'V' commerce: vending machines selling diapers, cosmetics - East Valley Tribune: Business

'V' commerce: vending machines selling diapers, cosmetics

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Posted: Wednesday, January 12, 2011 3:40 pm

SAINT PAUL, Minn. - Karla Rendon stood in front of the vending machine at Maplewood Mall in Saint Paul, Minn., staring at an assortment of items -- diapers, baby wipes, sippy cups, bottles, grape juice and diaper rash ointment.

Just what a mother shopping with her 13-month-old baby needed.

"I wish there had been one of these when I was at the Mall of America," said Rendon of Maplewood, recalling a recent excursion with daughters Makayla, 5, and Daisy, 13 months, to the Minnesota mall. On that day, Rendon had forgotten Daisy's bottle.

The vending machine, called Diaper Bag Basics, is the brainchild of two Twin Cities mothers and debuted at Maplewood Mall about two weeks ago. It's one of the many twists in the evolution of vending machines as companies embrace the potential of "v-commerce."

"There's a significant trend, especially for an already established retailer," said George Van Horn, senior industry analyst with market research firm IBISWorld. "They have a brick-and-mortar, they have mail order, they have a website, so the vending machine itself is just one more extension of the brand."

Using vending machines, retailers can track sales and inventory online, avoiding excessive trips to restock inventory and helping determine hot sellers. More machines have touch-screen shopping, and some companies are testing wireless technology to allow consumers to make a vending machine purchase with a mobile phone.

The timing couldn't be better for the $11.3 billion vending machine industry. More than 90 percent of vending revenue comes from snacks, candies and beverages, but those sales have been declining in recent years. Sales at machines that sell non-food products (excluding cigarettes) have been growing, according to IBISWorld.

Already, vending machines are used to sell everything from $2 shaving kits to $400 electronics, building familiarity with consumers. It's not difficult to imagine more shoppers embracing the utility of making a purchase through a vending machine, especially when so many are comfortable shopping online with a computer.

Robbie Blinkoff, a consumer anthropologist and managing director of Context Based Research Group in Baltimore, understands the draw. "Anything that's moving toward vending makes sense for consumerism," he said. "It's quick and it's done."

Diaper Bag Basics owners Steph Hughes and Jen Boog dreamed up the idea out of their own experience being caught without a diaper or snack at inopportune times, Hughes said. The friends and stay-at-home mothers, each with two children, worked with Innovative Vending Solutions, based in Dayton, Ohio, which had designed a similar vending machine in other markets.

Jeff Thibodeau, Innovative's vice president of operations, said his company launched during the recession and has grown to include machines at the Harley Davidson Tourist Center and airports, as well as bars and restaurants that want to sell branded hats and T-shirts but don't want to staff a gift shop.

"A lot of companies are closing brick-and-mortar stores, so they're more open to machines than in the past," Thibodeau said.

Best Buy first launched its Express vending machines at a handful of airports in August 2008 and has continued to expand what it terms "automated retail" into hospitals and businesses, said spokeswoman Carolyn Aberman.

Wal-Mart put up some machines earlier this year to sell small electronics, and J.C. Penney sells Sephora cosmetics inside its stores. Macy's was early to market in May 2008 when it put e-Spot machines in 400 stores to sell such items as iPods, GPS units and headphones.

Innovative Vending partnered with MainGate to open the nation's first licensed NFL vending machine last fall at the Mall of America, which is intended to complement the Vikings Lockerroom store and kiosk already in the mall.

Vending machines have downsides. They're labor intensive, often with low profit margins that can't be passed on, especially to the post-recession, value-conscious consumer.

For some, it takes a lot of nerve to stick a credit card into a machine to buy a cell phone or digital camera that costs hundreds of dollars. And if things go wrong, there's no one to complain to.

And Blinkoff, the anthropologist, said his research shows that the recession has made people "hungry for connecting, and building up a sense of the social." Vending machines don't do that.

"It's the ultimate transactional relationship," he said. "It shows the commoditization of our lives."

But so long as there's a captive audience with ready cash seeking a convenient purchase, vending machines will have a place.

As for Diaper Bag Basics, the owners say early sales at Maplewood Mall are strong. Baby bottles were a surprisingly strong seller, Hughes said.

The goal is to open three more in the coming year. Their sights are set on the airport, a zoo or museum, and, Rendon may be pleased to know, the Mall of America.Jackie Crosby

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