Editor’s Note: Self-checkout systems are an example of increasing in-store automation that also increases customer satisfaction. There are a variety of psychological and social factors involved with making purchases with a human cashier that just aren’t an issue with self-checkout systems, and that difference can actually result in customers spending more per transaction. With this positive feedback loop in place, demand and development of these systems will continue to expand across retail and restaurantsso these industries will need to make sure their network infrastructure is up to the task of handling the increased workload.
Self-service technology continues to expand at a fast pace, with more locations offering it than ever.
A host of technologies and service concepts have come on the scene as of late: smart coolers, third-party delivery, artificial intelligence, computer vision and biometric identity verification. These service concepts are emerging in sports arenas, hotels, travel hubs, health care facilities and universities.
Will traditional vending operators embrace these new concepts and technologies and define how and where they will be applied in the retail landscape? Will they be displaced by them?
Unattended retail set to expand
These questions took center stage during a session at the National Automatic Merchandising Association show at Chicago’s McCormick Place in April, titled, Unattended Retail in Foodservice.
Moderator Bill Moxey, director of strategy and planning at PepsiCo Inc., made one thing clear at the outset: Thousands of locations will be adding unattended retail concepts and technologies in the near future as the consumer’s preference for self-service is stronger than ever.
Consumers use unattended retail so they can shop at their own pace, said Moxey, who presented findings from a recent PepsiCo consumer study.
What McDonald’s found
McDonald’s, as everyone knows, took a pioneering role in foodservice several years ago when it rolled out its self-order kiosks.
What they found is consumers really want more control of the transaction, Moxey said.
Consumers wanted to know exactly what they were getting and they didn’t feel pressure about somebody asking if they wanted a side.
The irony, he said, is that McDonald’s customers purchased more from a kiosk than they did from a server.
When consumers feel less pressure, they feel more comfortable and we buy more, he said. They will spend 20% to 40% more per transaction in an unattended setting.
According to the research, half of consumers think unattended is faster and more than a third of consumers think unattended is more efficient, Moxey said. Two thirds say it is more comfortable, and one third like the ability to browse and purchase without interacting with employees.
The biggest takeaway is consumers don’t feel pressure and they feel safe.
Unattended consumers are loyal to unattended, Moxey said. The more unattended we have, the more consumers we bring along to more places. They seek new experiences, and they seek incentive programs.
This is truly a technological generation.
And it will continue to grow.
Consumers anxious to use unattended retail
These consumers, a third of the U.S. population, will use unattended venues more if there were loyalty programs, if the right products were offered and if unattended was offered in more channels. If they use it at work, they will use it in the amusement park or the hotel.
In response to these findings, PepsiCo has developed some of its own unattended solutions, including a combination beverage and snack cooler, which it displayed on the trade show floor. (The company did not wish pictures of its unattended cooler to be published since it is in test mode).
They (consumers) like the fact that they have control over a personal investment, Moxey said.
When consumers get full control over the experience, they get more excited.
PepsiCo tested the coolers at different locations and found that consumers at all types of locations cited the feel of a convenience store.
It really elevates the trust that (traditional) vending lacks, he said.
The opportunity to expand such solutions is huge, Moxey said, given the number of locations that stand to benefit from unattended retail. This is where the traditional convenience services industry can play a decisive role.
A look at the numbers
The expansion will include a projected 12,000 lodging sites, a projected 3,000 airports, a projected 11,000 health care sites, a projected 3,000 college and university sites (including gyms, libraries, common areas and auditoriums), Moxey said. The majority of expansion will be in healthcare, travel and recreation channels.
These are places where he said you cannot always put a vending machine but you can put a cooler.
We can now create a grab-and-go experience closer to arm’s reach than we ever would have before a vending machine, Moxey said, adding that where a vending machine costs $4,000, a cooler costs $2,500.
The three operator panelists agreed the need for new service concepts exists, but they also felt it was too early to be sure what the new workplace will look like as work sites are changing post pandemic.
Mike Coffey, chief strategy and innovation officer, Canteen Vending Services Inc., was nonetheless highly optimistic.
Coffey pointed out that consumers on average increased snack consumption from 2.2 snacks per day to over five snacks.
The people at home were rewarding themselves between Zoom calls, he said.
When they go back to work, these habits won’t change, he said.
I think there’s a lot more trust in unattended than there had been, agreed Mark Walker, vice president of convenience retail at Aramark Corp.
Walker said there is a gap in the workplace where the micro market is too small and traditional dining is too large, and that convenience services operators must explore new concepts.
Jacob Plassman, operations manager at Maumee Valley Group in Defiance, Ohio, agreed there is a need for unattended retail. He said the dilemma at his company was finding a way to serve smaller customers that are still a big part of revenue that is profitable.
Food delivery: Friend or foe?
The panelists differed in their responses to food delivery services, which are playing a major role in today’s foodservice industry.
We’re embracing these companies as they come in, Coffey said.
People don’t hesitate to spend $7 to $8 for delivery, so how do we tap into that as an industry? Coffey asked. We are literally the most convenient you can get.
Plassman agreed delivery services should not be seen as competitors. He said they offer a network of delivery drivers to service customers more effectively. At the same time, the delivery services don’t want to provide the services that convenience services offer.
I think the biggest thing is to make it all work along the supply chain with them, Plassman said.
Walker, however, said he views everyone else as a competitor.
New role for traditional vending
Unattended retail as defined in this discussion is similar to a micro market, but in a more public setting, Plassman said. You need a different product selection.
Coffey said convenience services have a role to play as a last mile solutions provider.
I rarely have a great retail experience in a hotel, he said, hinting at an opportunity for convenience services.
Where the industry today is supposedly $26 billion, Coffey said the opportunity is four to five times larger, if we enable the infrastructure we have.
What are the specific services that we can bring to these potential other customers and our partners, who may or may not become part of NAMA, but we can share what we do with them? he asked.
Meanwhile, what will become of today’s specialty convenience services operators? Will office coffee service, which lost half its revenue in a year on account of the pandemic, still exist?
Plassman said the pantry/OCS future is hard to gauge since it depends on customer budgets. With economies scaling and budgets cycling, there will be some type of need, he said, but the scale of it is uncertain.
Coffey said he doesn’t think we will lose the specialty OCS and pantry service operators. They bring an authenticity and they will grow as long as they don’t commoditize their service.
What are big things an operator should do in the next three years?
Walker said the ones who win will have relentless commitment to training employees. Number two is being disciplined to core service and finding other ways to serve the client without driving up cost. Third is remember the tech is an enabler to the business. Staying focused on smart innovation and not chasing the shiny object.
Plassman said with COVID, the need to diversify became important. Second is the need to embrace technology, which seems to be changing faster and can be utilized in all aspects of operating the business.
Coffey, echoing Walker, said people are number one, followed by the use of data and learning consumer needs. They need data to make faster decisions.
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