USAT: Why Unattended Retail Is Commerce’s ‘Great Equalizer’

The rise of unattended retail – from yesterday’s vending machines full of candy and soda to today’s upscale self-service conduits where one can get kiosk champagne at a hotel (it’s true!) – all started with digital payments.

In an interview with Karen Webster, Maeve McKenna Duska, senior vice president at USA Technologies, said that a few years ago, moving to digital payments was a leading way for businesses to grow organically.

That growth came as vending and unattended retail firms struggled to compete with big-box retailers. Duska said consumers were less likely to have cash in their pockets to make a purchase. Accepting payments by mobile means or across cards was one of the easiest things businesses could do to get consumers coming back to machines rather than passing them by on their way to a 7-Eleven or a Wawa.

The Data

Fast forward a bit, said Duska, and the same location, same machine and same products housed within that machine are now seeing a 35 percent lift in sales. She added that a recent study done by USA Technologies in conjunction with Michigan State University, which analyzed 250,000 machines connected to USAT’s cashless payment platform, found a 78 percent increase in cashless sales and a 26 percent jump in overall transactions through the first 18 months of deployment.

Similarly, as noted in a recent PYMNTS Automated Retail Tracker, consumers spend as much as 15 to 20 percent more when purchasing through kiosks that offer digital payment options than they do at traditional kiosks.

From the initial payment and profit boosts done across bits and bytes, said Duska, a whole new world opened up for operators, aided by connective technology that could bring a range of new products and services to their machines – and even spark consumer loyalty.

Technology, in other words, has been able to offer context, letting unattended retail flourish in environments where mobile wallets and cards can offer easy access to impulse buys.

“Consumers are very comfortable with serving themselves,” said Duska. “They almost would rather not have to talk to somebody to get the goods and services they want.” And now, with that connectivity, context and continuum of offerings in play, the big-box retailers that have been traditional competitors to the vending operators have a desire to be in that space, too.

The lines are getting blurred across retail, according to Duska, as brick and mortar is getting into unattended retail, and even eCommerce players are dipping a toe into unattended models (as Amazon Go shows).

The Convenience Factor

Of course, underpinning unattended retail – no matter the setting or the products being sold – is the convenience factor.

To get a sense of just how strong of a lure convenience actually is, consider the fact that, as Webster observed, delays at the airport will spur enthusiastic lines at a Sprinkles vending machine, which makes cupcakes a mere $4 treat away – perfect for stress eating when the arrivals/departures board lights up with bad news.

Similarly, convenience is an overarching theme as the big-box retailers experiment with new self-service models, including apps that can help guide a consumer find the right aisle and the right shelf, and then pay and check out right on the spot.

“There’s a consumer expectation that they can go through the [retail process] themselves,” Duska told Webster. “They go online, they read the reviews, they buy their own items. They want a similar experience when they are doing it all in person.” Advertising helps push impulse buying, she said, as additional products advertised (aided by predictive analytics and AI) at the point of sale saw an eight- to 12-point jump in transactions.

But Duska cautioned that merchants must be flexible in the payment options on offer at the kiosk or vending machine. USAT found that even as card and cashless sales soared, cash sales alone also grew by 17 percent over the 18 months observed.

“You make the machine the destination by allowing people to use whatever is in their pocket to pay,” she said. And, with the wealth of data on offer through mobile devices, Duska told Webster that vendors can cement brand loyalty through specialized offerings and digital payments.

Unattended retail has thus become the great equalizer, providing new opportunities for business owners who historically already had machines out there and are now having to change their business models, and might be mulling digital advertising and other offerings. There are also the big-box retailers that want to leverage their brands through pop-up kiosks. And finally, the newer firms can benefit from unattended retail by coming to market with new goods and services without worrying about the overhead mandated by real estate and labor costs.

“Based on the success of these different business models and brands, firms are going to figure out what works for them,” Duska noted. “The bottom line is that unattended retail works, and we’ll see more of it. It’s not going away.”