Michael L. Kasavana, Ph.D., who is a NAMA-endowed professor at Michigan State University’s School of Hospitality Business and knows a thing or two about the future of the vending industry and new ways it’s finding to capture the youth market. In yesterday's installment, Dr. Kasavana discussed new methods that the vending machine industry is experimenting with to capture the youth market, from a wider variety of products to social media technology. In today's installment, he delves deeper into new technologies on the horizon:
FDD: Could you elaborate more on the social media aspect? That’s such a huge touchstone for the younger demographic.
MLK: There are a couple of machines in the marketplace that do some unusual things. Pepsi’s got a machine called the Social Media Pepsi Machine that would allow you to text a gift of a Pepsi to someone else. A code is entered into or saved in their phone, like a QR code or another type, and it’s like a gift card but through the cloud. Some use of social media would be that type of interaction between multiple people, that type of gifting.
A second option would be location-based technology. In other words, if I’m in the mall and I’m walking by a men’s clothing store where I’m a frequent shopper, it might send a message to my phone saying: “come in today, we’ve got a special on the kinds of pants you normally buy.” What they call it is geofencing. The same type of thing can happen with a vending machine or a micromarket: someone who’s in proximity of a signal that’s being sent out, assuming they’ve opted into that program, can also receive those same types of discounts or incentives.
The biggest change for me is that most vending machines require you to enter money first, to establish credit, and you usually buy one product and it ends the transaction. But that’s not the way people normally shop! Usually you look for the products first, put them into a shopping cart, go up to the cashier station, and pay for all your goods at one time. A couple of companies I work with have started putting into the vending machine a small video screen where the payment mechanism is, and it’s got a graphic of a shopping cart there. As I press A1, for example, it would show a small icon of a bag of chips dropping into the shopping cart. I can shop then for multiple items and all that drops into the shopping cart. When I’m ready to pay, I simply press the “pay now” button, then I make my move with payment and the products are all dispensed simultaneously. Two companies have that available now in the marketplace as a beta test, and I think it’s working out fairly well. We’ll know more in this next calendar year. But that’s another use of social media, in the sense that now you’re keeping track of what people are buying and now you know what time of day they’re making the choice.
One of the problems with the glass-front machine, historically, is that it limits you to 45 items. But now you don’t have that requirement: you’re putting a digital screen on the front of the machine and the products can be stored vertically inside which gives you a lot more capacity. A company like Intel has something called “consumer analytics,” a camera that’s built into the vending machine that tells what the gender of the consumer is, approximates the age, and then sees what you’re shopping for and marks the time of day. As a vending operator with a digital screen on the front of my machine versus a glass-front machine, I can actually change that menu based on the analytics of the consumer who shops at the machine. So as you [a younger female] approach the machine, for example, it might show trail mix or health-oriented products. As I approach the machine as an older male, it might show me heavier type of products like maybe Slim Jims or some kind of beef jerky. It can actually then fine tune what the machine is selling.
So I think there are a lot of things happening that are either the outcome of social media or the result of social media. On a college campus, for example, you could even text message within the system saying that certain items on special this afternoon – between 3-5PM, all chips in the machine on the first floor are half-off. Those things are all possible. It’s looking at it not as a transaction, but as an interaction.
Check back tomorrow for the final installment, or check out the full interview in this month's issue of Food & Drink Digital!