As China's urbanization accelerates, the pace of life for domestic residents continues to quicken, and their demand for consumer goods rises, especially in terms of flexibility, convenience, and speed. Chinese consumers are more proactive than ever. However, the rising cost structure brought about by the economic environment hinders meeting this demand, prompting more people to consider how to achieve this at controllable costs.
In fact, not only in the retail consumption sector but also in manufacturing, the intelligent manufacturing reform known as the 'Fourth Industrial Revolution' has already begun. A large number of industrial robots are applied to product manufacturing, greatly improving production efficiency while also benefiting enterprises in terms of labor costs and other operating expenses. In the retail sector, the concept of 'smart self-service commerce,' typified by vending machines, is also gradually emerging. Combining internet and mechanical technology, achieving self-service, informatization, and standardization in retail has become the choice of more retail enterprises.
In developed countries such as the United States, Japan, and Europe, vending machines have long been widely popularized as public facilities, for example, in schools, stations, offices, and apartments. Although vending machines entered the Chinese market as early as 1994, their development status is far behind foreign markets. According to statistics jointly compiled by the Self-service Vending Industry Branch of the China General Chamber of Commerce (CGCC) and the China Vending Industry Network, as of June 2016, the number of vending machines in China was still only about 180,000 units, mainly concentrated in the food and beverage sector.
Rising costs, diversified consumer demand, and increased service requirements determine that the vending model will become the most important business model in China's future retail market.
China has a vast territory, and the further acceleration of urbanization has led to a rapid increase in urban population density. In the past several years, benefiting from the wave of urbanization, domestic retail industries such as department stores, supermarkets, and convenience stores have developed rapidly. However, with the rapid adjustment of the economic structure, the extensive business model of the original retail industry can no longer cope with the rising operating costs of labor, rent, and logistics. The retail industry has to think of better ways to transform. On the other hand, the development of internet technology has prompted the rapid rise of online retail formats such as JD.com, Tmall, and Yihaodian, making operations in the traditional retail sector even more difficult. Although convenience stores, mainly providing small-scale retail services, have seen some development in the past two years, with the intensification of market competition, the living space of convenience stores has also faced certain challenges. Convenience stores have to open more businesses to supplement the 'negative energy' brought about by market changes.
Technological revolution has facilitated the rise of the self-service vending model, with low cost, high flexibility, and high scenarioization, creating opportunities for more practical applications of vending machines.
Technological revolution has been the driving force behind the development of the vending machine industry in recent years. Technological developments in recent years have brought the following changes to vending machines.
1. Changes in payment methods
Traditional vending machines only accept cash transactions, which brings inconvenience to payment and change-making, thus affecting the development of the vending machine market. At a stage where cash recognition technology still has room for improvement, cash consumption not only reduces the satisfaction of the consumption experience but also brings many troubles to vending machine operators (such as counterfeit money and cash management). Nowadays, with the popularity of mobile electronic payment technologies such as WeChat Pay and Alipay, the payment of vending machines has been greatly promoted towards electronic and lightweight development.
2. Informatized management methods have greatly improved operational efficiency
Traditional vending machine operators usually manage their business through manpower. With the deepening integration of information technology and vending machines, the operational status data of vending machines has become increasingly easy to obtain and visualize for business managers. Through the vending machine informatization management system, operators can master various operational data with ease, and can analyze and decide the next stage of business strategy more timely and targeted. The benefit is that it greatly improves operational efficiency while effectively reducing the risks of decision-making and operation.
3. Diversification of sellable products
Japan is one of the most developed countries in the world in terms of vending machines, and its vending machines are far more popular and specialized than those in China. From the situation in Japan, the types of products sold in vending machines in Japan currently cover catering (fried chicken, French fries, etc.), snacks (potato chips, chocolate, etc.), beverages (cola, mineral water, etc.), daily necessities (umbrellas, socks, cosmetics, etc.), electronic products (earphones, batteries, phone cases, etc.), books (magazines, newspapers, books, etc.). In China, the vending machine market is far from reaching Japan's development level, but the evolution of the domestic vending machine business is obviously much faster than Japan's. Although due to historical reasons, the domestic vending machine industry market is still mainly concentrated in the food and beverage sector, from the emergence and rapid market development of professional equipment such as adult product machines, milk machines, fresh food machines, orange juice machines, and boxed meal machines in recent years, the revolution in the field of vending machine products in China is also taking shape, and the diversification of sellable products in vending machines has begun to take shape.
Group deployment of vending machines is gradually becoming a new choice in the market.
Due to Chinese consumers' extreme pursuit of consumer services, single-product self-service will be difficult to meet consumers' service requirements in the next few years. Group deployment of vending machines will become the choice of more operating enterprises. According to research data from the Market Research Center of China Vending Industry Network, the number of products that can be sold in vending machines has exceeded 1,800 types. In the future, the field of self-service will become wider, and in terms of depth, more professional segmented markets will also emerge.
Group deployment of vending machines will become a new retail format and have the opportunity to challenge traditional convenience stores.
With the continuous enrichment of service product types in the domestic vending machine industry, group-deployed vending machines will become a new retail format. It is particularly worth mentioning that the business forms currently provided by vending machines are already highly close to convenience stores. Self-service vending has covered more than 80% of the services that convenience stores can provide, including traditional food, beverages, dairy products, small general merchandise, fresh food, etc. In recent years, cooperation with cold chain logistics, catering, pharmaceutical, and express delivery industries has made the vending industry increasingly close to the convenience store format. Shen Zheming, Executive Vice President of China Vending Industry Network and Deputy Secretary-General of the Self-service Vending Industry Branch of the China General Chamber of Commerce, said that after group deployment, vending machines will form a new retail format. With further changes in the market environment, more market service providers will realize the opportunities in the self-service vending field. When more service providers participate in group self-service, this new format is expected to challenge traditional convenience stores and will surely become a new investment and market trend within five years.
Source: China Vending Industry Network