholesale value – predicted to grow further as more products are added to the range.

The last year has shown that there must be an enhanced focus on dedication to user experience and making sure that you can provide products that suit them. With more people working from home, and likely to continue doing so more flexibly, there has been a growth in the ‘home barista experience’ and so being able to operate an ecommerce shop online and deliver directly to customers has also been highly beneficial for the business.

The developed service offering

During the last year, it has been so important that businesses could find new opportunities and ensure they are able to take advantage of the circumstances, rather than admitting defeat.

Gary Lewis from Cafépoint, shared his experiences of the pandemic at the AVA AGM. He said: “The pandemic has forced businesses to do things differently. We have to adapt and change in order to keep ahead and despite this taking us out of our comfort zone, we have found that it has really paid off and are feeling very positive about the future.

“As a business, we decided it was an opportunity to invest, to help upskill and train our current teams and to recruit skilled individuals that may have lost their jobs in other sectors. While offices may have been closed and vending products were not in as high demand, we were able evaluate the skills we had in our teams and provide additional services. For one client, we even helped to fit new handbasins and sanitisation stations, to help them be more covid-safe and secure.”

This level of technology and innovation in vending not only shows that the industry is future proofing, but that the industry is ready for the future where contactless interaction and customer safety is at the heart of the retail customer experience.

For further information on the AVA, visit: https://www.the-ava.com/