How Unattended Retail Is Getting Smarter

The rise of smart vending machines, driven by data and contactless payments, has the power to upend the way we shop, building loyalty and speeding adoption of contactless payments along the way. According to Will Byrne, CEO of Worldnet Payments, the kiosks and smart shelves that are gaining traction across any number of commerce and retail settings may even shift the employment picture a bit.

In an interview with PYMNTS’ Karen Webster via podcast, Byrne noted that the smart vending space will grow 12 percent to 14 percent over the next couple of years. Along the way, retailers are leveraging, and will continue to leverage, the latest payments technology developments to maximize revenue, while maintaining security of the transactions themselves. The tailwind to growth is that there is “a real, tangible benefit to both the consumer and the retailer,” he said, terming it a “win/win for both of the fundamental parties in the transaction.”

He noted a recent survey that found 50 percent of millennials, 40 percent of Gen X and 20 percent of baby boomers have indicated they are “more likely” to visit stores with intelligent retail or automated checkout facilities than standard retail outposts. “This has become an irreversible trend,” he said.

Along the way, even the definition of unattended retail has expanded to embrace all manner of payment points and payment options, spanning plastic and mobile app. Tokenization and EMV chips enhance the ability to safely transmit payment details and personal data, helping to create a virtuous circle for unattended retail.

“Tokenization enables customers to generate payments across multiple delivery channels from the same merchant, whether that’s in-store, online [or] across a range of devices,” said Byrne, noting that enhanced security helps to eliminate operator error and cut down on theft.

The Changing Retail Footprint

The movement toward contactless and unassisted — and, crucially, frictionless — commerce means various small-store formats are changing too, said Byrne. Amazon Go may have grabbed its share of headlines, but there are scores of similar, if less immediately heralded, initiatives dotting the retail landscape, pointing the way toward customized retail environments.

Byrne told Webster that such technology has been introduced into some CVS Pharmacy locations, which — depending on immediate surroundings, ranging from hotels to college campuses — lets the company tailor inventory dispensed through unattended retail conduits.

Elsewhere, he noted, data has shown that kiosks can boost the top lines of businesses forward-thinking enough to deploy them. Fast food giant McDonald’s found that sales at its own in-house, stand-alone kiosk devices (for placing orders) are up 15 percent versus over-the-counter transactions.

As unattended retail notches an increasing footprint, said Byrne, other use cases will also emerge. In one instance, a roadmap lies with mass transit (and the eventual phaseout of ticketing). For example, in the U.K., contactless payments have quickly caught on across debit and credit cards.

As recounted in the April Unattended Retail Tracker, done jointly between Worldnet and PYMNTS, the estimated compound annual growth rate (CAGR) of the global transportation ticket vending market from 2019 to 2024 stands at 3.9 percent. The mass transit example, he said, offers a “well-established success story, which can be repeated in effect by any transport operation, anywhere across the globe.”

In addition, said Byrne, “we are seeing real opportunities in areas like laundromats,” where benefits accrue as operators shift from labor-intensive (and expensive) maintenance of coin-based hardware. He noted that software solutions also improve the customer experience through marketing schemes and loyalty promotions.

The days of the coin- and bill-operated laundry machine are numbered, it seems. Not much longer will consumers have to trudge forth with pockets stuffed full of hard currency in a bid to extract drinks or snacks, or even to do a quick load of socks and shirts at the local laundromat. Jammed slots and frustration will be a thing of the past.

An Employment Shift, Too

As the technology tied to unattended retail changes, and as more data flows and is captured during the transactions themselves, so too may the human component behind the scenes. Byrne stated that the vending machine industry employs large volumes of people today, where jobs are centered on low-skill, manual processes, such as cash-counting, vending machine maintenance, or stocking and restocking inventory.

As he stated, “there’s no question that automating those processes will eliminate the majority of those unskilled, manual tasks, but, in [their] place, [automation] will provide a higher level of employment for people who are technically savvy.” He predicted that there will a growing need for business analysis, focused on capturing, collating and analyzing the data that automated systems provide.

As unattended retail has shown, the value inherent in the payments industry — specifically unattended retail — is “at a position now where it’s no longer about just the transaction, … but is based on all of the information that goes with the transaction. … I think the pace of that evolution is going to increase in scale and complexity over the years ahead,” he told Webster.