Sep 14, 2007

It's Come to Vending Machines for High End Consumer Electronics

In a sign of just how commoditized consumer electronics retailing has become, grocer Stop & Shop is implementing a new vending machine-based retail format for new high end consumer products.Vending machines?

.... According to Progressive Grocer, Ahold’s US chain Stop & Shop is testing five instore vending machines offering high-end portable electronics and accessories, or premium skin care products. The vending kiosks featuring robotic arms that carefully pluck and dispense the expensive iPods and face creams, are from San Francisco-based Zoom Systems. Each store in the test boasts a Proactiv Solution skin care kiosk, and a consumer electronics kiosk with iPods, headphones and other electronics items.

"We hope our shoppers will enjoy the ease of finding these items -- not usually available at a supermarket -- at a great value," noted Stop & Shop director of new ventures Scott Forbes in a statement. ..."

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An excellent read on the development of kiosk retail formats for new high-end consumer consumer products is expressed by David Polinchock at Brand Experience Lab:
"...the key to success in harnessing technology for marketing or sales is to realize that technology has to be focused on creating a better experience for the consumer, not for the retailer. Audiences have come to expect dynamic environments in everything that they do. They watch content when they want to. They receive information when they want it. The have bought into just-in-time marketing. When they are bored with our content, they make
their own. So as you look at the technologies on the retail horizon, think about how you could use them to create something more unique for the consumer.
Dan Pink, writing for Yahoo Finance, recently had this to say: "Today, utility is abundant. We have more products and services than we can handle, and most function just fine. To stand out in a crowded marketplace, sellers must make a dramatic leap in utility-or stand out in some other way. They can try to compete on price, but that usually ends in a downward death spiral. So the alternative is to compete not on left-brain attributes like price and functionality, but on right-brain qualities such as emotion, meaning, and look and feel...."
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The strategic analytical error will occur if the kiosk program selling consumer electronics at a grocer achieves revenue projections and pundits conclude that it demonstrates consumers care most about price and convenience. Not neccesarily the case. Sure, a segment of consumers will always buy on price, no matter what a retailer tries to do to innovate.
But the success of a "consumer electronics kiosk in grocery" format is more likely the result of the grand commoditization of retailing and the overall level of 'sameness' across consumers' options of where to shop and buy. In the abscence of any compelling higher-value experience environments, a smart consumer will always make their decision on price. In that world, a kiosk is a stunningly effective and efficient answer.

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