Business Management

5 Ways to Get the Best Out of Product Merchandising

July 31, 2017 | By Terry Hovis

5 Ways to Get the Best Out of Product Merchandising

If you were to think about how you can increase revenue, implementing the right product merchandising plan in vending machines would be one the first answers you would come up with. Customers are almost always willing to pay for the right product, displayed at the right vending machine, and at the right time. That’s why merchandising in vending machines needs to be looked at carefully.

More often than not, vending machines cater to a captive audience like employees or college students. The only way to keep them coming back for purchases is with a tailored product mix and a periodic merchandising plan that leverages the most recent sales patterns. 

Here are 5 specific ways to get more out of your product merchandising initiatives:

  1. Capitalize on Gains: It might be a cliché to say, the product mix should stock more of what sells. But it couldn’t be emphasized enough. Studying past demand trends, assigning higher weights to seasonal fluctuations and analyzing more recent trends is key to building your best-sellers list. Another way to look at this if you are selling out of Coca Cola in your machine with only two rows then add another row of Coca Cola.  Sometimes you might have the right product, but having it at the right time, and enough, can become even more critical. 
  2. Eliminate Bottom-SKUs: There are several situations when personal choice takes over merchandising of a vending machine. Sometimes, we might hold onto our personal preferences when creating a product assortment. For example, your preference for Butterfingers might not necessarily match consumer preferences. At other times, we carry past preferences (regional or seasonal) forward, without substantive data to prove a strong demand for the products. For example, well into the winter, you might continue to stock Gatorade or other popular sports drinks, but what may be missing is the energy drinks that tend to be on higher demand during darker times of the year. 
  3. Create a Margin-Driven Assortment: It might seem like a no-brainer to have a high-margin focused assortment plan, but considering vending machine operators spend 52% of their cost on products, the focus might be on inventory and cash turnaround rather than margin. More often than not, the fast-moving products might not necessarily bring in high margins to the operator. It is important to analyze by machine, products that are top margin-earners, the number of facings they get and also if they are getting placed at eye-level.  
  4. Analyze Geographic and Seasonal Trends: Product preferences can manifest in brand, volume or variant inclinations. Geographically, even though most vending machine operators might service within a state where preferences don’t change much within sub-routes, it is smart merchandising to tap into subtle preference changes and leverage them for better profits. Preferences can also vary based on the demographics of a location.  For example, a blue-collar factory location will have different purchase trends then a white-collar high-tech location. Being able to identify your demographic at a given location is key to helping identify trends.
  5. Create a Merchandising Calendar: Regularly revamping merchandising of your top selling machines can help drive more customers to your machines and thereby increase sales. Creating a calendar with routes, sub-routes, number of machines and days of the week/month they should be serviced can help organize your merchandising efforts. Analyze the impact of merchandising on sales by pulling up data before and after merchandising efforts to see lift in sales.

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Terry Hovis

Director of Implementation

With more than 30 years serving the vending industry, Terry has had experience working at a vending operation from the ground up and implementing technology to improve business processes. Today, he gets to use that experience to help customers overcome the fear and challenges of technology, so they can ultimately live an easier life with software.

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