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Vending Machines Aren’t Tailor-Made for the Pandemic After All

Pandemic-era shopping is planned and deliberate. That’s hurting vendors that take advantage of impulse buying and accessibility.

At first glance, vending machines seem tailor-made to survive a pandemic. There’s no human interaction and they’re convenient, ready to dispense drinks and other products anytime, anywhere.

Yet the Covid-19 crisis appears to be accelerating their demise, nowhere more visibly than in Japan, where beverage retailers pushed vending machines to new heights of ubiquity and creativity. The reason? Less foot traffic.

Monthly sales volume of beverages across the nearly 3 million vending machines in Japan dropped more than 35% earlier this year, as people worked from home and stayed away from offices and dense city centers. It’s become clear that in the pandemic era, shopping has become more planned and deliberate — to the detriment of vendors that previously appealed to accessibility and impulse buying.

Convenience stores offering a similar proposition of basic shopping at all hours have also seen sales falling every month since March.

That’s forced Japan’s 4.6 trillion yen ($44 billion) vending machine industry to speed up its reinvention to secure a future in a post-pandemic world, or risk becoming a novelty vintage item. Vending-machine operators are rushing to increase merchandise variety for word-of-mouth buzz, and investing to upgrade the rectangular contraptions to provide real-time consumer data. Out-of-the-box ideas, like turning them into data centers, are being pitched.

“We’re telling them to look at the vending machines as a sort of real estate — it’s one square meter of land, has electricity and a cooling box,” said Dominik Steiner, chief executive officer of VPC Asia, a Tokyo-based private cloud and internet-of-things startup that works with operators to upgrade machines. “What can you do with this other than selling drinks?”

Japan’s machines remain surprisingly low-tech, with only about a fifth of them able to deliver real-time inventory data, Steiner estimates. Companies usually have no idea what’s in stock or out of stock until someone opens the machine, adding to logistical costs.

Steiner is seeking to convince operators to use the empty space inside the machines as a connected network for private data storage. Another idea has been putting in monitors for weather or earthquakes, leveraging on the fact that they’re already located throughout the country.

In the meantime, vending companies have resorted to adding products such as masks or stockings, and including cashless payment options or app rewards — but those are unlikely to be a long-term or scalable solution, said Takenori Kobayashi, a consultant specializing in the vending business.

The discussion over the future of vending machines is another example of how the pandemic is reshaping city landscapes and lifestyles around the world, as the shift to working from home calls into question everything from the need for office space to the way public transport is designed.

A majority of the country’s vending machines are owned by publicly traded beverage makers such as Coca-Cola Bottlers Japan Holdings Inc. and Suntory Beverage & Food Ltd. Operating the machines gives them a direct sales channel and a rich source of consumer data that bypasses supermarkets and convenience stores. In other parts of the world, vending machines tend to be owned by small, independent operators.

Vending Blues

Declines in beverage sales volume in Japan led by vending machines

DyDo Group Holdings Inc., which gets more than 80% of annual revenue in its main beverages segment from vending machines, is investing 6 billion yen over the next year on improvements. Much of that will be to upgrade their 280,000 machines, of which less than 2% can transit real-time inventory data.

“From the point of view of coronavirus, because there’s no human-to-human interaction, you’d think there’s a business chance,” said Kiyotaka Kobari, an analyst at Nomura Research Institute. “But there are also many reasons why vending machines may no longer be necessary.”

Vending-machine sales were already trending lower before the pandemic, edged out by better-stocked 24/7 convenience stores. The number of machines in the country has almost halved in the past decade, according to the Japan Vending System Manufacturers Association.

For the machines that don’t survive, a second act as reminders of a comforting past could await. The steady disappearance of the metal boxes has spawned a cottage industry in Japan: retro vending machine attractions.

Yusuke Uotani, who runs an online directory of retro vending machine locations, said there are about 60 to 70 such collections scattered around the country. “I’m in contact with the owners of these places across Japan, and their customer numbers don’t seem to be too affected by coronavirus,” he said. “As the world gets more high-tech, I’ve been quite surprised at the vending machines that have managed to stay around.”

That was the case in the corner of a used-tire shop lot in Sagamihara, in Tokyo’s suburbs, where manager Tatsuhiro Saito turned his passion for collecting and repairing antique vending machines into a bustling side business.

Almost 50 machines — some half a century old — stand side by side, attracting as many 1,000 people a day who come to peruse vending machines of an earlier era. The machines spit out warm hamburgers in boxes, bowls of hot soba or udon noodles, and snack foods.

“When I was younger, there was a vending machine that sold hamburgers near where I lived. But those types of vending machines have nearly all disappeared,” Saito said. “The food isn’t the most delicious thing, but it’s nostalgic.”


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