CAMA highlights Part 2: Vending industry responds to customer demand for contactless payment and healthy choices
By Canadian Vending
By Canadian Vending
Niagara Falls, ON – Customer demand for cashless payment options and healthier food choices are two major trends driving the vending industry, CAMA attendees learned from three informative educational sessions, held at CAMA Expo in October. The good news is that the industry is getting in front of these pressures and turning them into opportunities.
Kevin Rieschi, client director for Interac Association/ Acxsys Corporation, shared with members what’s happening with cashless payment in Canada and what benefits may be in store for the vending and office coffee industries. Rieschi gave members an update on trends in not just cashless but contactless payment.
Interac tracked 40 million tap transactions per month, he said. “Growth in cashless will continue to cannibalize cash,” he said. Canada is a mature EMV (Europay, MasterCard and Visa) market, meaning we are now fully chip-enabled. EMV has brought fraud to almost zero in debit transactions.
From 2014 to 2015, there was a 150 per cent increase in cashless transactions.
Cash payments are declining, he said. In 2009, there were 240 million cash payments; in 2014 there were about half that number.
Smartphone payment is growing, he said, pointing out two “waves” in the sector: debit and credit cards represent the first wave from 2012 to 2015. Mobile wallets represent the second wave.
Mobile point-of-sale and in-app payment is the next frontier, he said, and banks are leaping into mobile. Operators and merchants have access to the same protections as banks, Rieschi said. There is growing confidence in security and 98 per cent of top debit-accepting merchants – among them Tim Hortons – are now accepting Flash and credit card payments.
The benefit of offering cashless payment in general is two-pronged: it helps you attract and track new customers, and it prevents you from losing existing customers who like the convenience cashless provides.
Cashless options lead to “stickier” customers, he said. For example, some people find airport vending machines more convenient and easier to deal with than waiting in line at a retail store.
Cost is the biggest obstacle, Rieschi conceded, but that’s where the payments industry is going – the contactless chip payment.
Leading the way in healthy vending
On Saturday morning a focus group gathered to discuss potential opportunities for a healthy vending industry program in Canada. The issue at hand, president Ed Kozma said, was that the Canadian vending industry wants to be proactive and able to defend what they sell should the need arise. The group considered the benefits of adapting the NAMA FitPick model out of the United States – including its stickers, labels and clings – for its own use.
Members pointed to a few models out there already. The Alberta Project Promoting active Living and healthy Eating (APPLE Schools) is being used in Alberta to help define effective ways to create healthy school communities in Alberta, said Jacques Dubé of McMurray Coin Machines. David Orriss of London Vending Services wondered if the “Signal” or “Snackdown” could be reworked. Its labelling features traffic light signage with a green light suggesting customers “choose often.”
Kozma outlined pros and cons of the two main options. The main advantage of going with the FitPick program is that it is well established. A disadvantage is the ongoing licensing fee it requires. Another consideration is its applicability to Canada.
Developing a new Canadian program would allow the industry to control the content and depth of the program. It would involve a one-time cost rather than ongoing licensing fees. However, starting a separate program would involve building a brand from scratch.
CAMA executive director Amanda Curtis invited members to comment on the options and share their ideas with the board and staff.
Micro markets stocked with potential
Members had a chance to ask questions of a tuned-in panel of micro market specialists. Jim Jackson, owner of Quality Vending Services in Winnipeg, who has run micro markets himself for the last three years, led the discussion.
Jackson surveyed the Canadian landscape. With some 50 operators in Canada running micro markets, as compared to 9,000 in the United States, the new concept represents a significant opportunity for Canadian operators.
Members are here because business is tough, the industry is seeing annual declines, there are fewer consumers and a demand for healthier lifestyles is putting pressure on the vending industry, he said, adding that “what’s good for people is not always good for business.”
He defined the micro market concept as a small-footprint, self-checkout that sells fresh and healthy products.
Operators may want to convert existing manual foodservice or cafeteria locations to micro markets, they may want to keep a good client looking to expand or they may want to take over a current location.
Jackson and a panel took questions from the audience.
How many customers are required to make a go of a micro market? Patrick McMullan of Three Square Markets said 150 or more would be a viable number. Jackson said it is often a matter of which clients (employers) want to offer the service as a benefit for employees.
Are they typically subsidized enterprises? Jon Floyd of 365 Retail Markets said operators have creative options by which a firm or client may pay a subsidy to support the service. Elyssa Allahyar-Steiner of Avanti Markets said workplace human resources programs may choose to subsidize certain items – perhaps healthier items – they want to promote. Floyd said he sees this trend as well and that it’s in employers’ interests to encourage workers to stay in the workplace by providing good food choices.
What payment options are available? Allahyar-Steiner said there are a few: end-users can use credit card, debit card or Apple Pay; and clients (employers) can give end-users (employees) loaded cards to use. Visiting, or transient, customers may use any of these options depending on what clients choose to offer. There are other options, she added: clients can give coupons with a bar code and customize them with messages like “Happy Birthday” or cards can be transferred to employees’ accounts if not redeemed.
Who pays transaction fees? McMullan said operators pay the fee to get end-users to start using it. He suggested operators get the business owner, human resources manager or general manager on side to champion the micro market using the term “wellness” to generate interest and support.
Jay Seagrove, a marketing and confectionery expert with Nestle Canada, touched on the marketing side by emphasizing that micro markets differ from traditional vending machines because they are “mini convenience stores where you’re accessing more senses.” There is an average 80 per cent increase in sales after customers have touched an item, Seagrove said.
How much fresh food should a micro market carry? It’s important to keep the shelves well stocked, Seagrove said, as this has been shown to increase impulse buying. Kevin Galaida of Breakroom Provisions agreed, adding that more choice gives customers a more rewarding experience. Allahyar-Steiner encouraged operators to expand their SKUs to provide more fresh food. Vending machines typically offer seven per cent fresh food; micro markets typically offer 25 to 30 per cent fresh food. Jackson added that his micro markets sell 45 per cent fresh food on average.
Who does the restocking? Galaida said you can go the “hybrid route” by using an existing vending employee. However, because micro markets require different expertise, it may be wise to hire someone who has an eye for detail and merchandising experience who knows how to make a display look good. Some operators have two separate, dedicated accounts, he said.
Floyd suggested hiring a convenience-store employee and providing them with a planogram to guide them. In remote areas, you can partner with a deli or local provider, he said.
Floyd finished by encouraging operators to take advantage of the freedom micro markets provide to switch out merchandise. “Bringing in non-traditional is a good idea – windshield wiper fluid, phone chargers,” he said. “Think outside the box.”
Jackson ended the session on a similar note. “Imagination is your only limit,” he said.