Vending machines already reach ROI at their acquisition
Interview with Constantin Joannou-Römer, Managing Director Vensafe in Germany
In 2009 Vensafe from Norway sold 1,000 vending machines in Europe worth over 14 million Euros to retailers. According to Constantin Joannou-Römer there are 500 machines located in Germany at this point. The consumers do not receive their merchandise until they have paid at the checkout on their way to the exit.
This is done to prevent theft – but Joannou-Römer mentions even more good reasons.
Since when have you been an exhibitor in Düsseldorf and how has business developed since then?
We have been an exhibitor since 2005. Ever since, we have grown in double-digit percentage numbers each year. In every country we are active in, we have external service partners. That’s why Vensafe only has 40 associates in Europe, 10 of which are located in Germany. We manufacture together with external production facilities in Norway and Sweden.
What are the benefits of vending machines?
Theft protection from customers and co-workers is number one. Aside from that there are also other important arguments like the reduction of inventory. The entire range of products does not have to be on display at every checkout. Another point is the open checkout area: retailers don’t need set-ups at the cash register, like for cigarettes for instance. This way you can showcase more impulse commodities at the POS. And last but not least our machines also serve to protect minors: children and adolescents cannot get to cigarettes and tobacco products any more.
Which products are particularly well suited for vending machines?
Cigarettes, tobacco, razor blades, condoms, batteries and other products. The opening would also be large enough for tobacco boxes, off-the-peg clothing, cell phones or MP3 players.
How do customers react to this type of security system?
When you mention protection of minors, 99 percent of people have a positive reaction. The damage that retailers suffer annually from theft is not something the customers are very aware of.
Are you specifically referring to retailers in trouble hotspots?
No, although the biggest benefit is for the operator in these areas.
How important is the German market?
Germany ranks midfield with us. Vensafe is particularly strong in its domestic market Norway. The public sale of cigarettes is illegal there. Sweden is also a very important market for us.
Are your vending machines located at small retailers, or rather at large chain stores?
The independent retailer with 300 to 6,000 square meters of sales area has the larger benefit, because he calculates margins. Chain stores realize the added value not until after some intense observation, because they calculate sales volumes. Among our large customers in Germany are Edeka, Rewe, Penny, Reichelt, Wasgau AG and Nahkauf. You can also find Tegut Vensafe at the “Markt der Zukunft“(Market of the Future) at Edeka in Hamburg. But we are also located at individual merchants Edeka Simmel with self-scanning checkouts, Edeka Zurheide, Bonus Stuttgart, various Nahkauf operators, Cap-Märkte (markets) and others.
How high is capital expenditure and when do you reach ROI?
Retail invests between 10,000 and 30,000 Euro – depending on the equipment and number of checkout counters. The instant ROI can be reached by reduction in inventory, in the case of tobacco products per checkout that’s around 5,000 Euro. If you only measure it by savings due to prevented theft, it lies between 12 and 36 months.
Customers want to touch the products, looking at them leads to impulse shopping. Are pictures enough to entice a purchase?
It’s true: sales volumes decrease by about 9 percent on average, but margins increase due to theft prevention. Trained checkout staff can compensate for decreases very well. Product cards that customers place into their shopping cart have proven of value for visual merchandising. Customers know the products and it all works just like the regular shopping process. In the end, the cashier is not scanning the actual product, but the card instead.
With the product card, the buyer receives his merchandise at the output device. The customer can insert the product card into the machine or place it into his wallet, serving customer retention. If you always buy the same products for your partner, you don’t always have to ask for the right brand.
Do brand manufacturers contribute in acquisition costs?
Yes they do. For instance, we have collaborations with all cigarette distributors for set-up fees and product card delivery.
Does Vensafe offer rental solutions and are they in demand?
Leasing is significantly more attractive than a rental option, which we also offer in all the different types of course.
When you pay with your cell phone or credit card, you don’t need to handle cash. Will we also have Vensafe vending machines in pedestrian areas, shopping centers or at self-service gas stations in the future?
We are linked to a network and work with the POS’s inventory control system and are able to take advantage of all functions like fingerprint, card, cell phone, self-scanning and other systems. Several systems already have worked for years with a Vensafe. Food retailing, DIY and discount stores still remain our core areas.
Where do you see the growth potential for your market?
We already count tobaccoland, which has a full-service concept for tobacco products in Germany, among our commercial partners. In 2011, Germany will have the largest growth potential.
What can trade fair visitors expect from Vensafe at the next EuroShop?
We have reworked the design of our vending machines and will present ideas for visual merchandising. Multi-ticket, new software and other items will guarantee retail sellers larger profits with easier handling. Multi-ticket means various products with different number of items on one sales slip.
Interview: René Schellbach, EuroShop.de