Canadian Vending

Features Consumer Behaviour Trends
FROM THE EDITOR: July/August 2006

A Retail Approach


We used to think of wholesalers as intermediaries. They would
anticipate the needs and wants of consumers and supply operators with
the goods to match.  Over the past few years however, the proliferation of American-style
retailing in our country has given impetus to a new breed of
wholesaler: the consumer-driven, quasi-retailer – namely big box stores
and club warehouses. Canadians are buying everything from big-ticket
electronic items to their daily groceries from – what used to be –
wholesalers.

A Retail Approach

We used to think of wholesalers as intermediaries. They would anticipate the needs and wants of consumers and supply operators with the goods to match.

Over the past few years however, the proliferation of American-style retailing in our country has given impetus to a new breed of wholesaler: the consumer-driven, quasi-retailer – namely big box stores and club warehouses. Canadians are buying everything from big-ticket electronic items to their daily groceries from – what used to be – wholesalers.

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According to Statistics Canada, wholesale sales of food, beverages and tobacco products rose from 40 per cent between 1997 and 2004, and only 57 per cent of those were actually directed to retailers.

What was once a clear path from manufacturers to wholesalers to vending operators and eventually to consumers has now been blurred. This new consumer landscape has made Canada one of the most competitive shopping environments in the world. Operators are no longer competing with just grocery and C-stores, but many of these new wholesalers as well.

So my question to you is: if someone asked you to define your role as vending operator today, what would you say? Would your definition describe you in terms of the traditional network, with your services rendered merely as a method of product distribution?

Canadian operators are saying, no. They’re taking a cue from the wholesale industry and redefining how they see themselves, and perhaps most importantly, how they present themselves to their clients.

One operator I spoke with this month, the owner of Burlington Vending in southwestern Ontario, said he likes to think of himself as more of a retailer than an operator. By adopting a retail strategy, he’s become more consumer-driven, which allows him to maximize the revenue he gets from each client.

But in order to become truly retail or consumer-driven, you have to know exactly what the customers want, right? And as Lio Prataviera points out in “Operator’s Perspective” (p. 40), what people say they want and what people actually want are sometimes two very different things.

For example, too often HR big wigs and corporate bean counters tell operators their staff is asking for healthier snacks, yet no one – not even these decision-makers – purchase them.

By explaining the 80/20 rule (80 per cent of his revenue is derived from 20 per cent of the products), Prataviera is able to justify keeping those indulgent snacks – the ones purchased on a regular basis – in the machines.

You can increase same machine sales by doubling up on the best sellers and getting rid of the SKUs that just don’t sell. One advantage is Canadian operators still have access to wholesalers that are vending-dedicated. These wholesalers that cater specifically to the vending industry are good sources of both product and market research. Their employees don’t split their time trying to sell DVD players to college grads and buckets of shampoo.

Also look to manufacturers for information on what today’s hot sellers are, and encourage your drivers to track which items are moving and which ones aren’t.

Whether you call this your “retail approach,” “merchandising strategy” or whether you actually refer to yourself as a “retailer,” how you define your role will directly influence the way you approach your business.

So choose your words wisely.o


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