Investors And Their Vending Machines

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Think automation is a thoroughly modern problem? This historical article gives a fun glimpse back.

It's enough to make a salesman shudder. Wherever you go, the persuasive smile of a clerk and the pleasant thank-you of a cashier are being replaced by the blank, chrome stare of vending machines.

Whether you miss the old, personal, human touch or not, it's pretty clear that not only is automatic merchandising here to stay, it also has a huge growth potential. This is not surprising in view of the business world's ever increasing interest in achieving maximum merchandising with minimum handling cost.

The new automatic vending device removes the ceiling of 99 cents which formerly limited the use of automatic vending machines. This new paper currency changer can be used in every merchandising situation which involves portable merchandise. It would reduce unit selling, administrative, handling and inventory costs.

An added advantage of an automatic vending machine is the curtailment of pilferage both by customers and employees, a very significant retailing expense. This substantial cost reduction would improve revenue carry-through in an industry noted for its low profit margins, thereby motivating the speedy adoption of the bill changer by a great host of retailing merchandisers. Therefore, expert analysts have described the automatic venders as opening an entirely new era of merchandising to the automatic vending machine industry.

Still in its infancy, the automatic vending industry now accounts for only $2.4 billion or about 16 percent of the whole merchandising volume estimated at $40 billion annually for the United States alone.

Even the less romantic segments of the vending machine business are fertile fields for growth. Total vended sales volume has grown from $30 million in 1925 to $2.4 billion in 1959.

"Vending machine manufacturers and operators," said Mark C. Glad of Cohen, Simonson & Co.. "Are finally receiving acclaim by Wall Street investors as a growth industry after years of disregard. The big change in attitude is largely attributed to the innovation of coin and bill changers which have opened innumerable new localities of operation and markets in food and merchandise hitherto never fully realized as practical much less possible."

During the past decade, sales of goods through vending machines increased by 156 per cent, or at a compound annual rate of nearly 10 percent. By comparison personal consumption expenditures for nondurable goods rose by only 52 percent, or at a compound annual rate of 4.3 percent.

The growth in automatic merchandising has been largely due to the rising cost of labor, which has made machine merchandising the most economical form of distribution. Other contributory factors include growing public acceptance of the self-service principle, advances in packaging methods and the significant technological advances which have opened immense new markets for the industry.

One such market was opened, for instance, by Rudd-Melikian, Inc. which was called by Hugo Kappler of Boenning & Co. a "creative" company, with its Brew-A-Cup coffee machine being a "revolutionary" concept in the vending industry.

Especially promising is the growth of meals by machines, which have become the hottest item in the food service industry. The most advanced area at present is the factory. However, the idea of meals by machine is gaining in popularity among hospitals, offices, schools, etc. It may not be long before this trend makes extensive inroads into public restaurants. The development of the hot platter machine, together with other food vending machines, is ushering in an era of automatic cafeteria.

While the details have changed, automation continues to constantly effect industries throughout the economy. Stay ahead of the curve by keeping your ear open for new trends in automation, and you just may spot the next big thing.

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