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02 October 2018
Vending Machine Profitability
Photo: ponedelnik.info
Experts believe that in the near future the number of vending machines located in commercial buildings in Russia may significantly increase. Based on foreign experience, we know that vending machines can do more than sell coffee, contact lenses, or soft drinks. Vending machines can be used for books as in the United States, medicine as in Japan and China, or for something specifically Russian.
People have become accustomed to vending machines at commercial buildings in major Russian cities. Availability of coffee, drinks, and snack machines is considered a must. Vending machines selling contact lenses, pre-arranged flower bouquets, personal hygiene products, those that print instant photos, and game machines firmly occupy a specific market niche. However, foreign vending market is developing faster, especially in Japan and China, where you can find vending machines selling rice, bananas, medicine, or even neckties. In the United States and Europe, vending machines also sell wine and books.
“In addition, vending machines abroad are used to make and sell food such as french fries, cupcakes, sushi and rolls, pizza, and fresh bread. It is likely that Russia will soon expand the range of vending machines, if not to sell rice or bananas, but its own “domestic” goods and products,” Ekaterina Aridova, executive director of the Real Estate Management Department at Colliers International said. “The vending market is a relatively new trend in Russia, and it continues to grow,” Daria Sizykh, deputy CFO at FORTGROUP believes.
“We have a long way to go to catch up with the markets in America and Japan. The variety of options is still small, although new trends are gradually emerging. It is also worth noting that the “human-less" concept is becoming more common at our stores. Therefore, it is likely that in the future we will see a hybrid of both models.”
Experts are saying that there is no set limit for the number of vending machines at shopping centers, and it rather depends on the availability of space and the range of products on the market. “The key success factor for a vending machine is its location in the shopping center. It should be easy and convenient for the visitors to find it and use it. For example, it would be logical to place water on the way to the parking lot, so that customers could grab it “on the run”, or to find contact lenses near a pharmacy,” Ekaterina Aridova said.
According to Daria Sizykh, rental rates for vending machines are stable. Rates for entertainment and gaming machines have not changed either, and these machines stay popular among visitors. “However, the situation with payment terminals is somewhat different,” Daria Sizykh noted.
“Due to the expansion of online banking capabilities, the number of terminals has not increased. Moreover, in some cases the number of terminals is decreasing. Customers prefer to use their smartphones for these operations. In the not so distant future, the number of payment terminals will significantly drop. ”
In general, shopping malls charge vending machines operators higher rental rates than regular stores. These machines occupy no more than two square meters, and their profitability is not affected by the seasonal factors and is not dependent on the salaries regular stores have to pay their employees.
“In Moscow, rental rates depend on the success of a particular commercial property, and can reach up to 50,000 rubles per month for one vending machine,” Ms. Aridova said. According to Ms. Aridova, return on investment for a vending machine is directly related to the amount of traffic in a particular location. The pay off can take up to 1 or 2 years from the moment of installation.
Aleksey Korenev, a FINAM analyst, believes that the most profitable vending machines are those, that sell coffee. They cost between $1,800 and $5,000 depending on the number of functions, the initial loading, and necessary maintenance. “Vending machines that sell soft drinks and snacks are very profitable (their cost is comparable to the cost of coffee machines but does not require a water supply by the vendor). All of those machines can pay off within 5 to 10 months. Vending machines selling contact lenses that have become popular lately, are paying off a little bit slower. If a vending machine is not beginning to pay off within a certain time period, it is a good sign that the location was chosen incorrectly, and a new location should be chosen for a vending machine. Mobility and ability to move equipment quickly is one of the most attractive features of vending machines and the reason for popularity of this type of trade, ” Aleksey said.
Roman Rusakov, Dmitry Manylov
“In addition, vending machines abroad are used to make and sell food such as french fries, cupcakes, sushi and rolls, pizza, and fresh bread. It is likely that Russia will soon expand the range of vending machines, if not to sell rice or bananas, but its own “domestic” goods and products,” Ekaterina Aridova, executive director of the Real Estate Management Department at Colliers International said. “The vending market is a relatively new trend in Russia, and it continues to grow,” Daria Sizykh, deputy CFO at FORTGROUP believes.
“We have a long way to go to catch up with the markets in America and Japan. The variety of options is still small, although new trends are gradually emerging. It is also worth noting that the “human-less" concept is becoming more common at our stores. Therefore, it is likely that in the future we will see a hybrid of both models.”
Experts are saying that there is no set limit for the number of vending machines at shopping centers, and it rather depends on the availability of space and the range of products on the market. “The key success factor for a vending machine is its location in the shopping center. It should be easy and convenient for the visitors to find it and use it. For example, it would be logical to place water on the way to the parking lot, so that customers could grab it “on the run”, or to find contact lenses near a pharmacy,” Ekaterina Aridova said.
According to Daria Sizykh, rental rates for vending machines are stable. Rates for entertainment and gaming machines have not changed either, and these machines stay popular among visitors. “However, the situation with payment terminals is somewhat different,” Daria Sizykh noted.
“Due to the expansion of online banking capabilities, the number of terminals has not increased. Moreover, in some cases the number of terminals is decreasing. Customers prefer to use their smartphones for these operations. In the not so distant future, the number of payment terminals will significantly drop. ”
In general, shopping malls charge vending machines operators higher rental rates than regular stores. These machines occupy no more than two square meters, and their profitability is not affected by the seasonal factors and is not dependent on the salaries regular stores have to pay their employees.
“In Moscow, rental rates depend on the success of a particular commercial property, and can reach up to 50,000 rubles per month for one vending machine,” Ms. Aridova said. According to Ms. Aridova, return on investment for a vending machine is directly related to the amount of traffic in a particular location. The pay off can take up to 1 or 2 years from the moment of installation.
Aleksey Korenev, a FINAM analyst, believes that the most profitable vending machines are those, that sell coffee. They cost between $1,800 and $5,000 depending on the number of functions, the initial loading, and necessary maintenance. “Vending machines that sell soft drinks and snacks are very profitable (their cost is comparable to the cost of coffee machines but does not require a water supply by the vendor). All of those machines can pay off within 5 to 10 months. Vending machines selling contact lenses that have become popular lately, are paying off a little bit slower. If a vending machine is not beginning to pay off within a certain time period, it is a good sign that the location was chosen incorrectly, and a new location should be chosen for a vending machine. Mobility and ability to move equipment quickly is one of the most attractive features of vending machines and the reason for popularity of this type of trade, ” Aleksey said.
Roman Rusakov, Dmitry Manylov
