Full text of Business Trends : Robot Retailing

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FRIDAY, NOVEMBER l, 1963

Prepared

in

the

Research

Department

of

the

FEUERJ\L RESER\IE BANK OF CLEVELJ\ND
Serving

the

Fourth

Federal

Reserve

District

ROBOT RETAILING
Traveling along today's modern highways, a
motorist can hardly fail to notice the growing
number of vending machines installed for his
convenience at such places as service stations,
restaurants or motels. Machines dispensing
refreshments or cigarettes are old acquaintances, of course. But lately their ranks have
been joined by numerous other coin-operated
vending devices competing for the motorists'
dimes and quarters. Ready for service at all
hours, they offer a wide variety of merchandise ranging from books and magazines to
toys (for children or dogs), toiletries and
crushed ice, most of which were formerly
available only during regular store hours and
at the expense of a detour through an urban
business district.
This innovation catering to the needs of
hurried travelers is, of course, merely one
special phase of a general trend toward un attended or "robot" retailing which, as trade
sources point out, is the logical continuation
of self- service in retailing. Last year, the
robots took in nearly $3 billion in small change.
Coin-operated vending devices have been
around for a long time. They appeared first in
Europe more than a hundred years ago but did
not make much headway against the then prevailing methods of retail selling. In our own
country the earliest vending machines date back
to the end of the last century. They were for

the most part simple little gadgets . which
dispensed a limited variety of offerings, such
as candy, nuts or gum; upon insertion of a
penny or nickel and a tug at a spring-loaded
lever. Railroad stations and similar places of
heavy pedestrian traffic were their most
frequent habitat.
Today's coin -operated vending machines are
vastly more sophisticated in design and more
versatile in application than the earlier models
and have found many new locations for plying
their trade. They bear witness to the industry's
improved know-how as to temperature control,
packaging and sanitary handling. Improved
change-making devices have broadened the
price range of items that can be handled by
machines and thereby have opened up new
fields of application for this method of selling.
Greeting cards and corsages, phonograph records and school supplies are among the many
non-food items sold through machines. Other
coin-fed gadgets will write flight insurance
policies, play the latest popular tunes, take
passport pictures or sell parking space for
our cars. Almost side by side we may find
machines that, for a handful of quarters,
will tumble our clothes in laundry or dry
cleaning drums for an hour and others that,
for a more modest fee, will give our small fry
a few minutes' illusion of riding on a jet plane
or a bucking bronco.

Broadcast by Gerhard Krebs, Economist, Federal Reserve Bank of Cleveland , over WGAR
Cleveland, Friday, November 1, at 7:45 p. m.


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Food and beverage items are still the mainstay of the vending industry, but all fields of
retailing are its ultimate goal. In some large
apartment buildings such daily necessities as
bread and milk can be bought from coin operated dispensers. Some of the most modern
apartment houses offer their tenants the convenience of buying the frozen ingredients for a
complete meal right on the premises, from
machines which usually are installed alongside
the coin-operated laundry equipment and which
may respond to coins or to a credit card.
The vending industry is following two lines
in expanding its activities. One is to place its
wares within the most convenient reach of
consumers, in old or new locations where
demand for particular items is anticipated.
This tends to compete with sales of the same
items by conventional retail outlets. Most of
the industry's efforts so far have been in this
area of the "convenience" items.
The industry's second aim is to convert
existing retail facilities to completely una trended vending procedures in order to bring
about the greater efficiency and lower operating
costs which are claimed for robot retailing as
compared with conventional selling methods.
This aspect is still in an experimental stage.
A few grocery or variety stores without any
sales personnel or floor attendants have been
launched to test the claims, but at least one of
the test stores in the grocery line has been
discontinued because of disappointing sales.
One store handling merchandise unsuitable for
machine vending is operated by an electronic
system with punched cards, matched against
numbered merchandise samples, to serve for
filling the orders from stock and preparing
the sales tickets. For the customer this is
quite similar to a mail order or catalog
purchase.
Public acceptance of machines selling readyto-eat food and refreshments has been quite
favorable. Dispensers of snacks in solid or


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liquid form, of course, are an unqualified
success ho h as to meeting a public demand and
yielding a profitable return. Some people
wonder, in fact, whether the installation of
coffee machines has created or merely solidified the coffee break as an American business
tradition.
The response to vended meals seems to be
divided, being most favorably with "captive"
customers, i.e., those in factories or offices
with no other eating facilities in the neighborhood. When competing with restaurants or
conventional cafeterias close by, the machines
rate second with many patrons. Disillusioned
operators ascribe this to the missing personal
touch and are falling back upon human hostesses
who are able to greet customers with a smile,
say " Thank you" and correct the occasional
disobedience of the robots.
The obsolescence of attended retail selling
appears to be less imminent than some advocates of robot retailing would have it, even
with an expected doubling in the volume of unattended sales over the next few years. Last
year's total of such sales amounted to less than
2 percent of all retail sales of non-durable
goods.
A large- scale shift to robot retailing- -aside
from making our present shortage of coins
more acute- -would affect retail employment by
reducing the number of sales employees and
increasing the number of people needed for
restocking and servicing the machines, with a
possible net loss over all. Such a development
could result in removing retail trade from the
list of "growth" industries in terms of employment--those which in recent years have
been able to absorb more than their share of
the expanding labor force. During the past few
years the rate of employment increase in retail sales has been lower than it had been ten
years ago. That deceleration reflects a general
spread of the prevailing self-service methods
rather than a conversion to completely una trended retailing.

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