Vending machines that match the minimart

For anyone who has ever languished in a convenience store checkout line, this supersized vending machine may become a welcome sight.

Perched on a sidewalk of a popular Washington nightclub district, the 20-foot-wide Tiktok Easy Shop lets consumers buy dozens of daily staples, including toothpaste, milk, aspirin, bread, diapers, razors, shampoo, motor oil, and roast beef sandwiches.

All sales are made without the assistance of a clerk, who may not share the time-starved ethos of today's consumer.

Washingtonians are among the first in the country to get acquainted with this futuristic convenience-store-in-a-box, which went up in August and currently is the only one operating in the United States. While some D.C. residents and visitors lament its lack of a human touch, many others seem impressed by the new technology.

"It's fascinating. If you're out on the town, and need to get something late at night, it's perfect," says Adam Gibbs, a tourist from England, who stopped by on a recent afternoon to photograph the aluminum-clad machine trimmed with bright-blue awnings.

Gibbs and his traveling companion insert some coins, punch a code on the screen, and then peer through the window as the action unfolds.

A robotic arm rolls past dozens of items stacked 10 shelves high. It stops at a row of sodas, where a gear engages a conveyer belt that causes the bottle to drop into a waiting bin. Mission accomplished, the bin returns to a central receptacle, which slides open to present the drink along with a plastic bag. The machine can vend up to 10 items at once.

"I can see how it could be dehumanizing," Mr. Gibbs says, reaching for the soda. "But at the moment it's just fun."

The machine's manufacturer, naturally, hopes the kiosk will provide more than simple amusement.

Hettie Herzog, president of Automated Distribution Technologies in Exton, Pa., which makes the "Shop 2000" machine used by Tiktok, predicts such vending machines will "redefine convenience retailing" by providing shoppers with greater speed and efficiency.

"It can be open around the clock, and it takes up such a small space that it can go into a lot of places where there's not enough space for a full-sized convenience store," says Ms. Herzog, noting it's perfect for busy pedestrian areas like railroad stations, office buildings, hospitals, and college dormitories.

At 200 square feet and with only 200 products, the Shop 2000 is far smaller than most convenience stores, which average 3,200 square feet and may sell more than 3,000 separate items. Because space is limited, vendors must determine the "top selling items" for each location and stock the right mix, Herzog says.

The machine at 18th and California streets in northwest Washington is still in the test phase. Prices are comparable to neighboring businesses, including $4 for a box of cereal and $2.75 for a loaf of bread. Customers may pay with cash or a credit card.

Herzog, who based the Shop 2000 on similar machines she saw in Amsterdam and other European cities, hopes to expand to "a couple of dozen cities" by next year.

Traditional convenience stores see their eventual arrival as both complement and competition to the industry.

To succeed, the machines must offer consumers a tangible benefit over existing stores, "either in lower costs or quicker service," says Jeff Lenard, spokesman for the National Association of Convenience Stores. "If the benefit is solely to the establishment providing [the vending machine], it will probably have an uphill battle," he says.

But other experts see a "bright future" for vending. They predict that in next 18 months, consumers will welcome a host of new machines that dispense far more than sodas and chips.

One reason for the positive outlook is that machines today are "more reliable than ever before," says Michael Kasavana, a professor of vending commerce at Michigan State University in East Lansing.

Indeed, technological advancements – such as sensors that tell if an item has dropped, and new methods of payment, including credit and debit cards – are attracting new customers and driving up sales. US machines last year sold nearly $41 billion in products, up from $22 billion in 1990, according to the National Automatic Merchandising Association.

From a business perspective, vending machines address the serious problem of finding workers in a "very tight labor market," Professor Kasavana says. They also minimize real estate costs in cities where a new walk-in store can average $8,800 per month in rent, according to the convenience store association.

Ultimately, vending machines are well positioned to meet the demands of our 24-hour society, Kasavana says: "If the machine is reliable and highly stocked, then you end up with a satisfied customer and more repeat business."

But the proprietor of an old-style convenience store, 100 yards away from the Shop 2000 is not afraid of the automated competition. Even the most sophisticated machine can't perform some tasks, says Mekonnen Bekele, owner of Admass Grocery. "If you push the wrong button, and get something you don't want, who's going to replace the item?" he asks.

Rise of the cashless transaction

Besides offering consumers a wider array of items, some vending machines are now going cashless.

That's right – these machines eliminate the need to fumble around for change.

Coca-Cola, Pepsi, and Dr. Pepper for example, now have machines that accept credit cards. Transactions are processed via a wireless connection, much like using a credit card to buy gasoline at a self-serve station.

A few thousand vending machines in United States now accept debit and credit cards, industry executives say – not much in country with as many as 7 million vending machines. "But cashless is growing very quickly," says Mike Lawlor, senior vice president of business development at USA Technologies, a provider of cashless services in Wayne, Pa. "In 12 months, we'll have 10,000 or 20,000 units out in the marketplace."

Cashless machines, he says, are popping up in airports, convention centers, stadiums, and large retail stores.

The move to cashless also brings the promise of greater profits.

"People will spend more with a credit card than they do if they don't have to have a specific amount of cash in their pocket," says Prof. Michael Kasavana, a vending expert at Michigan State University. When machines accept credit cards, vending sales increase by as much as 30 percent, he says.

Kodak has taken the cashless trend one step further. The company has more than 400 disposable-camera machines at various amusement parks and other tourist attractions in the US. Unlike other machines that accept credit or debit cards, cash is not accepted.

Another cashless vending method some consumers are using involves a pay key. This device, when inserted into a machine, debits the amount of your order. If the key's account runs low, you can add money by inserting cash into any machine that accepts the key.

Down the road, American consumers may be able to make purchases with cellphones. Machines that can handle such transactions are already operating in parts of Europe and Asia.

"Each machine has its own phone number," says Mr. Kasavana. "So once you establish a phone connection with the machine, you then make your purchases, either through a debit chip that is in your phone – and payment is then transferred to the machine – or it's posted onto your phone bill."

of 5 stories this month > Get unlimited stories
You've read 5 of 5 free stories

Only $1 for your first month.

Get unlimited Monitor journalism.