Retailers think inside the box
Within the past month, two Ohio-based traditional retailers announced plans to test-market automated retail vending machines. It’s not so much thinking outside of the box as it is figuring out how to get that box to where the consumers are, wherever they are — the airport, the hospital, convention centers, exercise facilities, on a college campus or in a hotel.
Kroger in February debuted an automated retail kiosk, the Kroger Shop24, carrying both food and household goods for the college students on the Ohio Northern campus. Max-Wellness will this month unveil attention-grabbing orange kiosks at three airports: New York City’s John F. Kennedy International in the JetBlue concourse, Raleigh, N.C., and Houston.
It is brand extension and an inexpensive way to propel a retailer’s reach well beyond the bricks and clicks they have today. “The reality of retailing today is it’s changing,” Max-Wellness CEO Michael Feuer noted. “What we look at is expanding and becoming a national brand by … creating points of presence. We’re looking at a four-legged stool to create this national awareness: brick-and-mortar, which gives you credibility; the Internet, which reaches the masses; the targeted programs like the Mini-Max [small retail shops located in hospital settings]; and then [Wellness Center], which takes you to a different level.”
Improvements in Internet access in heavily populated areas not only give retailers the ability to track inventory and sales in real time, but also can give the customer an easy way to access the retailer’s website and conduct a transaction for a product not currently stocked in the kiosk.
The flexibility built into the kiosk model is advantageous, too. If a particular location isn’t working, the kiosks can easily be placed on rollers and relocated to a potentially better locale.
According to the “Automatic Merchandiser State of the Vending Industry Report,” vending industry sales dropped 3% to $19.3 billion, but this industry figure incorporates everything from cold beverage machines to the coffee vending machines found in many offices. The technology platform is improving across this industry. The report noted that cashless readers have made higher pricing at these vending machines acceptable for consumers, and there have been recent improvements in wireless reporting hardware, bill recyclers and “pick to light” warehouse picking systems that support loading deliveries in the warehouse based on machine needs.
Beyond extending a brand name into nontraditional retail channels, the potential opportunity in automated retailing can be found in higher sales-per-square-foot metrics and lower distribution and inventory costs. According to ZoomSystems, the manufacturer of the automated kiosks for both Max-Wellness and Best Buy, automated kiosks can realize up to 20 times the average per-square-foot than in the same space in traditional retail. That kind of success is realized by making sure high-velocity items are placed in the kiosk, Feuer said, because there is no margin for error in an environment that houses a finite number of offerings versus the thousands of SKUs in a retail setting.
While Kroger has not announced any future plans for its Kroger Shop24 — the grocer stated this concept is still in pilot phase — Max-Wellness has plans in place to roll out between 50 and 100 Wellness Center kiosks, depending upon initial results, all showcasing location-specific merchandise relevant to the venue, such as airports, convention centers or exercise facilities. In this regard, Max-Wellness also has been working on kitting offerings, Feuer said. “In order to increase the average transaction, we will put compatible items in a ‘Max-Well Kit,’” he said. In airports, Max-Wellness will be bundling a number of organic snack items into one pre-packaged bag.