by Dax Logue, Brand Vending Products – January 4th, 2006
It goes without saying that 2005 was not a good year for the bulk vending industry. Operators and suppliers alike were hit hard with rising fuel prices, increased product costs, uncertainty following consolidation of large operating companies and the aftermath of the toy jewelry recall that negatively impacted the critical teen/tween market. When all was said and done, 2005 was a year most operators and suppliers would like to forget. Yet, I remain optimistic about 2006.
In addition to seeing orders here at Brand picking up over the past few months, and reports from the field indicating that customers are returning to the machines, I have other reasons to be optimistic about the industry.
Take, for instance, the recall of toy fashion accessories, which dealt the industry a serious blow. Operators had come to rely on the metal bracelets, rings and other items to attract teen and tween customers, and when those items suddenly vanished from the industry, they left a distinct vacuum. An entire market segment disappeared virtually overnight.
To be perfectly frank, it took suppliers a while to regain our footing. We knew the teens and tweens could be lured to the machines, but only if we offered them the right product. Searching out the “right” products at the right price points takes time and, in many cases, involves establishing supply chains with new overseas manufacturers. This hasn’t been a particularly easy process, but now we are seeing many of those types of products coming to market, replacing the vacuum left by toy fashion accessories.
This did not happen overnight, but it is happening at Brand and other companies. Sales of these new items aimed at teens and tweens show every sign that this vital market segment is continuing to rebuild itself as more appealing and creative products enter the supply chain. This trend is more than likely to continue through 2006 as we suppliers aggressively search out these items.
Another reason for optimism is the strengthening of the Hispanic or Latino market. Although categorized as just a niche market only a few years ago, the Latino demographic continues to play an increasingly important role in the bulk vending industry. Suppliers and manufacturers have responded by offering a steady stream of products across all categories aimed specifically at this rapidly emerging market. In this respect, bulk vending was ahead of the curve and out in front of a great many other industries in recognizing the growth potential in this market segment. The Latino demographic is not a new market for bulk vending. In fact, many suppliers have years of experience and hard-earned expertise at identifying and providing the types of products that are appealing to the Latino demographic.
Then there is the issue of higher-priced merchandise. It has been less than a decade since many operators made the jump from 25¢ to 50¢ products. Today we are seeing the slow but steady movement to 75¢ and $1 vends. Operators are not only adding higher-priced merchandise into their mixes with greater frequency, but a growing number also are making the changeover to this next price point with success. In fact, over the past year I’ve encountered several small operators who recently entered the business with a 75¢ vend as a business model. These operators, who are unhindered by preconceptions of what a bulk product “should cost,” have found success in carefully choosing their locations and products.
We have not reached the so-called “tipping point” where operators across the board opt to convert their machines to higher prices, but we are getting there and will see even greater progress in the coming year. As more operators switch to higher prices, the inevitable effect will be a greater number of products aimed at those price points, which will convince more operators to change.
Lastly, I would also propose that the uncertainty created by recent consolidations is very likely to provide many operators with a sustained burst of creativity. As the larger operating companies flex their strength with chain stores, smaller operators will need to become more aggressive and focused. Already, many small operators have been actively pursuing the small chains that haven’t appeared on the radars of the “big boys” yet, as well as going after the kinds of mom-and-pop locations they never approached in the past. They are, in a very real sense, re-inventing bulk vending and redefining a bulk vending location.
For instance, part of this phenomenon is the pursuit of the adult market with operators venturing into nightclubs and taverns with adult items. These items are not particularly risqué, but do appeal to the 20-something and 30-something market. Five years ago, a bulk vender in a nightclub vending anything other than nuts or pan candy would have been an oddity, yet now they are cropping up with increased frequency.
Operators across the country are going back to the drawing board and redesigning their businesses. This is nothing new for bulk vending operators. Less than a decade ago, stickers and tattoos were a niche business, no more than a sleepy backwater of the industry presided over by a few “specialist” operators. Today, they are firmly in the mainstream of bulk vending. Our industry is nothing if not resilient. The past year hasn’t been an easy one, but 2006 is the year we bounce back.