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Vending machines go beyond candy and chips

Retailers embrace the potential of 'v-commerce,' offering a wide variety of goods such as diapers, shaving kits, cellphones and cosmetics in vending machines.

January 17, 2011|By Jackie Crosby
  • Best Buy Co. began putting its Express vending machines at airports in August 2008 and has expanded its "automated retail" effort to hospitals and businesses. Above, a traveler checks out a machine at Minneapolis-St. Paul International Airport.
Best Buy Co. began putting its Express vending machines at airports in August… (David Brewster, Minneapolis…)

Minneapolis — Karla Rendon stood in front of the vending machine at Maplewood Mall in St. Paul, Minn., staring at an assortment of items — diapers, baby wipes, sippy cups, bottles, grape juice and diaper rash ointment.

Just what a mother shopping with her 13-month-old baby needed.

"I wish there had been one of these when I was at the Mall of America," said Rendon of Maplewood, Minn., recalling a recent excursion with daughters Makayla, 5, and Daisy, 13 months. On that day, Rendon had forgotten Daisy's bottle.

The vending machine, called Diaper Bag Basics, is the brainchild of two Twin Cities mothers and debuted at Maplewood Mall about three weeks ago. It's one of the many twists in the evolution of vending machines as companies embrace the potential of "v-commerce."

"There's a significant trend, especially for an already established retailer," said George Van Horn, senior industry analyst with market research firm IBISWorld. "They have a brick-and-mortar, they have mail order, they have a website, so the vending machine itself is just one more extension of the brand."

Using vending machines, retailers can track sales and inventory online, avoiding excessive trips to restock inventory and helping determine hot sellers. More machines have touch-screen shopping, and some companies are testing wireless technology to allow consumers to make a vending machine purchase with a mobile phone.

The timing couldn't be better for the $11.3-billion vending machine industry. More than 90% of vending revenue comes from snacks, candies and beverages, but those sales have been declining in recent years. Sales at machines that sell nonfood products (excluding cigarettes) have been growing, according to IBISWorld.

Already, vending machines are used to sell such things as $2 shaving kits and $400 electronics, building familiarity with consumers. It's not difficult to imagine more shoppers embracing the utility of making a purchase through a vending machine, especially when so many are comfortable shopping online with a computer.

Robbie Blinkoff, a consumer anthropologist and managing director of Context Based Research Group in Baltimore, understands the draw. "Anything that's moving toward vending makes sense for consumerism," he said. "It's quick and it's done."

For entrepreneurs, vending machines offer a chance to try out a new concept without a lot of upfront costs. Depending on options and technology, the machines can range from $6,000 to $15,000 and beyond.

Diaper Bag Basics owners Stephanie Hughes of Roseville, Minn., and Jennifer Boog of Little Canada, Minn., dreamed up the idea out of their own experience being caught without a diaper or snack at inopportune times, Hughes said. The friends and stay-at-home mothers, each with two children, worked with Innovative Vending Solutions, based in Dayton, Ohio, which had designed a similar vending machine for other markets.

Jeff Thibodeau, Innovative's vice president of operations, said his company launched during the recession and has grown to include machines at the Harley-Davidson Tourist Center and airports, as well as bars and restaurants that want to sell branded hats and T-shirts but don't want to staff a gift shop.

"A lot of companies are closing brick-and-mortar stores, so they're more open to machines than in the past," Thibodeau said.

Best Buy Co. first launched its Express vending machines at a handful of airports in August 2008 and has continued to expand what it terms "automated retail" into hospitals and businesses, said spokeswoman Carolyn Aberman. The Richfield, Minn., company installed an Express machine in the IDS Crystal Court in September to test whether workers would also be interested in buying digital cameras, cellphones, MP3 players and accessories.

Wal-Mart Stores Inc. has put up some machines to sell small electronics, and J.C. Penney Co. sells Sephora cosmetics inside its stores. Macy's Inc. was early to market in May 2008 when it put e-Spot machines in 400 stores to sell such items as iPods, GPS units and headphones.

Innovative Vending partnered with MainGate to open the nation's first licensed NFL vending machine last fall at the Mall of America, which is intended to complement the Minnesota Vikings Locker Room store and kiosk already in the mall.

Nick Lemmer, 12, spotted the Vikings Locker Room vending machine instantly, mainly because a Christmas gift card to the store was burning a hole in his pocket.

"I'd buy stuff from this, yeah, if I was looking for a quick buy," said Lemmer of Cottage Grove, Minn., who was decked out in a purple Adrian Peterson jersey.

But Lemmer trotted off to the store because he wanted to check out more than the selection of caps, T-shirts and novelty items in the machine.

Vending machines have downsides. They're labor-intensive, often with low profit margins that can't be passed on, especially to the post-recession, value-conscious consumer.

For some, it takes a lot of nerve to stick a credit card into a machine to buy a cellphone or digital camera that costs hundreds of dollars. And if things go wrong, there's no one to complain to.

And Blinkoff, the anthropologist, said his research shows that the recession has made people "hungry for connecting, and building up a sense of the social. Vending machines don't do that," he said.

Crosby writes for the Star Tribune (Minneapolis)/McClatchy.

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