Machines muscle in on retail business

WIRED ON FRIDAY/Carol Power: Local stores have new competition - giant vending machines that provide everything from milk and eggs to DVDs at the touch of a button.

I'm sure you all know the feeling. Someone phones to say they'll pop around to see you in a minute or else they arrive unannounced at your door. You have no milk, sugar or biscuits in the house to offer them. Your only solution is to run to the local newsagent, or if you're in the US, to get in your car and drive to the nearest convenience store.

Well what if that convenience store was a standalone vending machine, stocked with everything you might need and open 24 hours a day? While Europeans are familiar with automated convenience stores, the first opened in the US only two weeks ago. It's called Shop 2000 and sits in the trendy Adams Morgan neighbourhood of Washington D.C.

Shop 2000 was created by Hettie Herzog, president of Automated Distribution Technologies in Exton, Pennsylvania, who was inspired by a grocery vending machine she saw in Belgium known as Shop 24, the automated convenience store. Shop 2000 can hold 200 products, less than a tenth of the stock found in the regular convenience store and it also occupies a lot less space. Shop 2000 occupies around 200 sq ft feet while the typical convenience store takes up 2,500 sq ft. It's 18 ft wide and stocks a variety of goods - everything from milk and eggs to DVDs. How receptive Americans will be to these pumped-up vending machines remains to be seen since the most frequently requested items at convenience stores are still the four Cs as they are known in the trade: candy, cigarettes, cold drinks and coffee.

Shop 2000 offers customers a touch screen interface and accepts coins, bills, credit cards and debit cards. Up to 10 different items may be dispensed in one transaction in less than four minutes.

The operators who maintain the machine have real-time access via a modem so they can track sales remotely, check on inventory and cash levels locally or from headquarters. If a machine stops or has a problem, it will call the operator's pager or send him an e-mail.

"The Shop 2000 is a unique product which effectively addresses some real concerns in the convenience industry such as space restrictions, labour availability and shrinkage," said Ms Herzog, president and chief executive of Automated Distribution Technologies. "It is a product that complements the automated fuelling technology the petroleum industry is implementing." Mr Jeff Lenard, director of communications at the National Association of Convenience Stores, which represents the 125,000 convenience stores in America, said a test of a machine last year at a petrol station in York, Pennsylvania, did not provide enough business. But the machines might succeed in high-destination spots as America increasingly moves towards becoming a 24-hour society.

About 9.7 million Americans work full-time evening or night shifts, according to the Department of Labour's 2001 statistics.

Retail outlets such as Home Depot and Wal-Mart have opened 24-hour locations and many shops now offer extended hours of operation.

A study by the Society for Human Resource Management predicted that by 2006 there would be 151 million workers needed in the United States and only 141 million potential workers to fill those jobs across all industries. Often the jobs most difficult to fill are for capable sales staff.

In 1999, the American convenience store industry posted $234 billion (€238 billion) in sales with $134 billion in motor fuel sales. Increasingly, convenience stores in the US are offering freshly prepared foods such as sandwiches and salads. Shop 2000 offers either a refrigerated or non-refrigerated machine.

Mr Lenard can see two opposing trends emerging in the convenience industry: first, a trend to minimise labour input, whether through automated teller machines or ticket kiosks at airports, and second, an increased demand for interaction with people.

"As more people work from home or telecommute, they want this human interaction," he saidys.

While consumers may find it is not the same experience dealing with a machine rather than a person, the Shop 2000 concept has its advantages: if you do run out of toothpaste at 3 a.m. and want a chicken sandwich you can pop out to the vending machine.