USAT: For Unattended Retail, The Tech’s The Limit

Self-service retail is, of course, a fancy term that replaces the traditional vending machine moniker (though kiosks and other digital- and mobile-anchored technologies are rapidly entering the mix, offering self-service options). For so long – and even now – vending machines and unattended retail have often been an unsung and even ignored part of the retail world, even though they offer significant value to consumers in certain situations, and are deployed for relatively high-end product sales by retailers such as Best Buy.

During a recent retail-focused discussion with Paul Stadler, senior vice president at USA Technologies, which sells services related to integrated cashless and mobile transactions in the self-service retail market, Stadler described how the situation is quickly changing, as PYMNTS has long documented. And payments and commerce players best get ready, as that shift could offer tremendous new opportunities for some operators down the road.

“We’re seeing a lot of overall change, in numerous forms,” Stadler said. And those changes are not just technological, nor are they only related to the benefits of new payment methods – they are also reflective of changing consumer desires and expectations.

“Consumers want convenience and frictionless transactions, and they want to be able to buy on their own terms, wherever they want,” said Stadler.

Sound familiar?

It should.

After all, those are some of the macro-trends that promise to define so much of retail and payments in the 2020s. Vending machines and kiosks – and other forms of unattended and self-service retail, which Stadler broadly defines as sales that take place without human interaction on the retail side – will not only ride those trends, but might even influence some of them as well. After all, the use of sophisticated data analysis will almost certainly include more artificial intelligence (AI) efforts, giving retailers yet another deep and nearly real-time view into what consumers want to buy, and how and where they will be buying.

Market Growth

All of this is happening amid market growth for such devices.

As PYMNTS research has shown, sales growth via many unattended retail devices is increasing significantly, and will probably continue to do so. For instance, unattended retail on units bringing in less than $2,000 a year have — after adding cashless payment options — experienced sales growth of up to 110 percent. And machines that get “smarter” in some way also stand as a very hot area of retail, with that market estimated to reach $15 billion by 2025.

That is very hard to ignore.

Even so, notable challenges still face the unattended retail industry, as Stadler pointed out to PYMNTS. “Some machines have been running for 10 years” and have yet to be upgraded, he noted. On the other hand, the relatively slow but now serious deployment of EMV-enabled payment cards and methods in the U.S. is also impacting vending machines and kiosks, which should serve to make them even more attractive to a wider base of customers.

Putting more secure payment methods into unattended retail devices could also help to fuel another trend: the increasing availability of higher-priced retail items in those machines. India offers just one recent example. There, Amazon aims to enable consumers, via kiosks, to buy such goods as Kindle eBook readers, Echo devices, Fire TV Sticks and smart speakers. The goal was to deploy around 100 of those kiosks in malls by the end of 2019, but it was not immediately clear whether that mark had been reached.

Will there be a limit on the value of products sold via unattended retail? “I don’t think so,” Stadler said. “The limits are based on technology.”

After all, even automobiles are sold via vending machines on occasion these days – a practice that is becoming intertwined with auto financing via digital methods.

Insightful Experiences

There seems little chance that vending machine staples such as potato chips and candy bars will become extinct – but change is happening there, too. And much of that change is fueled by the better, more personalized customer experiences offered via unattended and self-service retail devices.

For instance, fresh-food vending machines are becoming more popular. More generally, with the emergence of not only machine learning (ML) and AI, but also portable and standard application programming interfaces (APIs), the more personalized customer experience will find its way further into unattended retail, Stadler said. And those experiences will serve to increase the appeal of these new types of unattended and self-service retail devices.

“They will be able to understand the customer better, and better sell to them,” he noted.

Say a vending machine or other such device knows that a particular consumer buys a particular soft drink or another item from a particular machine at a particular time, and on a regular basis. Handled correctly, such data can open other doors to sales and retail experiences – that is, better merchandising. “You can use that information to market differently and provide opportunities for loyalty,” Stadler said, providing just two basic examples of what seems to be on the horizon for unattended retail and self-service devices.

Vending machines probably never got the respect they fully deserved, given how useful they were to consumers in often unexpected situations. But it’s reasonable to expect that, going forward, unattended retail won’t be so easily ignored.