Retailing: The Ubiquitous Salesman

Few Americans can move very far from home these days without running into a squat, silent (except for a few rumbles) salesman who has become an unbelievable success by indulging its customers’ penchant for convenience, impulse buying and gadgetry. The salesman is the ubiquitous vending machine, before which Americans stoop, bow and jingle coins as if it were a roadside shrine. The machines usually come through, too, and with less fist-pounding than ever before. Some 4,500,000 of them—or one for every 43 Americans —now dispense everything from gum to gardenias to greeting cards at the drop of a coin.

The vending machines also dispense a very nice profit, as the industry’s owners testified in Chicago this week at a meeting of the National Automatic Merchandising Association. The association’s prediction: the industry’s 1964 sales will rise 9%, to $3.5 billion. Some 6,200 companies now blanket the field, but vending is dominated by eleven major manufacturing or operating companies—and each of the eleven expects higher profits this year. Says Universal Match Corp. President Thomas B. Donahue, whose company is the leading cigarette-and candy-machine supplier: “Vending is more and more a key part of America’s mobile image. The industry has never been in better shape.”

Hoodlums & Hopefuls. Gum Maker Thomas Adams introduced vending 76 years ago with penny machines on New York City’s elevated platforms. The industry blossomed in World War II, with jerry-built soft-drink and snack dispensers in three-shift war plants. But postwar prospects attracted underworld hoodlums and undercapitalized hopefuls. The industry was overbuilt, and fell into such bad repute that long-range credit was difficult to obtain.

Vending as an industry was saved by widespread shakeouts, new directions and new types of machines. Many small operators dropped out, unable to compete for locations or cough up $2,000 for a single, modern coffee dispenser. In the last five years, 400 mergers have taken place. Meanwhile new mechanical marvels have lured more nickels and dimes. Coffee, the most profitable product (2.8 billion cups last year), percolated higher sales and earnings with the introduction of single-cup, variable-strength mixers. Soft drinks in cups, an impulse purchase, boomed with the introduction of cracked ice to the machines. Cigarettes, the largest sales item (4.2 billion packs last year from 863,000 machines), actually gained from the cancer scare: wishful smokers stopped carton purchases, tried to cut down with one-at-a-time packs from machines.

150,000 Cows. Universal Match this week unveiled a machine that deals out 22 brands of cigarettes at chest level, thus eliminating stooping. At Wheaton, Md. last week, the U.S. Post Office opened a vending-machine post office in a shopping center, complete with bill changers and stamp, envelope and postcard dispensers. Vending companies are working to crack the softgoods market, which, apart from hosiery and handkerchief machines, has so far resisted broad mechanization.

The biggest trend in vending is toward more involvement with food other than the usual cookies and soft drinks. Convinced that customers will never go for automatic full-course meals, many vendors have recently acquired catering operations, tying in manually served main dishes with vended soup, salad and dessert. The vending industry is making huge strides in the $20 billion-a-year school-lunch field, where banks of vending machines have replaced hot meals in many high schools and colleges; this year, 107 Southern California schools converted from cafeterias to vending machines. The industry already has a machine that offers milk shakes, and another that serves hot pizza. Vendo Co. of Kansas City, the nation’s biggest supplier of machines, figures that its machines take all the daily production in ice cream, dairy products and milk of 150,000 cows.