“Unattended retail” may sound futuristic, like a driverless car, but in reality, it is a thriving segment of the economy that offers huge growth opportunity for cashless payments. What used to be dominated by simple coin-based laundromats and vending machines selling candy bars is now a high-growth, multi-layered and profitable segment retailing items like electronics, makeup, school supplies and over-the-counter medicines.
In the absence of a cashier and the typical bricks-and-mortar retail environment, cashless unattended retail attracts more customers more frequently who spend more.1 In the past decade, the growth has been constant, with just 10,000 machines accepting cards in 2007, to at least 1.3 million devices today.2 By 2020, the unattended retail market is estimated to reach $275 billion globally.3
Even in the traditional mainstays of vending machines, the addition of credit card payments increases customer convenience. According to a recent Visa Small Ticket Survey4, 48 percent of respondents currently use payment cards as one of their payment options at vending machines. Of those who prefer card payments, 82 percent cite convenience as the top reason for their preference, followed by: security, flexibility and more personalization. These sales are particularly attractive to millennials, who prefer to use cards for small transactions, under $5.5
Unattended retail comes to life through city parking meters to garages, where there is no longer a need to store quarters. Vending machines not only sell food and drink with increasingly healthy options but they increasingly offer other convenient items that people on the go frequently need like earbuds, power cords, batteries and toothpaste. Unattended retail represents a gold rush opportunity for these non-perishable goods. There’s potential to offer almost any consumer good through high-tech vending.
“Over the next 12 months, USA Technologies is on-track to process over $1.0 Billion in small-ticket transactions, across the 568,000 unattended retail machines connected to our ePort Connect network”, said Michael Lawlor, Chief Services Officer at USAT. “Consumer demand to use cashless and mobile payments for every day purchases, like vending machines, kiosks, parking and laundry continue to increase every quarter. Our clients are generating 20-25 percent sales revenue growth from the addition of cashless payments, driven by a 32 percent increase in the average purchase amount, combined with an increase of the total number of consumer transactions—cashless payments equals consumer convenience and consumer payment preference.”
Recent advances in vending machine technology mean that kiosks are highly customizable, with touch screens, remote data access, and carefully calibrated delivery systems. This means great benefits for the provider, because companies no longer need to visit their machines to determine inventory; it can be managed remotely. The machines are constantly collecting data about what is purchased when, so providers can better satisfy local buying trends. Gone are the days of kicking a malfunctioning machine in frustration: unattended technology is highly reliable these days, with remote monitoring and Wi-Fi connections to self-report problems.
Visa has championed the idea of ‘going cashless’ and wants to continue to help merchants, consumers and economies manage and overcome obstacles to becoming completely cashless. We have found that retailers love cashless vending because it streamlines operations and transfers revenue into their bank account instantly. Accent Foods of Austin, Texas maintains more than 15,000 vending machines across its local region. The company uses a system called Cantaloupe for dynamic route scheduling, automated pre-kitting and merchandising and inventory management.
“Cantaloupe,” said Chris Molinar, IT Director of Accent Foods, “helps us keep track of inventory, the specific items that are selling at specific locations and for adjusting our planograms to maximize the number of days between servicing machines without selling out of items. Our system sends out alerts if machine inventory is running low or if machines are not working properly. That enables us to deliver better customer service, reduce costs and generate more sales.”
The opportunities for unattended retail are unnumbered; Visa continues to explore and celebrate the companies who have made innovative upgrades to accept digital payments and enhance the user experience.
1According to the results of USAT’s 2015 Knowledge Base Study, consumers are spending, on average, 32 percent more when they pay with a card or mobile payment versus cash on small-ticket purchases, and choosing goods with a higher price point. This equates to an opportunity for higher revenues for businesses.
2 “The Retail Automation Market to see 16.7% CAGR to 2020.” PRN Newswire. Dec. 19, 2014.
3 “The Retail Automation Market to see 16.7% CAGR to 2020.” PRN Newswire. Dec. 19, 2014.
4 Visa Small Ticket Survey Results, Quantitative research to understand consumer landscape and preference; Conducted by independent research firm, AYTM in the US targeting 1,200 Men/Women, 18+ years old, July 6-7, 2017
5 CreditCards.com Survey