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Cashing in on automated retailing |
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Written by Brandi Cowen
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October 5, 2011, Toronto - The Automated Retail Company of Canada is betting that non-traditional vending will be big business in the coming years.
The Toronto-based company’s Spot Shop self-serve retail outlets integrate automated retail technology with digital, interactive media, and marketing. The machines are approximately three feet long by three feet wide and six feet tall. Each machine features a media component – a full colour digital video screen for digital signage that directly targets consumers.
The Automated Retail Company of Canada is currently running a pilot program with West 49, selling the lifestyle apparel company’s branded t-shirts at the Woodbine Centre in Etobicoke, Ont., and at other malls in Stratford, Ont. and Owen Sound, Ont. Recently, West 49’s board of directors approved the roll out of additional machines for the pilot, which is due to wrap up later this year.
“It’s been a good lesson and a good project for our company because it’s really enabled us to see what’s happening in the market,” says Gino Tomaro, managing partner with the Automated Retail Company of Canada. “People are warming up to the idea of shopping from a machine for these unconventional items.”
Opening people’s eyes to the possibilities of automated retail has been a challenge. While countries like Japan have developed an international reputation for the wide range of unconventional items – including floral bouquets, sneakers, and live lobsters – available for purchase from vending machines, the Canadian market has been slower to embrace the possibilities.
Tomaro says that in North America, the United States has been the main test market for automated retailing. However, he’s seen it “slowly starting to proliferate” into Canada. He also notes the arrival of new players on the scene, “which means that the industry is gaining some traction and it’s definitely coming around because you’re seeing more and more of these machines popping up.”
Secure selling
Built in security features allow the Automated Retail Company of Canada’s machines to vend a wide range of products, including pricier items, such as iPods and other electronics. The Spot Shops can be equipped with cameras or alarm systems to notify authorities or management when the machine is being tampered with.
In addition, the Spot Shop’s card reader features a drainage spout, which prevents thieves from squirting liquid into the slot and interfering with the machine’s circuitry. Some thieves use this technique to reset a machine to “filled” and force it to start dispensing its merchandise. If liquid does make it into the Spot Shop’s innards, the machine automatically locks down and remains out of service until it can be reset by a technician.
In addition, machines can be outfitted to protect operators against fraudulent credit or debit card transactions.
“With West 49’s machines, because the transactions are $29.99 or less, they weren’t overly concerned about having chip and PIN,” says Tomaro. “But the machines do have that capability. If the customer wants it, we can give it to them.”
Each Spot Shop can also be equipped with software that puts the machine into lockdown if the keypad or card reader is tampered with.
Expanding automated retail
In some cases, deploying the Spot Shops means selling landlords on a new model for leasing their space. While schools and public arenas are common locations for vending machines, landlords at large malls tend to bulk at the idea of signing real estate over to a vending machine. The key to getting the landlord on side is to help him or her visualize what the machine looks like, and understand the benefits a machine can bring to their location.
“There’s a lot of space in malls that’s unused and people are walking by it. We can turn that space into a money generating space by putting in automated retail,” Tomaro says. One challenge for the Automated Retail Company of Canada is to help landlords think creatively about ways to tap this space’s profit-making potential.
When deploying machines in non-traditional venues, it’s also important to work together with the landlord to develop an appropriate leasing system; in many cases, their existing retail agreements will not be applicable to automated retailing. Just as the vending industry has to adapt its business models to sell non-traditional items in non-traditional locations, the landlords responsible for these locations must adapt too.
Another challenge in bringing automated retailing to the Canadian marketplace is the fact that there still isn’t much widespread recognition of this segment’s potential.
“One of the things that we’ve realized is that most of the retailers and people in Canada are really unaware of what is going on with the automated technology,” Tomaro says. But, he adds, lately that’s beginning to change. “The ball has definitely been rolling. We pushed it over the hump and now it’s rolling down the hill and we’re starting to gain some momentum and traction in the market. We’re starting to see a lot more people calling us with all sorts of different ideas for [automated retailing].”
The Automated Retail Company of Canada welcomes these types of calls. Not only do the ideas generated open up new avenues for the company to pursue, it also serves as proof positive that the concept of automated retailing is gaining ground here. The company is happy to work with people to develop their automated retail concepts and help bring them to market.
“Somebody came to us and wanted to start promoting himself. He’s a musical artist… and he has a plan to dispense CDs and clothing and things like that in particular places,” Tomaro says. The Automated Retail Company of Canada worked with him to develop a program, helping decide what types of products to offer, and what forms of payment to accept.
This kind of enthusiasm for automated vending is an encouraging sign for Tomaro and everyone else at the Automated Retailing Company of Canada.
“The non-traditional side of vending – personal care items, clothing, perfumes, health food, all kinds of different ideas that people have come to us with – is so new in the industry that it’s just going to take some time before people get comfortable with it,” says Tomaro. “Online shopping had its trials and tribulations when it started on the Internet, and yet it’s just getting bigger and bigger and bigger every year.”
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