Not Your Grandparents’ Vending Machine

An empty lobby wall or a quiet corner near restaurants or food courts might be just vacant space to some.

Not according to Alejandro Rodriguez. From his point of view, that blank slate could yield benefits for commercial real estate owners, aided by automated retail kiosks and machines.

“It’s a revenue generator for them in a previously unusable space,” Rodriguez told Connect CRE. “It also is an amenity that provides convenience.”

More than Candy or Drinks

Gonzalez is the Founder and CEO of Pharmabox and its subsidiaries, AmeriKiosk and SmartBox Retail. Launched in 2015, the companies have placed branded automated retail machines in airports, malls and other high-traffic areas.

Pharmabox machines offer CVS-branded over-the-counter products in transit stations, malls, college campuses and hotels, while AmeriKiosk automated retail units are in locations where traditional brick-and-mortar stores aren’t practical. Brands including Pandora, Owala and Hasbro sell their wares through the machines.

Meanwhile, SmartBox is in place to support loss prevention for display cases in big-box stores.

However, there are misconceptions about automated retail that still treat it as “vending machines.”

One is the appearance.

“Every time we go to sell, in the potential buyer’s mind is that traditional black thing with coils,” Gonzalez said. “They think it’s not going to look so great.”

Another is poor service, which Gonzalez said is a carryover from older vending-machine scenarios. When the older machines went out of service, there could be a wait for repairs. The reason is that the technicians might be responsible for multiple machines and might not be able to reach the broken one to fix it.

“So, many say they don’t want complaints from guests about out-of-service machines,” he said. “It’s all about the complaints.”

But today’s automated retail boxes are different. They’re more attractive. And if they break down, companies like Pharmabox send technicians out in a matter of hours. Furthermore, “95% of our problems can be fixed remotely,” Gonzalez said.  

Finally, there is the revenue. Gonzalez said there is an assumption that property owners might not make much money from vending machines. “Traditional vending has been known to generate $500 a month if it’s a good location,” he said. But a building owner might see only a percentage of that due to revenue-sharing agreements.

However, Gonzalez said that automated retail can generate a lot more, with building owners receiving 20% of the take. And while he can’t speak for other automated retail companies, he said that AmeriKiosk and Pharmabox placements are structured strictly on a revenue-share basis. The property makes no investment, and the operator covers installation, maintenance and removal and sends a check at the end of each month.

The automated retail operator (not the property owner) also handles compliance. Rodriguez said that covers ADA and UL certifications, as well as food safety rules for machines that sell food. Those rules require temperature-monitoring software and daily on-site cleaning.

“When handling food, we go through training, plus there are specific requirements involved,” Gonzalez said. “We need the right software and someone to monitor it. We keep to the regulations.”

Where do they fit?

As automated retail boxes are plug-and-play, the ideal area should provide about 18 to 20 square feet of floor space, a dedicated 15-amp, 110-volt outlet and plenty of foot traffic.

In terms of “where,” people are used to seeing drink and food vending machines in airports or office buildings. Gonzalez said automated retail works in other locations as well. “If your hotel guests are looking for medication and the gift shop is closed, having a Pharmabox with CVS products offers a lot of convenience,” he said.

Viable locations can also include casinos, amusement parks, train stations, hospitals and malls.

“When the mall thinks about the customers, they find that having a CVS box is helpful,” he said. “Some of those locations offer this as a convenience, or an amenity for customers.”

Meanwhile, an office building might provide automated coffee units and a CVS Pharmabox setup. And airports, which have struggled to hire since the pandemic (because their restaurants close by 10 p.m.), are also ideal locations for food distribution.

And at travel plazas, Amerikiosk and Areas USA rolled out a concept called Oasis Express: a rebranded space with 12 machines, including hot food, open 24 hours a day.

Looking ahead

Rodriguez expects the category to keep growing and to move into residential buildings including apartment and condo communities. To that end, his company has developed a self-serve dog-washing machine for apartment buildings that supplies soap, shampoo and a blower.

“I think it will be one of the largest industries in the country over the next five years,” he added. “It’s already growing pretty quickly.”

Rodriguez will give the keynote, “How Brands and Locations Win with Automated Retail,” on Dec. 15 at the Automated Retail & Kiosk Innovation Show, held Dec. 14-16 in Miami Beach, FL.

Photo: Aiempp147/Shutterstock.com