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Vending Machines Woo Gen Y With New Technology

If you thought vending machines were on the way out, think again.

Source: Vendialogue

High levels of unemployment and a weak economy has been a double whammy for the vending machine industry. But there's reason for the industry to be hopeful: Gen Y.

Recent consumer research conducted by the industry's trade group, the National Automatic Merchandising Association, showed that more than 85 percent of consumers between the ages of 18 years old and 29 years old — the group known as Gen Y or the Millennials — actually would pick a vending machine over other retail options.

Perhaps that shouldn't be a surprise. This generation grew up interacting with machines and seem more comfortable texting than talking anyway.

"They love playing around with new technology," said Paul Schindelar, vice president of Kraft Foods' vending division. "That's it in a nutshell."

Although this age group already has a higher opinion of vending machines than do other generations, the industry is betting new vending machines equipped with more interactive technology, will boost usage even more.

To spread the word about vending machines' potential, NAMA recently took a fleet of a high-tech vending machines on the road to seven cities, hoping to showcase what they can do.

"We have never taken the technology out to the consumer," said John Healy, of Healy & Schulte, NAMA's marketing firm, which helped organize the event. "We can't wait for consumers to find them."

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Some of the more eye-catching machinesmixed up fresh cotton candy or allowed consumers to text a Pepsi to a friend.

Vending Machines With Touch Screens

There also was the Diji-Touch machine, developed by Kraft, Crane Merchandising Systems and Samsung Electronics. To some degree, the Diji-Touch works like a giant iPad, with a touch screen that makes it possible for consumers to browse nutritional information or examine a 360-degree view of the product with a few swipes of a finger.

The screens also can act as advertising, perhaps catching the eye of consumers walking by and prompting them to make a purchase.

Although those bells and whistles may turn heads, sometimes it is the more practical aspects that will really drive business.

No More Fumbling for Change

Hate to fumble for change to make a purchase? There's a solution to that problem: Vending machines are increasingly being equipped with technology that allows consumers to make purchases with credit cards.

NAMA is encouraging vending machine operators to adopt these cashless payment systems because Gen Y favors debit and credit transactions.

Pepsi dream machine
Source: Vendialogue
Pepsi dream machine

There are already signs this is occurring. A study conducted by Apriva revealed that nearly 60 percent of vending operators said they planned to implement credit-card-based payment systems within the next few months.

More machines also are being equipped with telemetry, which allows them to communicate with the machine operator when it's time to restock.

This is a big plus for the machine operators because they can only make trips when needed and bring along the right merchandise.

Healthier Vending Options

If you think vending machines are just stuffed with candy and soda, there are companies out there that want to change your mind.

Canteen, a leader in vending services that is a unit of Compass Group, is one company that is addressing this with its 2bU vending machine, which is stocked with the types of healthier options one might find in a Whole Foods grocery store. There is also an LCD screen that displays nutritional information.

Of course, it may be a while before you encounter any of these machines. Vending is a capital-intensive business with razor-thin margins, so operators have to upgrade machines systematically. But keep your eyes out when you see machines in high-traffic areas such as airports, hospitals, universities and other large public spaces.

These machines are making their way out into the world. For example, Canteen has more than 300 of its 2bU machines spread across the country.

It may take a while longer to see machines like PepsiCo's Social Vending, which is a protoype of a state-of-the art, touch-screen vending machine that allows customers to gift a beverage to a friend. That friend then goes to a social vending machine with a code. When they type it in, they get a beverage and a personalized text message. Now, that could be the choice of a new generation.

Questions? Comments? Email us at consumernation@cnbc.com. Follow Christina Cheddar Berk on Twitter @ccheddarberk.

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