Is your business ready to be on a smartphone?

There is good news and very bad news concerning how shopping behavior is changing. The bad news is that the battleground goes far beyond what we sell – beverages, food and snacks. We are now fighting to be relevant on smartphones. You read that correctly – it’s all about smartphones.

There is even more bad news for operators in our industry. The pace of change is accelerating and the cost to catch up is rising rapidly. Worse than that is we cannot afford to wait. Forward-thinking brands in competitive channels, especially convenience stores and fast food restaurants, are investing big dollars to secure a position as an app of choice on smartphones.

There is good news for companies learning to engage shoppers. You will find a huge opportunity to drive profitable growth. For operators in vending, micro-markets, OCS and onsite foodservice, we will be able to deploy technology (hardware and software) to engage shoppers and capture an increasing share of their daily spending.

At this year’s Customer Engagement Technology World (CETW), the exhibitors and speakers were focused on how brands must change to engage shoppers – whether regular buyers or potential new customers.

The CETW Show was held at the Javits Convention Center in New York City on November 6 to 7, 2013. CETW is for brands seeking to improve their strategies and tactical execution for application in-store, out-of-home, analytics, customer experience management (CXM), device management, app discovery and monetization[1], digital signage, mobility and self-service. These might be new terms for many of you. Now is the time for our industry to understand these terms and to apply these tools in our daily business operations.

Welcome to the future!

We must become more than providers of beverages, snacks and food. We must engage technology and deploy smartphone apps. Among the most important lessons to take away from the CETW Show are:

1. Shoppers, especially younger people, expect that they can do anything and everything on their smartphones (or tablets). If they cannot do business with your company from their smartphones, you are at risk of not being a shopping alternative they will consider.
2. To be relevant on a smartphone, you must offer an app – one they will want to use when interacting with your company. The app is powerful – because people decide to access it. Once they’re connected to your company by an app, individuals can decide how they want to be contacted by a company – email or text messaging are the primary tools.
3. To be a frequently used app, especially when selling immediate consumption food and beverages, an app must do several things: (a) sharing news and special developments – new product introductions or a limited-time-offer (LTO) – a daily or weekly special or a seasonal item; (b) delivering value – unique offers and deals – focusing on “regulars” who want to be treated specially for their loyalty; (c) being easy to use – or the app will be removed – usually within 30 days of being installed; (b) providing meaningful information and insights about the products being sold – such as nutritional information, allergens, etc.
4. You can learn more about the news and developments at CETW by accessing a recent VendingMarketWatch podcast from December 17, 2013. Industry consultants and veterans Paul Schlossberg and Allen Weintraub clearly lay out the reasons the vending, OCS and micro market industries need to use customer engagement through smartphones and technology.

We are at a critical time for industry growth    

Right now you’re reading this, and I hope, asking yourself – “Why is this important for me and my business?” Well, let me share what I see as our industry’s biggest issues. If we do not act on these opportunities now, we will fail to connect with younger shoppers – who will go elsewhere when they are thirsty or hungry.

Think about these five challenges:

1. We are not focused on shoppers. We spend too much time on “what we do” and not enough time on what our shoppers are doing and how they are changing. As an industry, we still have operators who see their locations as serving “captive customers.” Be very worried if you believe “if we build it, they will come.” That is old, outdated and very dangerous thinking. While we must continue to pay attention to how we stock and serve machines and (micro-market) shelves, we must get busy looking at how shoppers are interacting with our machines and shelves. An April 2007 article in Automatic Merchandiser detailed the implications for retail ethnography (studying the shopping process) specifically in the vending channel. We might understand why they buy (they’re hungry or thirsty). We absolutely do not understand why they do not buy from us.
2. We are falling behind at an accelerating rate. Think back to Elliot Maras' two-part feature article "Wake Up Vending" late in 2005 and early in 2006. While there has been significant progress since then, many of his prescriptions for the future have not been fully addressed.
3. We need industry data to be available – the same as it is in other channels. A recent VMW blog posting by Mark Kelley, Region Manager, General Mills, discussed the lack of reliable industry sales data versus what product suppliers can access in other trade channels through IRI, Nielsen and other sources. For senior managers at leading industry suppliers, there is a sense of disconnect when looking at our channel versus supermarkets, convenience stores, et. al.  There is no industry-level data detailing market size, growth and (product category) share data for dollars and units sold. This makes it difficult to prove why our channel is an attractive investment for new product development and for additional sales and marketing resources    
4. We must be much better at how we manage our product assortment and how to merchandise it at the point of sale.  The challenge for operators is how to avoid the product merchandising mistakes driven by attempts to maximize dollars accrued from supplier rebate programs. An excellent Automatic Merchandiser article by Allen Weintraub in March 2013 detailed the necessity for marketing and merchandising programs to increase sales (to shoppers) versus how to increase operator purchases. “The rebate programs merely cannibalize sales from one product manufacturer to another with minimum benefit to the…operator.” By the way, for anyone interested, there is a relatively easy way to prove (or disprove) whether the dollars accrued from a rebate program might be more (or less) productive versus the (added) gross profit from a different product assortment. 
5. We are NOT “connected” at the locations we serve. According to the State of the Industry Report (June 2013 issue of Automatic Merchandiser) only 1.65 percent of vending machines are being remotely monitored. I checked that out with some very people in our industry – and their (collected) opinion was that less than 5 percent of machines are remotely monitored. How can we effectively communicate with shoppers at our sites when we have not established communications with our machines? Don’t waste your time or money creating and deploying apps or other social media strategies unless you plan to engage remote monitoring.

[1] A simple definition – how to drive sales and profits when introducing this app and any related social media programs.