I love the convenience of a vending machine. With the vending machine, I can purchase what I want simply by pressing the button after inserting coins or notes. And I am fascinated each time the product pops out of the machine like magic. Furthermore, I won’t be stalked or pestered by commission-driven salespeople.
I’ve experienced vending machine culture, particularly when I was in Japan. Despite the language barrier, I could order my bowl of ramen at ease just by pressing the order button of the restaurant’s vending machine.
Japan’s ubiquitous vending machines are truly astonishing. At every alley, block and train station in Tokyo, there are all sorts of vending machines, selling everything from cigarettes, beverages, snacks, candy, bananas, crepes, rice, eggs, soup, hot food, ramen, sake, flowers to peculiar products like underwear and puppies!
As stated by Japan Vending Machine Manufacturers Association, there exists around one vending machine per 23 people in Japan. And the annual sales of these 5 million vending machines across Japan total more than $60 billion.
In Singapore, these vending machines are also gradually or about to change the local retail scene.
In recent years, vending machines of a myriad of varieties have appeared in our neighbourhoods, be they vending cafés, newspaper vending machines, or vending machines called The Ma2 Shop, which replace the traditional ‘mama shop’ in void decks of Housing Board flats.
And even car vending machines! Used car seller, Autobahn Motors, has just opened a futuristic 15-storey showroom, the world’s tallest luxury car vending machine, located at 20 Jalan Kilang.
Advantages, Challenges and Opportunities
“We felt that traditional retail is dying with high rent and challenges finding good employees, so we wanted to give vending a try. Automated retail is definitely the way to go.” – Director of Kalms (Singapore) Pte Ltd, Mr Azan Tengku
Not only are 24-hour operational vending machines a more convenient option for consumers, but they also proffer a much easier route for sellers to expand their product’s reach minus the rental and manpower costs—problems faced by both retailers in Japan and Singapore.
In the case of Japan, vending machines are alternatives retailers turn to, to solve labour problems (scarce and costly labour) and astronomical real estate prices due to dense population density.
Vending machines also work in Japan because of its low vandalism and property crime rates, writes a Business Insider article.
Similar to Japan, Singapore retailers face high labour and rental costs, as well as low vandalism and crime rates.
In the case of Singapore, a 53-year-old Singaporean’s premium gift brand, Kalms, has closed down all stores to focus on automated vending machines.
I visited some Kalms’ vending machines situated at International Plaza, and was amazed at how premium gift items such as teddy bears, stuffed toys and jewellery could be purchased with the touch of a button.
Director of Kalms (Singapore) Pte Ltd, Mr Azan Tengku, told Epoch Times: “We felt that traditional retail is dying with high rent and challenges finding good employees, so we wanted to give vending a try. Automated retail is definitely the way to go.”
Although each machine costs around $10k to $15k in accordance with the configuration, Mr Azan feels that there is an upward tick towards automated retail due to high rental cost and scarce labour.
Besides a contract with the property owner bonded with a sum of the land rental fee, the other cost for vending machine retailers is the electricity bill. Other than that, it’s a pretty straight-forward business investment compared to brick-and-mortar stores. It only requires a periodic visit from the operator to replenish the stock and collect the cash.
“It allows for a smaller retail space and doesn’t rely on manpower,” said Mr Azan.
“The system is highly automated and full of analytics, at least our machines are. So this reduces the risk of any human error and predictive work in retail,” he added.
Currently, Kalms owns more than 30 machines islandwide, and 100 to 150 machines are in the pipeline by year end.
These customised machines, which are designed in Singapore but manufactured overseas, made up 30% of Kalms’ overall revenue. Presently, Kalms is leveraging on digital media to drive its online business and vending machines.
But, unlike Japan, where vending machines are integrated into Japanese society and play a major part in Japan’s retail scene, Singaporeans aren’t accustomed to these machines.
“There is still a learning curve for consumers. I would say we are still a year or two ahead of full consumer acceptance,” he explained.
Despite the challenge, he is still optimistic that the Automated Retail Machines (ARMS) could help the company achieve 100% domination of the market share.
For Autobahn Motors, sales have increased by about 30%, thanks to the implementation of a cutting-edge showroom.
Autobahn’s general manager Gary Hong told The Straits Times that people dropped by just to snap photos of the innovative “luxury car vending machine”.
Vending Machines—Retail Trend of the Future?
“Anything is possible to dispense in a vending machine. Recently, we’ve even heard of chilli crabs being sold in vending machines.” – Director of Kalms (Singapore) Pte Ltd, Mr Azan Tengku
Mr Azan foresees Singapore overtaking Japan in the vending machine culture in “just a matter of time”.
Mr Azan, who graduated Summa Cum Laude with a degree in Finance from Michigan State University and has over nine years of experience in Finance, Business Consulting and Project Management, thinks that vending machines would replace brick-and-mortar stores in Singapore’s future retail landscape.
“It’s not a question of ‘will it’? It’s a question of ‘when’?” he opined. “Retail jobs will always be around, just that it will be for higher end items where human interaction is needed.”
Singapore’s vending machine infrastructure may be just picking up, but Japanese retailers are already thinking beyond selling.
Japanese beverage company Dydo Drinco’s president, Tomiya Takamatsu, told CNN that the company intends to make the vending experience more fun by allowing customers to earn points for prizes using an app on their smartphones. In addition, when the smartphones are linked to vending machines, retailers could mine data about consumer behaviour.
Japan, in the vanguard of automated vending machines, is also deploying facial recognition technology to recognise customers’ age and gender to recommend products to the buyers. Also, multilingual machines and a pre-order function are also on its plan to attract tourists and on-the-go commuters.