Working for a trade publishing company bears a certain similarity to being in the refreshment services business: you get to see what is happening in many industries. Just as refreshment service operators serve a variety of business customers, our business trade publications cover many different industries.
And one thing we can all agree on is that the recession is far from over, despite what economists are saying.
Some of my fellow editors at Cygnus Business Media say, “Cheer up, we’ve been here before,” referring to earlier recessions we’ve witnessed.
But automatic merchandising has never been “here” before. During earlier recessions, sales fell in response to changes in employment. But the hit has never been this hard. This recession has been unlike any we’ve experienced.
THIS RECESSION HAS BEEN UNIQUE
Unemployment reached double digits in the early 1980s similar to the present time. However, outsourcing had not yet so fully decimated the nation’s manufacturers. And competing retailers, particularly convenience stores, had not yet hit the market in full force.
The current recession has brought both a financial hit and a moral one to automatic merchandising. More operators have laid off employees than at any time in the industry’s history.
Many operators, to their credit, remain committed, guided by faith in the value of the services they provide.
DO YOU HAVE THE RIGHT TOOLS?
The only way to survive is to take control of the economics and efficiencies and execute change. This requires planning.
Reducing overhead, including payroll, is one step.
Having the right tools is another. Management software has become imperative. It enables operators to “micro manage” their businesses. Automatic merchandising has many “moving parts,” any and all of which can undermine profitability.
Operators have to know what their profit margins are on a per item basis. They must know their sales and profits per employee. And they cannot know these things without good accounting software.
Return on assets is the key metric that operators have to know.
This month’s cover story on page 14 examines using existing assets to provide services to some non-traditional customers that once formed the basis of many operators’ original businesses: wholesale accounts.
Operators also have to be aware of changing customer needs. In past issues, we have examined “better for you” products, ethnic products, and specialty coffee. This month, on page 18, we examine iced refreshments.
SO WHERE’S THE MARKETING?
One area that remains ignored is marketing. Automatic merchandisers are largely aloof to the need to communicate the benefits they provide to customers and to the public at large, despite the obvious success of the convenience stores, coffee shops and fast food feeders.
Operators do very little to “piggyback” off of product manufacturer promotions. They do almost no media advertising. And very little point-of-sale marketing.
Now is a good time for operators to market aggressively, as consumers are more value conscious than ever.
Automatic merchandising will win every time if we know our customer, deliver what they want, and let them know who we are and what we do.
