This dissertation has been 64—7067 microfilmed exactly as received
VANDEMARK, Vern Alvin, 1917- AUTOMATIC MERCHANDISING OF GROCERY PRODUCTS FOR OFF-PREMISE CONSUMPTION.
The Ohio State University, Ph.D., 1963 Economics, commerce-business
University Microfilms, Inc., Ann Arbor, Michigan AUTOMATIC MERCHANDISING- OP GROCERY PRODUCTS
FOR OFF-PREMISE CONSUMPTION
dissertation
Presented in Partial Fulfillment of the Requirements for the Degree Doctor o f Philosophy in the Graduate School of The Ohio State University
Vern Alvin Vandemark, B .S., M.A., M.S.
******
The Ohio State University 1963
Approved "by
Adviser Department o f A gricultural Economics and Rural Sociology ACKK0WL3SDQMEHTS
The author wishes to express his appreciation to the Automatic
R etailers of America Educational Foundation, whose award o f a fellow ship made this study possible. The development and conclusions of the study, however, are wholly those of the author, who assumes all re sponsibility for the content of this dissertation.
The author would also lik e to thank Professor Ralph W. Sherman for his counsel and guidance at every stage in the development of this study. Appreciation is expressed to Professors Elmer F. Baumer and
George F. Henning who read the manuscript and offered valuable com ments and recommendations. The generous assistance and cooperation received from a great many individuals and organizations, without which this study would have been impossible, is gratefully acknowl edged.
There is also need to mention the encouragement and moral support that I received from my wife, Joanne, and the continued interest and patience of my children, Susanne and John. Without the wholehearted support of my family, this study would have been most difficult, if not impossible.
i i CONTENTS
Page
ACKNOWLEDGMENTS ......
CONTENTS ...... i i i
TABLES ...... i*
ILLUSTBATION3 ...... x
Chapter
I. INTBODUCTION ...... 1
Purpose of the Study...... 1
The Need for the Study...... 3
Sources and Methods ......
Scope o f the S tu d y...... 5
Limitations of the Study...... 5
Organization of the D issertation ...... 7
II. THE HISTOBY CE VENDING ...... 8
Origin in Antiquity ...... 8
Early European Vending ...... 9
Vending Begins in the United States ...... 9
Modern Vending Begins...... 11
Vending Sales ...... 13
The Structure of the Industry...... 1^
i i i Chapter Page
III. THE DEVELOPMENT OF FOOD RETAILING- ...... IS
The Trading Post ...... 19
The Peddler ...... - • . 19
The General Store ...... 20
The Specialty Store ...... 21
Development of the Chain ...... 22
Self Service ...... 2U
The Supermarket ...... 25
The Bantam Super ...... 29
The Discount House ...... P
IV. MAJOR VENTURES IN GROCERY VENDING ...... 32
Schulte-United ...... 32
D elam at...... 3^
Automatic Commissary ...... 37
Automatic Food Store ...... 3^
Hanscom's B akery ...... U3
Vend-O-Mart ...... ^5
Grand U n io n...... 50
A & P Tea Company ...... 60
Colonial Stores ...... 63
National Tea...... 72
iv Chapter Page
IY. (contd.)
K roger...... 74
Fort Bragg...... 80
Howard's Quick Shop ...... 82
Stop 1N Treat ...... 9^
Imperial Oil Limited-Baker Vending Services Limi t e d ...... 97
Don M ills...... 97
Burnahay...... 101
Montreal ...... 103
Empire Petroleum Company ...... 103
Dominion Stores Limited ...... 105
Pro-Vend-Co...... 110
Vend-7-Eleven, Handy Pantiy ...... 113
V. OTHER GROCERY VENDING VENTURES ...... 121
Mayflov/er Doughnut Shop ...... 121
Jewel Tea Company, Inc...... 123
Sol Atlas ...... 124
Krogery-Sterllng, Illinois...... 126
Nelson's Market ...... 127
Freeman...... 129
Food King ...... 129
v Chapter Pag©
V. (contd.)
Murray Vending ...... 130
Eberhard Poods, Inc...... 132
Thriftway-Dan D ee ...... 135
Schneider Dairy ...... 13&
K elley's ...... 137
Six Chicago Apartments ...... 13^
Sid's ...... 139
The Grocerette Story ...... 1^0
Hot and Cold Water Service, Inc...... 1^3
Wise I.G.A ...... 1U4
Brown's Good Poods ...... l*+5
Essex Packers Limited ...... l*+9
Kemper House ...... 150
Dairy and Bakery Kiosks ...... 152
Credimatic, International ...... 152
Supermnt-24 ...... 15^
VI. EUROPEAN TAKE-HOME VENDING...... 165
Take-Home Vending in Europe...... 165
Structure o f European Pood E e t a ilin g...... l66
A Report on Swedish Vending ...... 166
Store Hours Are State R egulated...... 1&7
vi Chapter Page
VI. (contd.)
Konsum, Stockholm...... 1&7
Bea Live, Stockholm ...... 168
Automatic Super Market, V ien n a...... 171
Zirbot, Zurich ...... 171
European Shopping Habits ...... 172
Take-Kome Vending: A Response to Consumer Needs ...... 173
VII. AUTOMATIC GROCERY STORES ...... 175
K eedoozle...... 175
A u to-Serv ...... 180
Elmersel ...... 182
Throckmorton’s ...... 18U
Snperdis, Nice, France ...... 185
Neomatic ...... 185
Ringstrom ...... 186
Daitch-Shopwell...... 186
The Supermarket o f Tomorrow ...... 127
V III. EVALUATION AND POTENTIAL OF AUTOMATIC MERCHANDISING OF GROCERY PRODUCTS ...... 190
'»Vhy Automatic Merchandising?...... 190
Potentials of Automatic Merchandising ...... 192
Disadvantages of Automatic Selling ...... 193
v ii Chapter Page
VIII. (contd.)
"Vendibility" ...... 19^
Results ...... 195
P oten tial ...... 196
IX. SUMMARY AND CONCLUSIONS ...... 198
BIBLIOGRAPHY...... 203
AUTOBIOGRAPHY...... 216
v i i i TABLES
Table Page
1. Operating Results—Vending Industry, 1960-1961 ... l6
2. Summary o f Vending Equipment Used, Items Offered and Average Weekly Sales, Vend-O-Mart, Bristol, Pa...... ^8
3. Products Vended in Original Grand Union Instal lation, East Paterson, N.J...... 53 U. Top Ten Items in Grand Union l,Eood-0-Matic,, Vending In sta lla tio n , East Paterson, N .J...... 5^
5. Products Vended, A & P, Levittown, New York 62
6. Costs-Vending Installation, Colonial Stores, Durham, N.C...... 66
7. Sales Analysis-Colonial Stores, Durham, N.C., Five and One-half Weeks ...... 6g
S. Total Sales "by Week of All Items Listed in Table 6, Colonial Stores, Durham, N.C...... 1 0
9. Profit and Cost of Sales Summary, Colonial Stores, Durham, N.C...... 1 1
11. Products Vended, Kroger, Detroit, Michigan...... 77
12. Sales Summary, Howard1s Quick Shop,Wichita, Kan. . 87
13. Partial Listing of Grocery Items Vended at Shop-'N-Treat ...... 96 lh. Comparison of Prices at Handy Pantry with Prices at Nearby Supermarket ...... 117 15. Products Vended, Eberhard's, Grand Rapids, Mich. . 13*+ 16. Products Vended and P rices, Wise I.G,A.-West Towne Laundry, Marion, Ohio, 1962 ...... lU6
ix ILLUSTRATIONS
Figure Page
1. Vending In stallation : Schulte-United., In c., Bridgeport, Conn., 1929 ...... 33
2. Delamat: Beaux Arts Apartments in Manhattan, 1931 ...... 35 3. Automatic Food Store, Minneapolis, 195^...... 39
k. Hanscom 2k-Hour Sidewalk Service, Philadelphia, 1956 ...... kk
5. Vend-O-Mart, B risto l, Pa., 195& ...... *+7
6. Grand Union Nite and Day Quik Pik, East Paterson, N. J . , 195^ ...... 5^
7- Grand Union Nite and Day Food-O-Matic, East Paterson, IT. J ., 1957 ...... 57
g. A & P Around the Clock Hand i~Pan try, Levittown, L. I ., N. Y., 1956 ...... 6l
9 . Colonial Stores "Round the Clock Shopping," Durham, N.C., 1957 ...... £>5
10. National Food Stores, Natco Vend, Chicago, 1957 •• 73
11. Kroger 2k-Hour Vending Service, D etroit, 1957 •••• 75
12. Kroger H a n d b ill...... 78
13. Post Commissary Vending, Fort Bragg, N.C ., 1958 •• 81
lk . Howard's Q,uick Shop, Wichita, Kansas, 1958 ...... 85
15. Imperial O il Ltd.-Baker Vending Services L td., Burnaby, B.C. and Don M ills, Ontario, 1961 ...... 99
x Figure Page
16. Dominion Stores, Bexdale Plaza, Toronto, Ontario, i g 6 l...... 108
17. Pro-Vend-Co., nYour Pantry of Better Poods,11 Chicago, 1961 ...... H I
18. Vendo-7—Eleven, "Handy Pantry," Washington, D.C., 1962 ...... 115
19. Kemper House, Cleveland, Ohio, 1961 ...... 151
20. Bahery and Dairy Vending Kiosk, Kansas City, 1961. 153
21. Supermat-24, 1963 ...... 157
22. Grocery Vending, Stockholm, Sweden, 1961 ...... 1^9
23. Keedoozle Store, Memphis, Tennessee, 19^8 ...... 177
24. Customer Shopping at Keedoozle, 1 9 4 8...... 179
25. Auto-Serv Food Store, 19^-5 ......
26. Scale Model of an Automated Supermarket ...... 188
x i CHAPTER I
INTRODUCTION
The inherent dynamic nature o f our r e ta ilin g system makes for constant development and improvement in methods o f putting goods and services in the hands of the consumer. The responsiveness of re tailing institutions to an ever-changing social and economic envi ronment indicates that when need for a new type o f in stitu tio n is ap parent, it evolves. 1 One of the developments that has met with con siderable success in certain areas of retailing has been automatic merchandising.
Purpose of the Study
It is the purpose of this dissertation to present information concerning the development, the present status, and the potential of automatic merchandising of grocery products for off-premise consump tion. This information will be useful to those interested in eval uating the economic feasibility of automatically merchandising grocery products. It will provide information that will be helpful to those concerned w ith making economically sound decisions involving automated
^Theodore N. Beckman and William R. Davidson, Marketing. 2nd. ed. (New York: Ronald Press, 1962),p. 158.
1 grocery merchandising. Those interested include suppliers, machine
manufacturers, vending operators, food retailers, other retailers,
educators, researchers, and students of the food distribution system.
It is the writer’s intention to give a general, over-all portray
al of the automatic merchandising of grocery products in the hope that
others w ill implement this framework with their own knowledge, anal
ysis and empirical studies.
A marketing approach is primarily employed in this study. Prior
to this study, no comprehensive analysis existed of the development
and potential of automatic merchandising of grocery products for off-
premise consumption. Instead, fragmentary information concerning this
subject was scattered throughout various trade, professional, busi
ness, and governmental publications. Several theses and dissertations
have touched upon or considered segments of this phase of automatic merchandi sing.
The writer has attempted to draw together and to bring up-to-
date, in as much detail as possible, the currently available infor mation on grocery vending. This has been done to cla rify the role o f
automatic grocery merchandising and to determine more accurately its
current importance and potential in the marketing structure and in our
economic system.
Some of the important areas that this study intends to investi gate are these:
1. A brief history of automatic merchandising.
2. A brief history of the evolution of food retailing. 3. A comprehensive history of the development of automatic
grocery retailing and the experiences of those who have
tested and experimented with grocery vending.
U. An evaluation of experiments with non-food take-home auto
matic merchandising.
5. The relationship—actual and potential—of automatic mer
chandising to food distribution.
The Need for the Study
The automatic merchandising of grocery products for off-premise consumption receives continual mention in trade releases as an area in which considerable growth is imminent. Automatic merchandising is described as a coming revolution in food r e ta ilin g .
Those who are concerned with the food industry, including sup pliers, retailers, vending operators and all others with an interest in food retailing, have need for information concerning what, if any, tests or experiments have been conducted in the area of automated take-home merchandising and what the observed results were from the
installations. Interested persons are also concerned with the eco nomic potential of automatic merchandising as a method of food re
ta ilin g .
While this study does not propose to answer all questions, it is
desirable to assemble, interpret, and diffuse useful knowledge. The
intent is, therefore, to provide pertinent information to the manage
ment of retailing firms and others considering the economic aspects of
automated grocery merchandising. u
Sources and Methods
An investigation and analysis of available published data pro vided a partial basis for the study. Obtained through a careful and extensive library search were these important sources:
1. Authorative texts on marketing.
2. Texts on automatic merchandisii^; and food distribution.
3. Industry, government, and trade association bulletins and
pamphlets on the subjects of automatic merchandising and food
distribution.
Trade, professional, and business periodicals.
5. Theses, dissertations, and other specialized vending indus
try and food industry Btudies.
The following additional sources of primary data have been uti lized:
1. Extensive interviews with vending industry executives, vend
ing operators, food retailers and others interested in the
vending and food industries.
2. Extensive correspondence with vending manufacturers, sup
pliers, operators, vending industry executives, industry
trade associations and othprs associated with the vending
and food industries.
3. Many phone conversations with individuals who have had a
role in grocery vending operations or have knowledge con
cerning certain tests and experiments. Personal visits to locations of previous vending machine
installations, ae well as to existing installations to ob
serve and to study their operation.
5. Internal records and reports -
Scope of the Study
The study is primarily concerned with the automatic merchandising of grocery products for off-premise consumption. Consideration is given to other vending in-so-far as it is necessary to establish re lationships.
The study is confined almost entirely to domestic operations, al though grocery vending in Europe is described and evaluated in order to identify similarities ani differences which may exist.
Limitations of the Study
The automatic merchandising of grocery products for off-premise consumption, thus far, has in general been a financial failure for the parties involved. Businessmen are inclined to Become enthusiastic when relating success, but become reluctant to dwell upon their fail ures. Consequently it became difficult to obtain adequate data from several former operators.
Apparently, there is increased personnel turnover in the innova- tional segment o f the food distrib u tion industry. Many individuals who were responsible for vending experiments are now employed else where. Long distance telephone was the only available method for contacting these persons in several instances. Most installations, tests, and experiments that have been made by equipment manufacturers, operators and retailers were not organized with the thought in mind of maintaining and preserving detailed records. Where records were maintained, the time has arrived in the cycle of aging of records that they are being cleared from the files.
The author was fortunate to secure and record considerable information which would otherwise be unavailable at a future date.
Automatic merchandising is a relatively young industry, charac
terized by a great number of small, independent operators. Available industry data are based upon a limited sample of operators who respond
to questionnaires. The extent of bias introduced by a possible lack of representation is not known. Much of the limited data secured is available only to the cooperating firms and is not available for re search use. Industry averages are determined from the sample and are published for general consumption.
There is an opportunity for the national trade association or some other organization to aid the industry by the development and promotion of standardized accounting systems, the exchange of opera ting information, the development of statistical data, the promotion o f research, and the encouragement o f the exchange o f ideas. There
is an apparent lack of appreciation of the benefits resulting from a greatly increased exchange of information among all members of the industry. 7
Organization of the Dissertation
The history and characteristics of the vending industry will first be considered. The history and characteristics of the food re tailing industry will follow. Attention will then be given to the development of case histories of installations, tests, and experiments concerned with the automatic merchandising of grocery products for off-premise consumption. These cases will be evaluated with respect
to the real economic place of grocery automation in our distribution
system. Giving consideration to the opportunities, in light of any limitations that may exist, the potential of the automatic merchan dising of grocery products for off-premise consumption w ill be dis
cussed. CHAPTER I I
THE HISTOHY OF VENDING
Origin In Antiquity
The basic elements of automatic vending, the mechanized and automatic transaction of sales given the insertion of coins or cur rency by a customer, were known to the ancient Egyptians. The origins of vending have been traced back for at least 2,000 years to the time of Heron of Alexandria, who recorded the use of a coin-operated lustral vase in his Pneumatlca. a compilation of mechanical knowledge of that period. The priests of Egyptian temples used the ancestor of all vending machines to dispense holy water upon deposit of a five drachma coin.
0. R. Schreiber described the first automatic selling machine built in 219 B.C. aa the invention of Hero Cstebius, an ingenius
Creek inventor.^"
"A Brief History of Vending—Fact Sheet” has two entries concern ing the early history of vending that were not found elsewhere.
1076 A.D.—The famous Chinese poet and statesman, Su Tong-Po, who lived 1036-1101 A.D., recorded in the Imperial Encyclopedia, Yuen-K1en-Liu-Hau. as follows,
^•G. R. Schreiber, Automatic Selling (New York: John Vn'iley and Sons, In c., 195*0» P* 2.
8 9
’At the end of the Shi Tain Dynasty (A.D. 9^6) there lived a nan in Ju-chou who sold pencils from his house, which had all of its wall traversed by a bamboo tube, like a water pipe, and when one put one coin in it there would Jump out one p en cil. When he came home and found a ll ten pencils gone, he would gather the coins and spend them for a potful of wine, which made him contentedly sing and w h istle .1
1597 -A.D.—The celebrated Japanese centenarian, Bnura Sensai in his writing the Ro.lim Zowa. Tom, mentioned a coin operated doll carried before the Ibrperor Hidyo8his, at the Imperial Court.2
Early European History
Near the end of the eighteenth century, tobacco boxes appeared in
London public houses. They were more like honor boxes than venders
as the patron deposited a coin to slide the cover open and then helped himself. The cover was then closed manually.
The first vending machine in modem times was built in 1822 when
Richard Carlisle, an English publisher and book-store proprietor, put
into operation a book vending machine designed to circumvent laws pro
hibiting the sale of outlawed reading materials. A clerk was present
in the store at the time of a sale and courts held Carlisle responsi
ble and convicted one o f the clerks of se llin g blasphemous litera tu re
through the device.
Vending Begins in the United States
Percival Everitt, an Englishman in I883 invented and put into use a coin operated postal vender. In 1886 Everitt developed one of the
B rief History of Vending—Fact Sheet (Westbury, New York: Continental Industries, Inc., n.d.),{£. . 10
first springless scales and "brought it to the United States. Accord
ing to trade legend, Thomas Adams, the chewing gum manufacturer, out bid James B. Duke, the tobacco king, for rights to the machine. Adama
converted the machine to vend "Tntti-Tru**!" cwwinp gum and installed
the vending machines on the platforms of New York Cityts Elevav**
Railway.^
A great number of operators were attracted to the vending indus
try hut it remained a pennyante business of peanuts, gum and weighing
machine until the 1920*e. Business interests were attracted to the
automatic vending devices dispensing gum, nuts, confections and
stamps. A number of reasonably operable venders were developed and
marketed by American manufacturers. Most early machines operated only
on pennies; coin mechanisms to reject slugs had not been invented and
to have vended higher priced merchandise would have encouraged the use
of slugs.^
Horn and Hardart Baking Company opened i t s f ir s t Automat at 818
Chestnut Street in Philadelphia in 1902. While automats had been in
operation in Germany for nearly a decade, the opening in Philadelphia
created a sensation and received wide -oublicity. An Automat was
opened the next year in New York and an additional unit was opened in
^Dorothy S. Washburn, "The Evolution of Automatic Merchandising in the United States," Temple University, Economics and Business B u lletin . June 1951, p* 22.
^Wilbur B. England, "Automatic Merchandising," Harvard Business Review. November-Deeember 1953* P* 88. 11
Chicago. The Chicago installation was unsuccessful and expansion ef forts were concentrated in New York and Philadelphia. The Automat was a partially automated operation as an attendant had to restock the merchandise in the compartment after each purchase.
Experiments were conducted with numerous types of "beverage dis pensers, "but it was not until refrigeration was introduced "by the in dustry in 1927 that automated beverage dispensers were accepted by the public.
By 19IO there were f if t y companies engaged in penny or bulk vend ing machines. Thirty of the companies consolidated under the name
Autoaales Gum and Chocolate Company. The merger placed over 50»000 machines, vending hOO million one-cent items per year, under one man agement. Within five years, the company went through receivership.
It was reorganized and emerged as the AutoBales Corporation. Auto sales was quite successful in the boom years that followed, leading up to the crash o f I929.
Modern Vending Begins
Three machines were developed in 1925 and 1926 to sell cigarettes automatically. The machines were invented by National of St. Louis,
Smoketeria in Detroit and William Rowe in Los Angeles. The cigarette vender was the first serious attempt to sell quantities of products at prices in excess of a nickel.5 Most people thought that cigarette
-*G. B. Schreiber, A Concise History of Verging in the U.S.A., (Chicago* Vend. 1961), p. 33. 12 vending would not succeed, but cigarette venders proved their effec tiveness within a few years.
The late 1920’s brought a number of large-scale promotions.
Autosales had regained its vigor end had purchased a number of minor vending firms. Autosales had i t s equipment in the waiting rooms and stations of 165 railroads. It had 35»OO0 penny venders, 18,000 five
c and ten cent venders end 10,000 weighing scales.0
A huge combine known as Consolidated Automatic Merchandising
Corporation (CAMCO) was formed in 1928 by the merger o f eight manu facturers and operators of vending equipment. CAM00 had more than
50,000 locations on a nationwide basis. Both Autosales and CAMCO were involved in stock promotion schemes and were saddled with high opera tional overheads. Both went into bankruptcy in the early 1930's.
Some of CAMCO18 holdings were sold off, others liquidated, and Peer less Weighing and Machine Corporation eventually retained the scale and gum vending business. The Autosales assets were acquired by the
M ills Automatic Merchandising Corporation.
The development of the cigarette vender stimulated the development of the slug-rejector, the change-maker and an ever increasing variety of machines selling various types of merchandise.
During World War II, the efficiency of vending machines in serv icing large numbers of military personnel and defense workers was ef fe c tiv e ly demonstrated. Plants had been on a 2h~hour basis and the
^Arthur E. Yohalem, "The Story o f Automatic Merchandising," N.A.M.A. Automatic Merchandiser. Yearbook and Buyer1 s Guide. I9U7 Exhibit Edition (Chicago? National Automatic Merchandising Asso ciation,“fl95C ). p. 153. vending industry had demonstrated the usefulness and desirability of having vending equipment located close to the work for the convenience and morale of the workers.
The postwar period witnessed a great expansion in vending sales.
New equipment, which had not been available since the manufacture of vending machines was discontinued in 19*+2t was again availab le. Cof fee vending, introduced in I9U6, was a prime power behind the move into institutional food service. Many new types of machines were introduced, lin es were expanded, and new products added.
Vending Sales
In 1962 the r e ta il value o f merchandise sold through vending machines amounted to $2,95^,000,000, a 7*3 Per cent increase over 1961 sales volume.? Cigarette sales continued to dominate vending industry sales. Sales of cigarettes in 1962 amounted to $1,180,900,000 or U0.9 per cent of total vending sales. Soft drinks made up the next largest share, $522,280,000 or 17.7 per cent of sales.
Packaged confections, including candy, cookies, gum and crackers, accounted for $3^2,0^6,000 in sales and coffee was next in order with
$20U,960,000 of sales. Prepared foods, the most rapidly growing segment of the vending industry, accounted for $111,500,000 in Bales followed by milk, $72,758,000; bulk confections, $58,500,000; ice
7 For a complete report on sales volume, composition of sales and operating results, see 0. R. Schreiber, "1963 Census of the Industry," Vend. March 15, 1963, PP« 17“^8. This section is adapted from that report. cream, $23,875*000; hot canned foods, $21, 010, 000; cigars, $11, ^ 0,000 and all other products, $372,000,000.
The Structure of the Industry
Total vending sales in recent years have been increasing at a rate of 6 to 8 per cent per year. The number of operators has re mained nearly constant at about 6,200, in spite of the numerous merg ers and acquisitions, both local and national that have characterized the industry. New entrants in the industry have offset the Iosb of independent companies through mergers, acquisition or exit.
The industry has always been dominated numerically by small operators. Less than 25 per cent of 1961 vending volume was done by
the large operators and 31 per cent of the operating companies had six or less employees.^
Operating Results
The National Automatic Merchandising Association sponsors an an- aquai Operating Ratio Study of the vending industry. The complete re
sults of the study are available only to members of NAMA. A condensed version presenting several ratios and operating averages is released to the public. It reveals that average profits have increased for
^"Vending in 1961: Year of Realistic Reappraisal" (Chicago: National Automatic Merchandising Association, jl962] ), n.p. 15 the past several years, A summary o f resu lts as given in Vend maga zine follows:
Number of Total Pre- Operating tax Profit Companies (before Year Reporting income tax)'
1955 91 3*^3 1956 128 3-25 1957 163 3.33 1§58 I83 2.86 1959 212 U.33 1960 18U I+.58 1961 i l l 5*55
The member NAMA companies participate voluntarily in the study and the responses are not necessarily representative of the industry.
The participants change from year to year and comparisons are some what le s s than p recise. N.A.M.A. b elieves the companies studied are typical of the industry generally and reflect the changing character istics of the industry.1®
Table 1 presents a comparison of operating costs as reported by the 18U companies participating in the study in i960 with the 111 companies reporting in 1961. Not only did the number of companies vary, but the composition of the group also varied. In i960 total operating expenses were 37*03 per cent nod pre-tax profit was I+.58 per cent. Total operating expenses increased to 1+1.61+ per cent in
1961 and pre-tax profit also increased to 5*55 Per cent. One factor that may have accounted for an increase in operating expenses was an increase in other-than-vending sales from 1,96 per cent in i960 to
R. Schreiber, "Ibrecast: 1963*" Vend. January 1, 19&3* P* 32* 10Ibid. 16
TABLE 1
Operating Results—Vending Industry I96O-I96I
Operating Costs i960 1961
Total Sales 100.00# 100.00# Cost o f Goods 59-39 53-h? Operating Costs 37.03 Ui.6h Operating Profit 3. 5 S 1+.88 Other Inc. Net 1.00 .67 Pre-Tax Profit 1+.58 5.55 Cost Detail
Service Salaries and Commissions s . 36# 7.69# Maintenance labor 1.67 1.67 All Other Salaries 3.62 7.11 Total Payroll 13.65 16.16 Maintenance Cost o f Machines (Other Than Labor Costs) .91 .83 Location Commissions s. 51 7. 9^ Depreciation or Rental—Machines 5.1+6 i+.ho Other Depreciation Except Buildings • 78 .91 Truck, Auto Expense 1.26 1.11 Taxes Other Than Income 1.90 1.76 Insurance .66 .65 Building, Garage Rental or Expense .62 1.18 A ll Other Expense 3.2s 6.70 Total Operating Expenses 37.03 1+1.61+
Source: Vend. January 1, 1963. p. 35 * (data ir e from N.A.M.A. Operating Ratio Study). 17
15.96 per cent in 1961. Acquisitions that included manual food serv ice and possibly a different composition of the sample of respondents could account for the considerable increase in nonr-vending retail sa le s.
The vending industry is digesting the rash of mergers that occur red in 1959“1961* The larger regional and national firms are con tinuing to operate their divisions as local units, but are gearing themselves to provide the local operating units with increased manage ment and financial assistance made possible by their vastly increased size and resources.
The smaller firms are making increased entry into nfWLl-line” vending rather than remaining as single line operators. More and more operators are gaining e^erience in prepared food vending and more are providing their own commissaries to prepare their own food. CHAPTER III
THE DEVELOPMENT OF FOOD RETAILING
The modern food store is a product of a long and interesting evolution. The historical development of food retailing has been characterised by a number o f dynamic innovations and when comparing food retailing today with that of yeBteryear, great changes are ob vious.
Food retailing over the years has been greatly influenced by the environment in which it has operated. "An important principle widely recognized by social scientists is that our institutions arise out of, and are modified in accordance with, social needs. Retailing ftl institutions are a product of the environment in which they operate."*
The development of food merchandising w ill be considered briefly.
Attention will be directed to the external and internal factors re sponsible for the growth, development, and changes that have occurred in the various evolutionary stages.
The development of food retailing along with the development of automatic merchandising, previously discussed, will set the stage for the consideration of the potential future development of the automatic merchandising of grocezy products for off-premise consumption.
^William R. Davidson and Paul L. Brown, R etailing Management. 2nd ed. (New Yorks Ronald Press, i 960) , p. 1^. 18 19
Colonial Merchandising
The Trading Post
Trading posts, established in earliest colonial times, vtre she
retailing institution of frontier society. Originally established to
exchange trinkets for flirs from the Indians, the trading posts ex panded their offerings to supply more of the needs of the adventure
some pioneers as the frontier pushed westward.
The Peddler
The itin eran t merchant or "Yankee peddler" played an important
role in the early American r eta ilin g scene. The pioneers pushed the
frontiers westward and the early settlers established their homesteads.
Transportation was difficult and many of the pioneers were miles from
a town. The lack of transportation made the peddler a practical
necessity in many parts of the country.
First appearing in New England in the seventeenth century, ped
dlers expanded their territo ry as time went on u n til they were cover
ing the country as far west as the Mississippi. The early peddlers
traveled on foot with packs on their backs. These packs contained
tinware, scissors, needles, groceries, dry goods and patent medicines.
Sometimes they would s e l l for cash, other times for cred it and s t i l l
at other times they would barter; anything fbr a sale. Gradually the peddlers advanced, f ir s t to horseback and, as the roads were improved,
to wagons as a means of transportation. As their means of transpor
tation Improved so did their selection and stock of wares. 20
The General Store
As towns developed, the trading post and the peddler were re placed by the general store. The development of railroads, waterways and roads resulted in the decline of the peddler as the chief carrier of merchandise. The development of "better means of transportation, combined with the growth o f the towns, led to the development o f the general store. Many o f these stores were owned by former peddlers, who, in the course of their travels, had the opportunity to discover locations in which stores might be successful.
The general store carried a wide variety of merchandise, attempt ing to supply everything that the customer wanted. These stores were largely independent, having no financial or tuying arrangements with any other store. Dry groceries often made up a large part of the stock. Other merchandise lines included were hardware, dry goods, patent medicines, et cetera. Most of the items were handled in bulk, and few perishables were sold. Margins were 3 0 P®r cent to h0 per cent or more. The r e ta ile r ’ s sa le s were small and he had plenty o f time to stand around and weigh out bits of tea, pepper, salt, and other groceries when customers bought them.
In many respects, the general store was more than a store. It was a meeting place and a center of social life for the male members of the community. Many a heated discussion took place around a pot bellied stove at the back of a general store with the participants chewing tobacco or possibly munching a cracker snitched from the near-by cracker barrel. 21
The general store gold for cash, barter, or credit, oftentimes long term - up to a year1 e duration. Necessity normally dictated the
terms of sale. There was not sufficient business to warrant a separ- rate grocer, hardware store, shoe merchant, et cetera, but there was enough business and need for a general store.
The general store was well adapted to the period in which it
flourished. It made a considerably wider range of merchandise avail able the yeararound than did the peddler who could only make his rounds once or twice a year. The general store, however, had several disadvantages. The small sales volume prohibited any sp ecia liza tio n .
So many lines were carried that the proprietor never became very ex perienced in buying or se llin g any one of them. Purchases were in small quantities, resulting in high coBts to the retailer and, as a consequence, high prices to the consumer. While many lines were
carried, there were no complete assortments. There was little de partmental organization and the organization and operation of the en tire store le f t much to be desired. The economic development o f
the country, rapidly expanding population, and greatly increased quantities of manufactured goods resulted in further problems for the general store.
The Specialty Store
As communities grew in size, demand developed for variety in each line of merchandise. The general store, physically incapable of car
rying complete assortments in all lines of merchandise, could not meet
this demand. As a result, the specialty or limited-line store came 22 into existence. These small-scale establishments each originally han dled hut one commodity. Grocery stores, for example, took over much of the trade in dry groceries. Other stores handled only meat, dry goodB, jewelry, hoots and shoes, tobacco, et cetera. The wide assort ment of merchandise within a limited line encouraged impulse buying.
The progressive retailer soon realized that his prices, merchandise and services had to please the customer in order to establish and maintain a profitable business. This marked the beginning of more aggressive food selling.
Slowly, mass production made its way into food manufacturing.
An ever-increasing quantity of food was being produced in greater variety. Lines and brands began to multiply. More and more lines be gan to appear in packaged form, saving labor for the grocer and pro viding more sanitary food at a lower price for the customer.
Development of the Chain
Large-scale food retailing was bom in 1858 as a result of the spread between the importer's price of tea and the price at which it was sold to the consumer. Starting in a small shop on Veasey Street in New York City, George Gilman^and George Huntington Hartford began to import tea from China and to sell it at a price considerably below that charged by contemporary merchants. The business prospered and they opened another store the next year. Within five years the Great
Atlantic and Pacific Tea Company was operating twenty-five stores.
It was fourteen yeaTB later that the initial store of what was to become the second food chain was founded. In 1872, Jones Brothers Tea Company, later to 'become Grand Union, opened for business and then ten yearB la ter , in 1882, the f ir s t Kroger store was founded.
By I865, A & P was operating twenty-five storee. Seasoning that if they could sell tea at below competitive prices, they could also sell other things in the same manner, they prepared to emhark on car rying a fu ll lin e o f dry groceries. These stores s t i l l embodied de livery service, credit, and exchange as a part of the operation.
Later, John Hartford experimented with a new merchandising idea, small stores that did not provide credit or delivery service. These were called Economy Stores, the forerunner of cash and carry. "These stores were small, low-rent, one-man a ffa irs with modest fixtu res.
Every policy adopted was in the interest of gaining volume. Even p r o fit rates expected were low to increase volume by the use o f low prices. The Economy Stores nroved so successful that the company chose to expand rapidly, opening stores wherever they could expect a reasonable degree of success."^»2
The real expansion began in 1912. The five hundredth store was opened in 1913* and 1,600 more were opened in the next two years.
By I9I9, there were over h,200. The peak in number of stores for
A & P was reached in 1930* when 15*700 were In operation.3 Buying power along with skill in buying developed as the organizations be came larger.
^Weldon J. Taylor, and Hoy T. Shaw, Marketing (Cincinnati* Southwestern Publishing Company, l$6l ) , pp. 590-591*
5lbjd,. p. 591* Vhile many food chains were established in the latter half of the nineteenth century, the almost phenomenal growth came in the decade of the 1920 ’ s . In the decade of the 1930's, the trend was reversed and the chains, instead of continuing to rapidly increase in numbers, began to decrease as they enlarged and modernized existing stores, closed unprofitable stores, and relocated others. In the 1920's, grocery stores had begun to add meats and fruits and vegetables, thus becoming combination grocery stores. After 1929. this trend was greatly accelerated. The imposition of special chain store taxes in some states undoubtedly accelerated the closing of marginal stores.
Self-Service
There were a few merchants operating self-serv ice or p a rtially self-service stores in southern California as early as 1912.
Clarence Saunders is an example o f one o f the more colorful figures in the development of self-service. His initial Piggly-
Wiggly store,opened in 1916, was probably the first food store to use the tu rn stile and checkout. I t was designed to compel the customer to walk past all the display shelves on her wav from the entrance to the checkout. The customer made her own selections and took them to a checkout at the completion of her shopping.
By 1923 Clarence Saunders had 2,660 Piggly-Wiggly Stores in op eration, but in that year he was completely ruined financially in a stock market maneuver and he applied for bankruptcy. His next ven ture was "Clarence Saunders sole-owner-off-my-name" stores,*which flourished for a time and then faded. Later in I9U5 he opened his robot ”Keedoozlen store and at the time of his death in October 1953• he was about to open his fourth venture for fame, the flI’ood-electricn store.
The growth of se lf-se r v ic e , aided by improved packaging was rapid.
Shod firms converted their stores to self-service when they began to realize that the customer was willing and even anxious to take over the selection of merchandise from the store shelves.
The customer by making her own selection, relieved the store of the expense previously incurred by a store clerk in selecting items from off the shelves and assembling the purchases. Not only did self- selection reduce costs, but it increased sales as well.
The Supermarket
California supplied the predecessors of the supermarket. They were large self-service markets but their growth was localized in
California. It remained for a brash young man in the mid-west,
Michael Cullen, a branch manager in Illinois for The Kroger Company, to sta rt what la ter became a national movement.
Cullen was an early disciple of mass merchandising. He thought that the food chains should lead a movement for a revolutionary change in food retailing. He outlined all his ideas, complete to minute de tails, in a letter to the president of Kroger. He wanted to try his ideas "by opening five cut-rate stores. In those stores he proposed a revolutionary (for that time) pricing idea. He wanted to sell:
300 items at cost 200 items at 5 per cent above cost 300 items at 15 per cent above cost 300 items at 25 per cent above cost
Sales would gross 9 Per cent profit. Cullen had such faith that he offered in h is le tte r to in vest $15»000 o f h is own money in the vert* ture. When he went to Cincinnati to present his idea to the president of The Kroger Company, he was unable to see Lim. As a resu lt, Mr.
Cullen resigned.
In August, 1930» the first unit of the King Kullen Grocery Com pany was opened at 171st Street and Jamaca Avenue, Jamaca, New York.
It was much smaller than those that followed, but it made mercham- dising history. His catch phrase "King Kullen, the world’s greatest price wrecker—how does he do it?" caught the fancy of the public and sales were phenomenal. Shortly, other much larger units were opened.
Concessions of a ll types were added and the supermarket was on its way.
Michael (King Kullen) Cullen had a system. It was selling gro ceries at the lowest possible markup made possible by a tremendous volume tinder one roof. Additional p rofit was coming from various con cessionaires. By 1935, Cullen had fifteen large units in operation.
He was about to launch a national operation when he died in 193^ at U the age of fifty-two.
^For a more complete histoiy of the early supermarket, see M. M. Zimmerman, The Super Market (New York: McGraw H ill, 1955) * PP* 3.6—39• What proved, to he more spectacular and of even greater impact on the food distribution system was the opening of Big Bear in the vacant
Durant automobile plant in Elizabeth, New Jersey. The crowds and the newspaper p u b licity were tremendous from the opening day, December 8,
1932. A circus-like atmosphere was created in the first floor of the factory building. The sales area comprised 50»000 square feet. The food department, about 30 per cent of the space, was the hub in the center, end eleven leased departments utilized the balance of the space.
Sales for the first year had been projected at a million dollars.
One-half was projected to come from groceries. Actual sales for the first year totaled of which the makeshift grocery depart ment, with the roughest of equipment, had contributed sales of
$2,188,1+03 or 56^ P«r cent of sales. The gross profit on the grocery sales was 12.01 per cent which was at least 10 per cent below the existing chain food store average.5
While the supermarket industry was getting underway and gaining momentum in every part of the country, the organized food trade tried to rationalize that the supermarket was doomed to failure and that it was only a flash and not to be taken seriously. All sorts of road blocks were thrown in the way of the early growth of the supermarkets.
Retailers boycotted wholesalers and manufacturers who sold to the supermarkets, and newspapers, under pressure from the other retailers,
5lbid., p. 1+2 28 refused their advertisements. Nevertheless, supermarket growth con tinued at an astounding rate.
It was not long "before supermarkets were invading other areas o f the country and the mid-west became the spawning ground. William H.
Albers opened his first Albers Super Market in a new modern building in Cincinnati in November, 1933* Ik®* reportedly was the first time that "supermarket" had been used in a corporate name.
Wayne Brown was another supermarket pioneer in Ohio. In 193^ he opened Big Bear Stores in a former ro ller rink on lane Avenue, adjar* cent to The Ohio State University. Other units followed in 1935 and-
1936 with a tota l o f four in operation by 1937*
By 19HO, the chains, independents, and manufacturers were eager to become a part of the supermarket industry, which by now was well entrenched and growing rapidly.
The early depression stores were a far cry from those that ap peared in the post-war period. The early ones were bom o f economic adversity. Price was all-important. Practically all services were eliminated and a ll efforts were desifmed to lower costs. World War II had restricted the growth of the industry, but by the end of the war, the industry had acquired a better understanding of self-service, had developed better operating techniques, had developed a confidence on the part of the public, and had financial resources to embark on an ambitious expansion program.
After the war, se lf-ser v ice expanded beyond the grocery depart ment into the meat and produce departments. Expansion was made possible by technological developments in transparent wrapping mat&*
rials making it possible to pre-package a number of products that had previously only been sold with the assistance of a produce clerk or butcher.
The growth of the supermarket from its humble beginning has been
one of the most dramatic revolutions that has taken place in retailing.
Prom its birth in the depression of the 1930's, the supermarket has
grown in numbers and in sales until of total food sales of
$56,200,000,000 in 1962, supermarkets, which represented 11.5 per
cent of grocery and combination stores in the United States, accounted
for 67.6 per cent of the total grocery store sales. Superettes, ac
counting for 11.6 per cent of the stores, did 13*5 Per cent of the
business. Small stores, accounting for 76.9 V eT c^nt of total stores, c did but 18.9 per cent of the volume.
The Bantam Market
The miniature super or bantam (the modern convenience store) is a growing development in the retail food trade. The bantam is really a cross between a supermarket and a small store. It is strictly a convenience store, open lb- to l 6 hours a day, 36b- days a year.
c The d efin ition s of the above groups are: Super Market—any store, chain or independent doing $500,000 or more per year; Super ette—any store doing from $150,000 to $500,000 per year; and Small Store—any store doing less than $150,000 per year from Pacts in Grocery Distribution—19S 1, Edition (New York: Progressive Grocer), 1963, pp. 6-7- Selections are lim ited to one brand of only the fa stest moving items.
Sales average ninety cpnts to a dollar per customer as compared to
sales of about five dollars per customer in supermarkets.
The bantam d iffers from the conventional "mom and pop" small
store in that it is a modern, attractive, well arranged store in a
convenient location with ample parking facilities. Sales are for cash
and there are no deliveries. Prices are usually higher than super market prices with most sales based on convenience. Progressive
Grocei reported that there were about 3»5QO convenience stores in
operation in 1961. Sales averaged about $3,000 per week. The gross margin on sales was slightly over 22 per cent and labor expense was
just over 8 per cent of sales.7
While the growth o f the convenience store has been most rapid in
the South, new installations are springing up throughout the nation.
This institution is filling the gap that was left with the growth in
supermarkets and the rapid decrease in the number of mom-and-pop
stores.
The growth of the convenience store fills a need that might
otherwise have presented an opportunity for the use of grocery vend
ing machines.
The Discount House
Supermarkets within discount houses now account for about 3
cent of total supermarket sales. Sales in 1962 from supermarkets
7Ibid., p. 2 k . ff within discount houses totaled 31,105,000,000. The main impact on
competing supermarkets has been in r eta il pricing. Many grocery de partments in discount operations operate on a 12 per cent margin.
Store hours may "be shorter than in the conventional supermarket.
Many open later in the day than the conventional supermarket, hut re main open u n til 10 p.m. and are open Sundays. CHAPTER IV
MAJOR VENTURES IN GROCERY VENDING
Knowledge of the experiences of others is oftentimes of consid
erable value to those who are responsible for planning and decision
making. Accordingly, c&ee histories have been developed, in as com
plete a form as was feasible, of past grocery vending installations.
Schulte-United
The first recorded use of vending machines to sell groceries took place in 1929 when Schulte-United, Inc., installed a bank of twenty1*
one venders and two change-making machines in a Bridgeport, Connect
icut, unit of the cigar store chain (see Figure l). That installation
marked the pioneering effort to merchandise groceries by machine.
Schulte-United had not previously been in the food business, but was a chain confining its selling to tobacco, shaving cream, razor
blades, and other notions. The objective of the installation of the
vending machine was to solve the problem of taking care o f customers
at peak hours and to save customers from walking out due to lack of
attention by store clerks. Mounting rents were also increasing the
value of floor space; the machines put vacant space to work.
The twenty-one machines, manufactured by Consolidated Automatic
Corporation (CAMCO) aroused much curiosity and interest by including
32 33
Source: Commercial America
Figure 1. Vending Installation: Schulte-United, Inc., Bridge port, Conn., I929. a talking device that repeated an advertising Blogan as each purchase was made. With the purchase of a chocolate "bar, a voice repeated
"Thank you; Hershey's for health." A machine containing mayonnaise would say, "A Schlorer quality product; thank you." When buying peanuts one heard, "You w ill enjoy Toms' toasted peanuts." The items vended included canned goods and glass-packed items; olives, spaghetti, sardines, salad dressing, tea, and coffee. A window at the top of each machine provided a display for the item of merchandise sold by
the machine. «
The growth of mechanical s e llin g was planned to go hand in hand with the expansion of the Schulte-United chain into the grocery busi ness. . With success in the Bridgeport store, the chain planned to adopt a program to install a mechanical selling department in each sto r e devoted to the sa le o f fa s t moving iterns.* Whether the experi ment was a su ccess or not i s unknown, sin ce Schulte-U nited and CAKCO both failed to survive the crash of 1929 and the depression that
follow ed.
Delamat
In 1931* Robert Harvey installed a battery of vending machines in a room of the main floor of the Beaux Arts Apartments in Manr- hattan (see Figure 2). This installation was the first automatic, electrically-operated food store. Harvey, who had been in the gfocery
^"Mechanical Selling Enters the Grocery Store," Commercial America. July, 1929, pp. 9t 35
Source: Business Week (Wide World)
Figure 2. Delamat: Beaux Arts Apartments in Manhattan, 1931* 36
business previously in Philadelphia! called hi a mechanism the Delamat
("Delivers Automatically"). His idea was to provide the apartment
residents with 2U hour grocery and delicatessen service.
Groceries, meats, bakery goods, vegetables, packaged goods, and
canned goods could a ll be displayed and sold through the Delamat unitB. The equipment was designed to be used in sections or u n its.
Each unit provided five separate selections and contained the mecha nism for displaying and delivering merchandise. The insertion of a
coin and turning of a knob started an electric motor which moved the
item selected from display position to a delivery window immediately
below. The next tray, at the same time, popped up into display posi
tion, Odd priced items had a small envelope attached containing
change.
A neighborhood store utilising this equipment was estimated to
require 35 non-refrigerated sections, five selections each, thus pro
viding a selection of 175 items. An additional installation of five
electrically refrigerated sections would make available an additional
25 items of meats, vegetables, and dairy products.
One person, making change and restocking the units was e s ti mated to provide a sales capacity equivalent to the ordinary store, which at that time, would require two or three employees. Locations were being selected in apartment buildings where 2U-hour service was in demand and where one or two b u i l d i n g s housed enough potential c u b - O tomeT8 to insure a profitable operation. The project failed when
Harvey found the operation to be u n p rofitab le.3
Automatic Commissary
One year later, in 193^. another attempt at apartment house vend
ing was undertaken in Los Angeles. Charles 0. Johnson, a distributor
for the National Sales Machine Company of St. Louis, used general
purpose merchandise venders built by National. The installation,
called the "Automatic Commissary," u tiliz e d seven o f the National u n its and vended nickel and dime items.
Each u n it contained a se r ie s o f six v e r tic a l compartments w ith a
glassed section displaying the offerings. Upon the insertion of a
coin and the turn of a handle, a shutter dropped down exposing a com
partment in that tier and the product was removed by the purchaser.
Four units contained canned goods, one unit contained bakery products
and two units contained bottled beverages. There was also a candy bar
and cigarette vending machine. The venture failed because housewives
found the ten-cent sizes of the grocery items to be uneconomical.
The installation could not compete with odd-cents pricing in the grocery stores and the units could not make change.^
^"Now Comes the Automatic Store for Apartment House Dwellers," Business Week. February 25, 193^-1 P- 9*
^G. B. Schreiber, A Concise History of Vending in the U.S.A. (Chicago: Vend. 1961), pp. 37“ 3*5 •
**Ibld.. p. 38. 38
Automatic Food Store
Louis Roberge introduced the first automatic "push-button* gro cery store in this country when he completed his automated store at
3150 Lyndale Avenue South in Minneapolis in August, 195^ ( 886 I'i£ur®
3). Five years in planning and developing the unit represented an investment of $35*000 according to Mr. Roberge.5 The "push-button" grocery was self-contained in a refrigerated unit lhx l S fee t by 8 feet high. Items to be sold included milk, eggs, bread, butter, canned goods and fresh meats.
To be served, the customer merely stepped up to the front of the unit, looked through a fill length glass window to select her purchas es, dropped her coins into the appropriate coin machine located in front of the building, and pressed the appropriate button, bringing the desired merchandise forward into a hopper.
Within the machine, each product was placed upon a separate con veyor, thirteen feet long. When the proper coins were placed in the coin mechanism and the proper button pushed, the particular conveyor moved forward a prescribed distance. The item was discharged, sliding down a stainless steel chute into a stainless steel compartment out sid e.
The automatic grocery was insulated and refrigerated to maintain a 3H-36 degree temperature. It was built in panels so that it could be easily moved and it could be erected in about three hours.
5"PuBh Button Grocery," Vend. September, 195^* P* 108. 39
Source: American Druggist
Figure 3* Automatic Food Store, Minneapolis, 195^* Mr. Eoberge had spent twenty years In the advertising field and from I9I+2 to 19^9 was the owner and operator o f Dutch M ille D airies, consisting of both a dairy plant and retail stores. Working with Mr.
Boherge in designing and planning the Automatic Food Store was E. B.
Craft, a Minneapolis architect. The automated grocery was built by the Central Cabinet Company.
Mr. Eoberge planned to go into the manufacture of Automatic
Stores as soon as interested food retailers had observed the operation of his unusual store. Eoberge wae highly enthusiastic with the po~ tential that the Automatic Pbod Store would present to the neighbor hood grocery operation and anticipated an enthusiastic response from food retailers.
The operation, however, met w ith challenging delays. Planned to open in August 195*+» the automatic food store was denied a food li cense in Minneapolis, although the city health department had earlier given tentative approval. The denial by the City Council License
Committee was not on health grounds but was made after considerable protest to the automated operation by Edward Strauss, executive secretary, Minneapolis Eetail Grocers Association, and by officials of the grocery clerks, meat cutters and milk drivers locals. Mr.
Strauss argued that the machine violated grocery health ordinances requiring running water, drainage outlets and accessibility for health inspection.^ Bay Wentz, Minneapolis vice-president of the AFL Meat
^"Opposition Delays ’Push Button1 Operation," Pood Topics, December 20, 195^» P« 2. Ul
Cuttera International, while "not trying to stop progress" complained that health inspectors would not be able to examine food a t the in- sta lla tio n .7 Mr. Eoberge met the complaints by offering to make keys to the unit available to the health department.
Eugene Utecht, business representative of the Minneapolis AEL
Meat Cutters Local 5^8, warned that the automatic units would "spread lik e cancer," forcing other u n its to keep la te hours. Roberge count ered that the automatic store would prove to be a blessing to the small grocer who could operate the automatic store when his regular store was closed and so be able to limit the hours of operation at the regular btore.8
Unable to secure the necessary licenses in Minneapolis, Eoberge secured a food license in suburban Richfield. However, when the unit was set up on a leased lot near the leading business corner, Roberge was brought into court on a charge of moving a building into the village without a permit. Hearing the plea nolo contendere, on the argument that the unit was not a building but a vending device, the judge advised the council to determine the nature of the unit. The council drew up a new ordinance that would reauire modifications of the Automatic Eood Store and a vending permit was not issued.9
In July 1955* after having been stymied nearly a year fr o m opera ting either in Minneapolis or in suburban R ichfield, the unit went
7Ibid.
8Ibid. 9lbid. into operation in the Meadbrook Apartment area of another suburb, St.
Louis Park, Minneapolis. The meat cutters' union, milk drivers1 union and the grocers’ association had expressed their opposition to the
St. Louis Park council, hut Roberge received a more favorable recep tion when the manager of the apartment development appeared before the council to request permission for the store to operate. Roberge was granted a milk license and a tentative ordinance was drafted to cover
"the automatic food store" and all other food dispensing units in the city .
The fourteen building apartment area where the Automatic Pood
Store was located had an immediate draw o f 558 fam ilies with the nearest supermarket a mile and a h a lf away. The customer potential was estimated to be about 2 ,0 0 0 .^ Items dispensed at prices com parable to the chain stores included: milk at l6 cents a quart;
Jumbo eggs at ^5 cents a dozen; Sw ift's bacon at 65 cents a pound; doughnuts for 30 cents a half dozen, bonder bread at 25 cents a pound and weiners at 50 cents a pound, plus butter, margarine, cup cakes and ground round steak.11 Early reports indicated sales were running about $100.00 a day with milk the fastest selling item.
Mr. Roberge, after undergoing the great difficulties encountered in getting into operation, suffered a stroke a few weeks after opening
iOnyirst; PaHy-Automated Unit Termed Success," Pood Topics, September 5t 1955» P* 2.
^G loria Hogan, "Vending Machine For Grocery Items Starts Operations," Supermarket Hews, August 1, 1955* P* 2. and was thus denied the opportunity to carry out his plans to manu facture and s e ll the "Automatic Pood Stores." With Mr. Roberge con fined to his home, his wife and two eons have continued the operation which is s t i l l serving the Meadowbrook Apartment area in S t. Louis
Park. A recent outbreak of vandalism has presented Mrs. Roberge with additional maintenance and operational problems.12
Hanscom'B Bakery
In April, 1956. Hanscom Brothers Bakery, a Philadelphia chain of
25 candy and baked goods Btores, installed an around-the-clock bakery vending machine in the front window o f th eir store a t Broad Street and
Olney Avenue in Philadelphia (see Figure 4). The location, a transfer point for both surface and subway transportation, was a heavy traffic spot with over 65,000 people passing by the bakery daily. The unit, designed to give 24-hour service for the "harrassed hostess, the late snacker and the early riser?,*3 also made sales during rush periods.
Most sales, however, were considered as plus sales, being made while the store was closed.
Sidewalk Service Company, the manufacturer, reported sales at
$500,00 to $600.00 a week.*1* The purchaser had a choice of four items.
*%>hone conversation with Mrs. Louis Roberge.
1 ^Business Week, March 24, 1956, pf 51.
l5+"Uew Baked Goods Vendor Seen Usuabie for Stores," Supermarket News. March 12, 195^. p. 19* Source: Supermarket Uewa
Figure 4. Hanscom 2U-Hour Sidewalk Service, Philadelphia, 1956. h5
The customer dialed the item displayed in the show window by number, inserted the needed coins in the coin mechanism, and received the purchase through a delivery door on the store front. Exact change was needed Bince the vender did not include a changer. Cakes, coffee
cake, doughnuts, pies, rolls and a miscellaneous variety of items were offered at various times.
The installation was discontinued in June, 195^ “because of me chanical difficulties.*5 Mr. Edward Hanscom reported that the test was satisfactory from the sales point of view "but that the unit was not engineered properly, mechanical d iffic u ltie s causing tremendous
customer dissatisfaction. While Hanscom's have not tried vending again, they are still interested if and when the right vender is de veloped. ^
Vend-0-Mart
Another of the few installations that still remain in operation was opened August U, 1956, by Prank Ver at State Route 13 and Pine
Street in Bristol, Pennsylvania, just outside of Philadelphia. Open
ing with two machines, Mr. Ver did not anticipate having more than six venders but he found that each additional machine added increased the sales from all of the other machines, aB well. He continued to add machines, keeping those that paid off and getting rid of those that
Marketing Trends,” Tide. June 22, 195&. P* 3^.
^^ersonal correspondence of the author, letter from Edward E. Hanscom, July 3. 19^3- fa iled to achieve acceptance, u n til he had 23 machines set up along a ninety foot stretch, dispensing a variety of food stuffs including groceries, soft drinks, and snack items (see Figure 5).
Seventy-five per cent of the 'business Came in the evening hours.
The operation was not staffed during the day, but in the evening a g ir l was employed to make change and to help customers. A change maker was removed when Hr. Ver found that people were taking a ll o f the change for poker games.
Business was best in the spring, summer, and fall and tapered off rapidly in the winter. In the winter there was less travel, outdoor shopping was very uncomfortable, and the cold weather played havoc with the coin mechanisms. Machine contents would freeze and the ma chines operated very sluggishly. Machine improvements have taken care of many of the problems resulting from cold weather.
Table 2 gives a summary of the equipment used, items sold and average weekly sales. The average weekly sales are based upon esti mates made by Mr. Frank Ver. These estimates total slightly over
$1,000 weekly sales. Local estimates were that sales were in the
$700-$S00 weekly range when Mr. Ver owned the Vend-O-Mart. Ver se cured a five year lease on the property. His initial rent was $50.00 per month, graduating up to $150.00 per month at the end of three years.
Having only $h,000 of capital, Mr. Ver proceeded to do much of the work himself. He graded the location, built the base for the vending machines, and erected a canopy with a multi-color fiberglass ^7
Source: Mr. Ver
Figure 5, Vend-0-Mart, Bristol, Pa., 195^* TABLE 2
Summary of Tending Equipment Used, Items Offered and Average Weekly Sales, Vend-O-Mart, Bristol, Pennsylvania
Estimated Average Wedcly Machine Type Sales
Ice Vendor Block and crushed $100.00 Dry Groceries Vendor Coffee in tin s, boxes o f tea* boxed spaghetti* 2 Campbell soups, peanut butter, 6 pack sodas and breakfast cereal 20.00 Canned Soda Vendor h flavors 15.00 Candy Vendor S - 5* bars 7.00 Pastry Vendor Danish pastry, mixed* jelly and cream donuts 30.00 Milk Vendor (near beer) Orange drink (2) 25.00 Milk Vendor Milk (2) 250.OO Egg Vendor Medium and large ^5.00 Sandwich Vendor Cold cuts (5) 35-00 Sandwich Vendor Cold cuts ( 5) , 3 cheeses, franks and bacon 20.00 Soda Vendor Pepsi 72.00 Bread Vendor One kind 52.50 Cigarette Vendor 20 kinds 120.00 Soda Vendor 1+ kinds Us.oo Potato Chip Vendor 1 kind 9.60 Ice Cream Vendor Ice cream sandwiches, popsicles, and 3 kinds o f n ovelties 33.00 Candy Vendor 10 - 10^ candies and 3 ~ 5# gums 12.50 Pastry Vendor Individually packaged pies (5 ® 15(*) 15.00 Pastry Vendor Individually packed tasty cakes (5/15) 30.00 Bread Vendor 1 <§ 25 37.50 Ice Cream Vendor P in t package, 5 ® 35 35.00 Cookie Vendor Cookies & peanuts, 5 ® *05 12.50 Pretale Vendor Packaged pretzles, 1 @ 10^ 5.50
Telephone % receipts averaged approximately $17*50 Per month
Source: Personal correspondence with Mr. Ver. roof. His construction cost him $4,000 and hie initial machines cost another $4,000. Some of the equipment was owned by Mr. Ver and some was owned and operated by outside firms. Outside specialists operated
the ice cream, cigarette, cigar, coffee and candy machines. Mr. Ver
received a commission on sales of these items. Unusual days included a Christmas Day when bread sales were 660 loaves before running out of
supply and one Sunday when the Pennsylvania Blue Laws were strictly
enforced and cigarette sales were over 7 0 0 packages for the day. The
early sales leaders were milk and bread. A dairy serviced the milk machine and two bakeries serviced the bread machines. A local farmer provided the eggs. He was provided with a key to the vender and
loaded it himself. Early results, with 17 machines on location at the
end of the first six months of operation, gave average sales in the
range of $1,200 to 31,400 per month. Average gross profit was 22 per
cent giving Mr. Ver an average gross profit of $3^0.00 per month.^7
Mr. Ver Operated the Vend-O-Mart u n til August 4, 1961, when he was'unable to renegotiate a satisfactory lease. Hillcrest Dairies,
the milk supplier, purchased the installation to retain the milk business.W hen visited in August, 1962, the installation showed obvious signs of neglect. Business was off considerably, a number of
the machines had been removed, and several were inoperative. The area was untidy and the entire installation was seriously in need of repair and attention.
^Aaron S terp field, "The Outdoor Vending Stand," Vend. February, 1957, PP. 58-59* l^Pfcrsonal correspondence of the author, letter from Mr. Frank Ver, December 20f 1962. Mr. Ver’e start in vending was most unusual. Ver was an aircraft
production supervisor, with 19 year’s experience in the industry, at
Kaiser Metal’s B ristol plant. The plant completed a government con
tract and Mr. Ver was among those who were let go. The evening after
losing his job Ver drove down State Route 13 to get a quart of milk
from an outdoor milk machine located at a gas station. Arriving at
the sta tio n he found there waB a bread machine but that the milk ma?-
chine was located at a station two miles in the other direction.
Ver, with no experience in either the vending industry or the
food industry, reasoned that if bread and milk, with possibly the ad
dition of eggs and pastry, were offered at the Same location there
would be the basis for a good business. His reasoning led him, also,
to decide that the addition o f coffee, cold drinks and candy would
supply the snack trade and so he could easily have a combination
grocery and lunch stop. Ver was fortunate to secure an excellent lo
cation, a heavily traveled dual lane highway at a minor intersection,
making it available to customers from either direction. An estimated
80,000 people lived within a five milk radius of the site which was
12 miles from Trenton, 15 miles from Philadelphia, and near Levittown.
Grand Union
The first real break-through in grocery vending by a food firm
occurred October 2 k , 1956 when Grand Union opened an in sta lla tio n of
eight venders at the firm1 a headquarters store located in the Elmswood
Shopping Center, East Paterson, New Jersey. Grand Union had not entered grocery vending without forethought.
As early as the f ir s t wedc o f April, 195^, Emerson Brightman, director of grocery and non-foods operations, appeared for Grand Union before
the East Paterson Board of Adjustment to secure permission to install a bank of ten vending machines in the parking lot of its headquarters
store.^ When this store was destroyed by fire shortly afterwards, vending machines were incorporated into the reb u ilt and expanded
store.
The installation consisted of four Eowe units, purchased by Grand
Union and four Vari-Vend units, leased with an option to buy. The battery of machines was fitted into a 50 inch-deep recess in the brick
front of the supermarket and was flanked by two large display windows
(see Figure 6). Vending 58 items, listed in Table 3» the installation marked the first major use of vending machines by a food store to
supply around-the-clock service to their customers. Table H indicates
the percentage of sales contributed by these items.
On the first Sunday of operation, the battery sold out on most
items, grossing $700 for the day. Sales included U80 quarts of milk
and 180 loaves o f bread. Such an amazing in it ia l response to the
vending installation apparently served to fire the imagination of
numerous other food store operators and undoubtedly helped to stimu
late the installation of vendors by other firms.
^W illiam D. Hart, "Grand Union Eyes Vending Machines," Super market Hews. April 16, 1956, pp. 1, 35. 52
TTTfUilllllJUiiii:;
Source: Vend
Figure 6. Grand. Union Nite and Day Qjiik-Pik, East Paterson, N. J., 1956 . 53 TABLE 3
Products Vended in Original Grand Union Installation, East Paterson, New Jersey (by machine)
Machine No. 1: Machine No. 51 Margarine 1 lb Luncheon Meat, Hjr-Grade Sour Cream i p t Salami Cream Cheese 8 0 2 Bologna Cottage Cheese 1 lb Pickle & Pimento Loaf Heavy Cream £ pt Light Cream pt Machine No. 6: Sweet Butter £ lb Bread Fresh Butter 1 lb Hotel Bar Butter £ lb Machine No. J x Sliced American Cheese £ lb (Bakery Products) Swiss Cheese 8 os Cinnemon Buns Cheese 8 oz Saltine Craokers 1 lb. J e lly Donuts £ doz. Machine No. 2: Sugar Donuts 1 doz. Orange Juice Qt. Butter Cup Cakes Pancake Mix Corn Muffins Buttermilk Biscuits, Cinnamon Donuts Pillsbury's & Borden's Marble Pound Cake Strawberry Yogurt £ pt Ritz Crackers 8 oz. Kraft Velveeta £ lb English Muffins Frankfurters Baby Cup Cakes (Armour's) 1 lb Coca Cola 26 oz lchlne No. 8i Sausage 1 ib Tea Bags hZ pack Cinnamon Rolls 8 oz Canned Evaporated Milk Creamed Herring 8 oz Tuna Fish 6 oz. Cheese Whi z 8 oz Orange Juice Tomato Juice 10 oz. Machine No, 3: Granulated Sugar 2 lb. Egg8 Instant Chocolate £ lb . Coffee 1 lb. Machine No. Instant Coffee 2 oz. Carton Milk Strawberry Jam (Glass) 8 oz. Peanut Butter (Glass) 13 oz.
Source; "Automatic 'Pood Clerk'," The Teamster. January-february 1957. PP. 12- 13. TABLE k
Ten Top Items in Grant Union MPood-0-MaticH Vending Installation, East Paterson, New Jersey
Item Percentage of Total Sales
Milk ^3-5 Bread, white sliced 28.0
Donuts 10.0
Cold Cuts 1+.0
Eggs 3-1
Butter 2.5 P lain Cookies 1.2
Sugar Cookies 0.7
Chocolate Cookies 0.6
Herehey Bars 0.5
Other 5.^
Source: Unpublished work by Alan Andreason. Conflicting reports appeared in the trade press concerning the role of vending in Grand Union's future plans. Vend magazine, in the
December 1956 issue, carried the following comment in a story.
Grand Union itself is committed to a large-scale vending program, according to a company executive who could not be quoted. He said that at least 200 of the 38O stores in the chain would install vending batteries against the store fronts, that recessed vending walls would be considered in a ll new stores, and that ad ditional vending units may be placed in parking lots adjacent to G.U. stores.20
Another report quoted chain officials as seeing the vending ma chines as an experiment. If the machines were successful, they might try them in other markets. Carl Shaver, director of sales, was quoted in the December 10, 195& issu e of Supermarket News that Grand Union was making no immediate plans for the in sta lla tio n o f additional vend ing machines, although it might install machines in another unit or so. The machines were being studied for consumer acceptance and he added that it was too early to project plans or to predict future operations. 21
The first promotion supporting the vending installation appeared about five weeks after the opening when an ad appeared in a circular distributed in the Elmwood Shopping Center area. The ad stated:
Forgotten something? Need something after store hours? Use Grand
Union's handy Qpik Pik. A listing of items carried was also included.
^Aaron Sternfield, "The Automatic Supermarket," Vend. December, 1956, p. 60.
^"Chain Limits Plans for Vending U nits," Supermarket News, December 12, 195&, P* 1* 56
In March 1957* Lansing P. Shield, President of Grand Union, made i t known that Grand Union was planning to u t iliz e a Food-O-Mat as an outdoor vending machine. Mr. Shiold reported that the vending ma chines installed at the Elmwood Center store had worked out very well from the standpoint of sa les. However, there had "been many breakdowns pp and repairs had required a considerable expenditure.
Fears that the availability of staple items outside of the store might make it unnecessary for Borne customers to enter the store and be exposed to impulse items proved groundless. The vending battery was stocked with impulse items, as well as staples, and served as an express checkout. The real purpose was to provide after-hours vend ing; to provide an opportunity to make sales that would otherwise be made at a neighborhood grocery or delicatessen or not at all. Tend ing machines were to be the answer for the late-at-n igh t shopper who just needed a lo a f of bread or a b ottle o f milk.
Prices were about the same in the vendors as those inside of the store. Some items selling for 2U cents in the store sold for 25 cents through the vendors while other items selling for 26 cents inside of
the store were priced at 25 cents through the machines. Prices were thought to even out when different items were purchased.
The first week of June 1957* the original eight vendors were re placed by eleven Food-O-Mat vendors (see Figure 7)* Food-O-Mats were
p p "Grand Union Sets Outside 'Food-Mat'," Supermarket News, March 11, 1957, p. 1. 57
Source: Sales Management
II. Gr“ 4 Uni0n• H lt* 8114 Day feat Paterson, a product o f the North American Equipment Company, a Grand Union sub
sidiary. These new units were installed in the same space as the
original installation hut tripled the selection offered. They of
fered l 60 items as compared with the ^4- items previously offered.
The Food-0-Mat u n its accepted exact change including pennleB. When
odd penny pricing was utilized in the previous machines, the customer
inserted the purchase price in increments of five cents and received
the change with the package. Mechanical breakdowns were somewhat of
a problem. A telephone connected to a telephone answering service
was located at the vending machines. A customer who failed to receive
merchandise could call and receive an adjustment later.
Shortly after the Food-O-Mat installation was completed, Grand
Union was reported to be soon ready to begin installing a unit of 25
vending machines that would dispense some 1,UOO to 2,100 items outside
of one of its stores. Two possible locations, including the Bronx,
New York and C lifton, New Jersey, were mentioned. There was a pos
sib ility that a dial system would replace the push-button which had
given some mechanical problems.23 This installation did not materi
a liz e .
Later again in 1958» "according to reliable reports," Grand Union
was about to make a second vending installation at the Grand-Way
Serving Center under construction a t Lynwood Avenue and Route 17 in
Paramus, New Jersey. This 90»000 square foot junior department store
2?Doris Tobias, "Say Grand Union 25-Vending-Machine Unit w ill Offer l,U0O-2,10O Items Outside Store," Sunermarkat News. July 1, 1957, P. 12. supermarket Was to have a vending installation about four times the size of the 11-unit installation outside of the headquarters store in
East Paterson. Grand Union officials would not confirm the report but did reveal that there had been discussions concerning such an instal- pli lation. This also failed to materialize.
The vending experiment was abandoned in November 1961. The equipment was dismantled and sold. Charles H. Haight, Grand Union
Treasurer, reported that among the reasons for discontinuing the operation were:
1) Busy se llin g times were Sundays and holidays requiring re stocking of the machines. Union personnel had to be called in to do
the restocking, making the operation very expensive.
2) The machines were restocked from the front. This was time- consuming and expensive.^5
Grand Union Vice President, E. E. Silvers, Jr., reported that the main reason for giving up the experiment was lack of profits. The expense rate far exceeded the gross margin and the decision was made
that it should be continued no longer as either an experiment or as a public relations gesture. Mr. Silver feels that vending machines would work i f expenses were lower than the gross margin. This
ph "Hear Grand Union Plans 2d Vendor," Supermarket News. July ll|., 1958, pp. 1, 35.
^^Personal correspondence of the author, letter from Charles H. Haight, Treasurer, The Grand Union Company, July 2, 1963* would require a relatively high volume at pricee higher than charged
p C in regular supermarkets.
A & P Tea Company
The Great A tlantic and P a cific Tea Company became the second food chain to install food vending machines for 24-hour a day shopping, when on December 1, 195&» it opened a battery of five, multiple item
Vari-Vends at the front of a recently opened new supermarket located at 170 Gardiners Avenue, Levittown, Long Island (see Figure 8) . The grocery vending installation was known as the "A& P Around the Clock
Handi-Pantry." The items stocked included dairy, meat, milk, bakery, and grocery items (see Table 5)* Prices were comparable with those
charged in-store.
Only seven weeks a fter the vending operation began, A & P noti
fied customers of the store by handbill that the operation of the bank
of vending machines would be discontinued. The handbill read:
Effective 8 a.m. Monday, January 21, 19571 we w ill discontinue the out-door machine food service located in front of this supermarket. These machines were installed as an experiment and we thank you for your patronage at them. We hope that you w ill not be inconvenienced and suggest that you buy these items in this supermarket which is open for your convenience evenings.^7
A & P officials declined to comment on the closing. Vari-Vend
officials reported that they were told by A & P that "vending didn't
^Personal correspondence by the author, letter from E. H. Silvers, Jr., Vice-President, The Grand Union Company, June 27, 19^3*
^ Supermarket News, January 21, 1957* P* 1* 6i
AkOUR
MW-MW’BAmY'MM-GliOWM
v r n u
Source: Supermarket Uewa
Figure S. A & P Around the Clock Handi-Pantry, Levittown, L .I., N.Y., 1956. TABLE 5
Products Vended, A & P, Levittown, New York (tiy machine)
Machine No. 1 One Pound Bread Glazed Donuts
Machine No. 2 ’/heat Bread 1 lh. English Muffins Sugar Donuts 1 doz. Cinnamon Donuts Gold Pound Cake Marble Cake 12 oz. Chocolate Chip Cookies Sugar Donuts
Machine No. 1 Fresh Milk ( carton) 1 qt. Half-Gallon Milk Carton
Machine No. H Salt Butter Heavy Cream Half-Dozen Eggs (2 brands) American Cheese 8 oz. Swiss Cheese Half and Half Cream Fresh Orange Juice
Machine No. 5 Coffee 1 lb. Instant Coffee 2 oz. Evaporated Milk 13 oz. Bologna 6 oz. Frankfurters 8 oz.
Source: "Automatic 'Food Clerk,'" The Teamster. January-February, 1957* PP* 12- 13. 63 fit in with its operations at this time."28 Orval Eaton, president of
Varl-Vend Sales, Inc., added that another reported reason was that the out-door vending machines were cutting down on A& P*s store t r a f f ic .^
Other comments indicated customers had reported experiencing mechan ical difficulty. No information is available on the unit or dollar volume of sales realised through the vending machines. The unfavor able weather o f the winter season (December-January) and the mechan ic a l d iffic u ltie s and low sales volume experienced by other operators suggest that very low sales volume was undoubtedly a key factor in the abrupt termination of the experiment.
Unrecognized at the time, the A & P termination of its grocery vending experiment was the bellwether of the results to be experi enced by numerous other operators who were about to embark an auto matic grocery vending experiments.
Colonial Stores
Colonial Stores made news in a number of ways with the opening of the first bank of outdoor food vending machines in the South on Feb ruary 28, 1957* The installation was at a three year old, 12,000 square foot store located at 1116 Broad Street, Durham, North Caro lina. This installation was unique in that it was the first to be housed as a self-contained unit.
28"Vari-Vend Explains A & P Dropping It," Supermarket News, February 3, 1957t P* 26.
^ Ib ld . 6U
The entire installation was contained in an attractive pre-fabri
cated aluminum structure, built at Colonial headquarters in Atlanta,
trucked to Durhaxa, and erected in a day on a specially built concrete platform. There was ample room within the structure for on-premise
storage, making it possible to stock the venders nights or week-ends without opening the store.
The structure matched the decor of the store p erfectly. Atop
the roof was the traditional CS rooster insignia. The machines were
installed in a unified white metal front, above which were plastic
signs of bright red lettering mounted on white and illuminated by
fluorescent lights from behind. The signs carried the slogans "round
the clock shopping" at the front of the structure and "2h Hour Shop ping" at the side.30 The building enclosing the vendors was twenty-
four feet wide, nine feet deep and eight feet high (see Figure 9)*
Data on the cost of the installation are contained in Table 6.
There were six vendors, three Lehigh and three Howe. This was
the debut for the Lehigh machines. They had eight adjustable shelves
each able to vend a different item. The unit was six feet, seven
incheB deep and could be stocked from the rear. Delivery o f each product was made by the forward movement o f a b e lt. The Lehigh ma
chine displayed its selection in two glass cases which were designed
as a part of the vendor1s door. The selection was dialed by number,
the coins were inserted (n ick els, dimes and quarters) and the product
3®Paul Gould, "Colonial’ s Outdoor Battery o f Vendors F irst in South," Food Topics, March IS, 1957* P* 3* 65
Source: Vend
Pigure 9* Colonial Stores "Round the Clock Shopping," Durham, North Carolina, 1957. TABLE 6
Costa—Vending In sta lla tio n , Colonial Stores, Durham, North Carolina, 1957
MACHINES*
1 Milk Machine (Bowe) $1,156.1+1* 1 Egg Machine (Bowe) l,6o6.1+l+ 1 Meat Machine (Bowe) fS O .O O (Freight on above) 76.67 1 Grocery Machine (Lehigh)** 1,290.75 1 Bakexy Machine (Lehigh)** 1,290.75 1 Beverage Machine (Lehigh)** 1,290.75 Additional Sales Tax 126.97 Total Machines $ 7.618.77
HOUSING
Prefab House Unit, Transportation, Labor $2,999*68 E lectrica l In sta lla tio n o53»02 Concrete Slab and Building Erection 783*52 Labor In sta lla tio n (Ealeigh Maintenance Shop) 570.55
Total Installation $ 5,006.77
TAXES
City and State $ 1105.00
Total Cost (Entire Unit) $12,730.5^
*$15.00 sales tax included for each machine. **$25.00 freight included for each of these machines.
Source: Company records. was delivered automatically. While the three Howe machines were re frigerated, the three Lehigh's were nonrefrigerated hut had provision for temperature and humidity control.
Colonial Stores developed a system to record sales movement through the vendors. Inventories were taken twice daily at store opening and closing time to show the movement hy day and night (see
Table f ) . The assistant manager of the store was placed in charge of the operation. Sales were rung up weekly hy department and submitted as a part of store sales.
The opening o f the food vending operation was announced in hoth
Durham newspapers with a six column spread in each. No further no tices or advertisements were utilized in the following six weeks.
The Durham store was closed Wednesday afternoon in keeping with general store hours in the city and was open only two evenings a week.
Such store hours must he considered favorable to vending in comparison with the longer supermarket hours generally found today, throughout
the country. The store was a free standing unit on a heavily traveled residential street in a high-income area.
The vending operation oppned on Thursday, February 28, 1957, and sales records are available through April 6 (see Table 8). Sales for the first weeks averaged $85-91 Per week. Average weekly gross profit for the same period was $12.65. Depreciating the vending in stallation over a five-year life, charging the installation for actual hours of labor utilized (27.8 hours per week at $1.50 per hour and estimating power and miscellaneous costs at i 5*00 P®r week, the 68
TA3L3 7 Sales Analysis - Colonial Stores, Durham, North Carolina, Five and One-Half Weeks (February 28-April 6, 1957)
Unit Per cent Dollar Movement Selling Dollar Gross Gross Item Day Night Price Sales P ro fit P rofit
Pick of the Nest Ffegs, Large 27 86 $.U7 $ 5 3 .ll 10. $ 5.31 Buttermilk (qt.) 33 k6 .20 15.20 17- 2.59 Sweet Milk (q t.) 262 .26 IO5.56 8. s.kk S liced American Cheese 15 26 .25 IO.25 22. 2.26 Sliced Bologna 10 •25 8 . 25 23. 1.90 Frankfurters 26 26 .25 13.00 23. 2.99 Dried Beef 6 11 •35 5-95 25 . i.k 9 Canadian Bacon 16 31 • 35 16.U5 21. 3.k5 CS Instant Coffee (2 oz.) 15 12 .kg 13.23 27. 3-57 Gold Label Coffee (1 lb .) 8 12 •95 19.00 7. 1-33 Gold Label Tea Bags (k8 c t.) 1 • 55 • 55 2k. • 19 Swift' 8 Beef Steak and Gravy k 6 .kg h.90 13. .6k Little Sister Sweet Pickles (pt.) 1 1 .29 • 58 29. • 17 Starkist Tea 3 8 •35 3.85 17. .65 6a. Maid Peanut Butter k .h5 1.80 23. .k i Premium Saltine Crackers (1 lb .) 6 5 .29 3-19 17. , 5 k CS Pound Cake* 3 6 • 33 2.97 23. .68 CS Sugared Donuts** hi 103 • 25 U2.05 23. 9.67 CS Chocolate Layer Cake* 2 • 35 • 70 23. .16 CS Weiner R olls (|- doz.) 27 20 • 15 7.05 16. 1.13 CS Hamburger R olls (■§• doz.) 26 27 • 15 7-95 16. 1.27 69
TABLE 7 (contd.)
Unit Per cent Dollar Movement Selling Dollar Gross Grose Item Day Night Price Sales P rofit P rofit
Thin Sandwich Bread 90 1 7 b $.15 $ 39.60 16. $ 6.3U 0. P. Bread 5 * .15 20.55 16. 3.29 Small Thrifty Bread 56 104 .15 t2U.00 16. 3.8U Mother's Mayonnaise (p t.) 1 9 •35 3.50 20. • 70 CS Milk (tall) 15 21 .26 9.36 8. Sugar (2 lb.) 11 15 .25 6.50 10. .65 Campbell's Soup 18 18 9.00 12. 1.08 Pepsi Cola - 6 7 21 .Ul 11. U8 20. 2.30 Seven-Up - 6 6 6 Ml U.92 19. •93 Coca Cola - 6 10 10 .Ul 8.20 11. .90
Total Sales ------$U72.70
0ro88 Profit ------— 1U.73 $69.62
Man Hours Expended------•153
*Keplaced.
■"Trice change week ending March 16 from $0 . 23,
Source: Company records. weekly cost o f operation was $95*66 (see Table 9)* Given the realized
gross profit (l4.73 Per cent), weekly sales of $649.42, more than six
times the realized sales, would be required to merely break even.
Other adjustments would have resulted in raising the break even point
still fhrther. The cost analysis used made no provision for the cost
of ordering, receiving and warehousing the product at the store level.
No adjustment was made for additional labor required as sales inr-
creased. Electrical power and miscellaneous costs would appear to be understated, as $5*00 per week would not be sufficient to cover elec
tricity, upkeep and repair, taxes and insurance, et cetera.
TABLE 8
Total Sales by Week o f All Jtems Listed in Table 6, Colonial Stores, Durham, North Carolina, 1957
Week Ending Sales
Opening Week* March 2 $ 45.15 Second Week March 9 136.57 Third Week March l 6 105.77 Eourth Week March 23 87.44 F ifth Week March 30 43.93 Sixth Week April 6 51.86
Total Sales $470.72
Average Sales per Week (5-| weeks) $ 85.91
* One-half week, Thursday to Saturday.
Source: Company records. TABLE 9
Profit and Cost of Sales Summ»-y, Colonial Stores, Durham, North Oarolina, 1957
Average Weekly Sales (5^ weeks) $ 85.91 Average Weekly Gross P rofit 12.65 Annual Depreciation (5 years) 2 , 51+6.11
Weekly Depreciation $1+8.96 Average Weekly Man Hours, 27.8 @ $1.50 per hour 1+1.70 Electrical Power and Miscellaneous Costs 5.00
Average Weekly Cost $ 95.66
Average Weekly Sales Necessary to Produce Gross P rofit Equal to Average Weekly Co3t (Based on lU.73 Per cent Gross Profit) $ 61+9.1+2
Source: Company records.
Colonial Stores ended the experiment in May, 195®• M. Harris
Dodd, Colonial general merchandising manager said, "It "became evident
that the location of our vendors and the shopping habits of the par
ticular community, among other factors, would not provide a true
te8t,..w e are continuing to study this subject as a part of an over
all analysis of potential changes and trends in food distribution."^
Low sales volume, mechanical d iffic u ltie s and vandalism were other
factors leading to the abandonment of the test.
3^"Interest in Vending Machines S t i l l High Despite Setbacks in Outdoor Tests," Food Tonics. August 18, 195®i P* 2. 72
National Tea
The first food chain in the mid-west to experiment with outdoor grocery vending was the National Tea Company with a five machine in sta lla tio n at the National Pood Store, 1705 North Harlan Avenue, on
Chicago’s West Side. This installation, utilizing Vari-Vend machines, incorporated four refrigerated units and one non-refrigerated unit in a location directly in front of the store windows and protected "by a three-foot overhanging canopy (see Figure 10). The "bank of machines was made attractive by utilizing spaces fillers between the units and by building a common front above them. The front carried the identi fication N/VTCO VEND 2 b Hour Vending Service.
A variety of items ranging from canned ham @ $2.2U to tomato juice © 13^ were among the 5^ products offered. Other items included canned goods, luncheon meat, cereals, bread, milk, butter and cartoned eggs. Prices were the same as those in the store.
The test was labeled "definetely experimental" by National Tea officials. Shortly after the opening, bread was discontinued as an item offered because of the difficulty in vending an item packaged in the manner of a lo a f of bread.
The National Tea experiment was discontinued after being in oper ation for a year. Val Bauman, National Tea general merchandising manager said, "We averaged about $150 a week, gross. We consider i t a big flop." Bauman thought that the biggest reason for the low sales were the "countless individual transactions the customer faces, which
32Food Tonics. July 22, 1957, p. 17. 73
Source: Jobbers Service, Inc,
Figure 10, national Food Stores, "Natco Vend," Chicago, 1957* he doesn’t care to or hasn't time to bother with.” Mr. Bauman indi cated that National Tea would have no further in terest in outdoor grocery vending u n til a machine was developed that would allow the customer to make all of her selections, present a totalized h ill, ac cept payment for the entire purchase, and make delivery of a ll the purchases at one time.53
Milk and soft drinks were the fastest moving items. There was no provision for heating the refrigerated machines and there was some difficulty with eggs freezing during cold weather.
Kroger
On July 2, 1957, The Kroger Company opened the f if s t 2lj-hour grocery vending operation in the Detroit, Michigan, area. The instal lation was against the outside wall of the market facing Thirteen Mile
Road at the large Northwood Shopping Center, Thirteen Mile and North
Woodward Avenue in Royal Oak, Michigan (see Figure l l ) . The in sta l lation consisted of sir Vari-Vend units on lease, three refrigerated and three non-refrigerated. The machines were housed under a lighted canopy which included a lighted identifying sign, "Kroger 2h-Hour Food
Vending Service." Total investment, had Kroger purchased the machines
(they were on four months' le a se ), would have been approximately
$1 0 , 0 0 0 .
Prices were the same as within the store but adjusted to include the state sales tax. The customer had a selection of fifty-four meat,
33"Food Chains Look at Outdoor Milk Vending,” Vend. July, 195^, p. 3k . Source: Kroger
Figure 11. Kroger 2U Hour Vending Service, Detroit, Mich., 1957. produce, dairy, and grocery items to choose from (see Table 11).
Kroger was the f ir s t known in sta lla tio n to test produce items, of
fering packaged head lettu ce and tube tomatoes.
After the machines had been on location for about a month, Job bers Service, Inc., Coldwater, Michigan, the distributor of the Vari-
Vend machines, conducted a limited survey of fifty Northwood Shopping
Center customers concerning their knowledge and response to the vend
ing machines. Some of the findings are of interest. Only 20 of the
50 respondents had seen the machines. Only 9, less than 20 per cent,
of those interviewed had purchased anything from the machines. The
vendors were considered an added convenience, however, by U8 o f the
50 respondents (one didn’t purchase anything on Sunday; the other
nhad i t inK for automation). The Detroit newspapers had carried i l
lustrated articles and advertisements at the time of the opening on
July 2, but only 19 of the 50 respondents recalled anything in the
newspapers about the in sta lla tio n .
When Kroger o ffic ia ls became aware of the apparent lack o f knowl
edge by potential customers concerning the grocery vending machines,
they immediately raised their advertising budget and also printed
10,000 handbills to be distributed in the cars on the parking lot on
Thursday, Friday and Saturday. One o f the handbills publicizing the
vending installation is reproduced in Figure 12.
The cash was removed from the machines and run through a store
cash register according to sales by department. Sales the first week 77
TABLE 11
Products Vended, Kroger, D etroit, Mich, (hy machine)
Machine No. 1 Machine No. 1* Item Price Item Price Tea Bags W 57# Bread, Kroger 20* Kroger Coffee 97 Peanuts, Kroger 2 lh . Sugar 26 Pizza Mix, Box k o Milk, Kroger 13 Wheaties, 8 oz. 18 Tide, Large 33 Spaghetti, F. A. 15 Kleenex (1*00) 28 Dog Food, Rival I k Modess, Regular 1*2 Lemon Juice, p t. 3? Coffee, Instant 2/1*6 Salad Dressing, Kroger, pt. 3^ Toilet Tissue I k Pickles, Dill, pt. 26 Machine No. Tomato Soup, Campbell 13 Bread, Kroger 20* Crackers, Kroger 18 Machine No. 2 Cookies, Chocolate Chip Uo Milk, \ ga l. 1*2* Buns, Hot Dog 22 Cream, £ p t. 26 Butter Cookies, 10 oz. 30 H alf and Half, p t. 27 Potato Chips 30 Milk, qt. 23 Buns, Hamburger 22 Chocolate Milk, qt. 25 Machine No. 6 Machine No. 3 Cheese, ^ lb . American 32* Bologna, lb. 59 s# Cheese, £ lb . Pimento 32 Hot Dogs 55 Butter, 1 lb. 71 Mustard, Jar 15 Potato Salad 36 Salami, 8 oz. package 38 Cottage Cheese 30 Tomatoes, Tube 30 Herring, Cream 61 Catsup, Kroger 18 Margarine, Eatmore 20 Lettuce, Head 30 Eggs, doz. 56 Bacon, lb . 50 Pigs Feet, Jar 1*0 Ginger Ale, 2 k oz. 2 k Velveeta Cheese, 8 oz. 30 Pepsi Cola, 2** oz. 2 k Pimento Cheese, 8 oz. 30 Sweet Relish, pt.-Heinz 30 Sweet P ickles, A.J. k 2
Source: Company records. 78
For Your Convenience Kroger Offers 24-HOUR SHOP WITH NEW VARM VENDING MACHINES i at nj '
Av-’ tf l Dinars rmsr 2 4 - h c k m ours o w FOOD VENDING SiEVICtl
• OVEE SO OF THE MOST-MOSMAHD OBOCBSY ITEMS - BOTH ElfEIGBBATED AND NON-, IEFEIOEBATIDI
• SAME IVEEVOAT LOW FBKES AS M M * THE STOMI
SALES TAX INCLUDED IN FWCB O f ITEMI
MACHINES WXl ACCOT FEMMES. NKXSU, DIMES AND QWABTEBS FOB YOU! FUECHAOS — AUTO MATIC CHANGE MAXIM TOOI
LOCATED UN DEE A BEAUTIFUL CANOFY . UOHTED FOE EASY NNSHT SHOFMNBI
NO W YOU CAN SHOF 24-HOUES A DAY SEVEN DAYS A W*«*f AT YOUR KROGER STORE IN THE NORWOOD SHOPPING CENTER 13 MUI A WOOCWAAD
>rn FIEi 10 AM o u t FUHOHHU ANT DMSTION YOU MAY HAVE NOAEMNO THIS NEW SHOFMNO SMVtCI
Source: Jobbers Service, Inc.
Figure 12. Handbill D istributed in Northwood Shopping Center Area to Publicize Kroger Vending In stallation . 79
were $lb-9 a*11! h>250 the second week.3^ Sales "built up to an average o f
about $260 per week over the four months tr ia l which was concluded
during the week of October 27, 1957* The store was open until 9;00
p.m. weekdays and was closed on Sunday. The te s t was p a r tia lly to
help find an answer to "Sunday closing." Canned food items did not
move and sales of produce and meat items were only fair.
Sales were not as great as originally anticipated and breakdowns were frequent, the machines requiring almost constant care. The ma-
chines were expensive to service and there was no profit. A1 Rain,
Kroger official in Cincinnati, commenting on the tests the following
year said that the tests were discontinued because of "increasing me
chanical difficulties of the equipment. . .and because sales did not
Justify the expense."35
The manager averaged over fifteen refunds a week to customers who
had put in money and who received no product. Canadian coins would
Jam the coin mechanism. Other d iffic u ltie s arose from the use o f
dirty or bent coins and from the failure of customers to follow in
structions.
With the closing of the ill-fated experiment, Kroger, apparently
dismissed grocery vending in their operations for the near fliture.
Branches could probably get authorization for future tests, should
changed condibiops warrent further interest, but grocery vending cur
rently evokes slight interest at general headquarters.
3^Company records. 35"Sbod Chains Look at Outdoor Milk Vending." Vend. July 1958, p. 3 * . go
Port Bragg
A somewhat different approach to the nee of grocery vending mar- chinea was utilized when the Commissary Division of the Post Quarter master Section at Port Bragg, North Carolina, opened a grocery vending operation in 1958. The installation utilized five Vari-Vend units and a cup dispenser soft drink machine (see Figure 13) on lease from Nance
Vending Service, Inc., Spring Lake, N. C.
Products soId included one and one-half pound pullman loaf bread, one pound regular loaf bread, frankfurter rolls, hamburger rolls, one- half gallon milk, quart milk, quart chocolate milk and quart skimmed milk. Prices were the same as in the post commissary, contract cost plus 3 per cent. The lease cost of the machines was paid from other funds. The commissary hours were fiv e days a week closing at 5:30 p.m. and closed a ll day on Sunday and Monday. The vending machines were to supplement the commissary store hours and were in operation
Tuesday through Saturday from 5;00 P*®* to g:00 p.m. On Sunday and
Monday the hours were 1:00 p.m. to 8:00 p.m.
Sales were exceedingly heavy. On days the commissary was closed, sa les o f one and one-half pound bread were approximately 1,200 loaves; one-half gallon milk sold at a rate of approximately 2,000 units d aily .
The staff to operate the five grocery machines consisted of two
Non-Commissioned O fficers in charge and two en listed men. The vending 81
COMMISSMV
Source: 1959 Directory o f Automatic Merchandising
Figure 13. Post Commissary Vending, Fort Bragg, North Carolina, 1953 . 82 company kept a mechanic on duty most of the time that the machines were in operation.3^
The coin mechanisms gave all sorts of difficulty. Sometimes no product was vended when sufficient coins were inserted and at other times the machine continued to vend without the insertion of addi*« tional coins. There were numerous other mechanical breakdowns, as well. Even though the convenience offered hy the additional sales hours was much appreciated hy the post personnel and the sales were at a high level, the vending installation was discontinued after about eight months because of the continued mechanical difficulties and the high costs involved in servicing the machines.
Howard’ s Quick Shop
Howard1 8 Quick Shop, an installation of eight multi-item vending machines, was opened September U, 1958, ^y Howard’s IGA Jbodliner,
21st Street East, Wichita, Kansas. Multi-Vend machines were supplied by Multi-Vend, Inc., Wichita, Kansas, the sales company for Paramount
Products Corporation, Peabody, Kansas, manufacturer of the machines.
Multi-Vend was interested in knowing more about customer buying pat terns from automatic machines and participated in the research program that followed their installation.
Multi-Vend, Inc., had developed an automatic coin-operated multi purpose vending machine and was interested in developing a marketing
3^Personal correspondence of the author, letter from John R Sanders, MC, Commissary O fficer, Port Bragg. program. The manufacturer wanted to s e ll the machines outright and realized that they needed to know much more ahout the sales potential of their machine, customer reaction to grocery vending,product move ment, et cetera.
Arrangements were made to te st the machines as a group in sta l lation at an existing supermarket, Howard's IQA in this case. -
Howard's, one o f two IGA Poodliners owned hy Allen and Clarence
Howard, was located on a heavily traveled thoroughfare in a well-de veloped suburban market area. Numerous other businesses were located along the main street, including three other supermarkets within one- h a lf mile. Arrangements were made for Howard's to keep the machines
stocked, empty the coin trays, and to maintain daily sales and in ventory control records. Howard's was to receive any p r o fit from the
Operation and had the use of the machines on a no-cost loan basis.
Vari-Vend periodically inspected the machines and provided mechanical service as needed. Items were to he priced within five cents of the nearest price for the same item in the store, prices were not to be changed other than hy mutual consent, and each item was to remain in
the machine for the period of the test regardless of the movement.
Prices were in five cent units and no odd cents pricing was used.
Howard's agreed to promote the use o f the machines in their regular weekly mailings and to otherwise promote the in sta lla tio n .37
37y©rne A. Bunn, "Modern-Vender, Incorporated," Case study, University of Wichita, Wichita, Kansas, 1959. PP* The installation consisted, of eight machines, three refrigerated and five non-refrigerated. Ten selections were available from each machine. The machines were se t on a walk against the supermarket and faced the thoroughfare. The space from the base of an overhanding canopy o f the store to the tops of the vendors was enclosed with a white corrugated Fiberglas sign running the length of the installation and enclosed at both ends. The sign was illuminated from behind at night with fluorescent lights.
Small signs above the machines indicated the location of the products vended. These signs (by machine) were dairy, meat, grocer- ies, household and groceries. The inscription on the sign was
Howard's Quick Shop IGA "Convenience at the Drop of a Coin" and toward
the right-hand end of the sign was an electric clock encircled with naround the clock shopping." The end panel carried the single legend
"Quick Stop" (see Figure 14).
Three change-makere were in sta lled in a panel at the center o f
the installation for changing quarters and half-dollars.
The supermarket was open evenings but was closed on Sundays, along with most o f the other major supermarkets in the c ity .
The machines were in sta lled and the te s ts began on September U,
1958. Professors Verne A. Bunn and Alton E. Harness o f the Marketing
Department, College of Business Administration and Industry, Univer sity of Wichita, Wichita, Kansas, organized and conducted the field study of the usage of and consumer reaction to the installation.3® Source: Jobbers Service, Inc.
Figure 14. Howard's Q,uick Shop, Wichita, Kansas, 195®* The controlled inventory testing continued for a period of eleven weeks and was discontinued afovember l6 t 1958* Professors Bunn and
Harness found that definite patterns in daily and weekly movement hy item and in total dollar sales appeared within two or three weeks and quickly leveled off.^
A comprehensive summary of the sixty-nine items offered through out the eleven-week test, including unit sales, per cent of total unit sales, price per unit, dollar sales hy item, per cent of total
Bales by item, per cent gross profit hy item, per cent of total gross profit hy item, and dollar gross profit hy item is listed in Tahle 12.
The top ten items in dollar sales accounted for &S.2 per cent of total dollar sales, i.e ., approximately one-seventh of the items car ried contributed two-thirds of the total sales. Milk in quart and one-half gallon cartons accounted for nearly 37 per cent of total dollar volume. The top ten items in unit sales contributed 70*^ Per cent of total unit sales. Several of the items in the top ten for unit sales were not in the top ten for total dollar sales as they were low priced items. Chocolate milk in ^ pint container @ 1 0 $ i s an example o f high u n it sales and low price while regular coffee @ 80$ a pound had lower unit sales hut waB in the top ten for total dollar sa le s.
The top ten items with respect to gross margin contribution ac counted for &.9 per cent of total dollar gross margin. Milk,
39ha l68-Hour Sellin g Week with Tending Machines," Super Market Merchandising, June, 19&0. p» S5» TOTAL 12
Sales Summary - Howard's Quick Shop, W ichita, Kansas, Eleven Weeks (September 4, 1958-November l6, 1958)
Per cent Per cent P rice o f Total Per cent Per cent of Unit o f Total per D ollar Gross Total Gross Gross Item Sales Unit Sales U nit Sales Sales P ro fit P rofit P rofit
Milk g a l.) 2265 i s . 690 s.45 $1019.25 27.864 15.6 21.242 S158.55 Bread 2593 21.396 •15 388.95 IO.633 20.0 10.423 79.79 Milk (q t.) l4 l2 11.654 .£5* 359-40 9.825 22.0 10.457 78.11 Eggs U05 3-342 .45 183.65 5.031 2.3 .569 4.25 Cinnamon Buns 335 2.764 •35 117.25 3.205 25.7 4.040 30.15 Bacon 107 . 8S3 .90 95.70 2 . 6l 6 18.1 2.326 17.36 Bologna 271 2.236 •35 94.85 2-593 37.1 4.720 35-23 Fleming's Regular Coffee 110 .908 .80 8 8.00 2.406 1-3 • 147 1.10 Frankfurters 107 . 8 83 .70 74.90 2.048 27.1 2.724 20.33 Root Beer 366 3.020 .20 73-20 2.00ft 37*5 3.678 27.45 Hamburger P a tties i4 i I .163 .50 70.50 1.927 24.0 2.267 16.92 Donuts 200 I . 65O •35 70.00 1.914 31.4 2.948 22.00 Banana Cookies 180 1.485 .30 54.00 1.476 26.7 I .929 14.40 Chocolate Fudge Cookies 179 1.477 .30 53*70 1.468 25.O 1.798 13.42 Ham 62 .512 .80 49.60 1.356 36.3 2.409 17.98 TABLE 12 (contd.)
Per cent Per cent Price o f Total Per cent Per cent of U nit o f Total per D ollar Gross Total Gross Gross Item Sales Uni t Sales Unit Sales Sales P ro fit P rofit P ro fit
Fleming1s Drip Coffee 6l .502 b . 80 $48.80 1-334 1-3 .082 .61 Half and Half 136 1.122 •35 47.60 1.301 25.7 1. 6UO 12.24 Maxwell Instant Coffee 94 .776 *5C 47.00 1.285 18.0 1.134 8.46 Tide Detergent 133 1.100 .35 46.55 1.273 15.7 -979 7.31 Milk, Chocolate (i pt.) k k i 3.639 .10 Uh.io 1.206 4o.o 2.363 17.64 Luncheon Meat 57 . k 7 0 .70 39.90 1.091 27.1 1 .U51 IO.83 Ginger Ale 129 1 . 06k • 25 32.25 .882 28.0 1.210 9 .O3 Butter 79 . 65U .Mo 31.60 .864 20.0 .847 6.32 Oleomargarine 126 1.040 .25 31.50 .861 30.0 1.277 9.45 NBC Oreo Cookies 75 .619 .ho 30.00 .820 22.5 .904 6.75 Jelly Bolls 92 .758 .30 27.60 -755 25.O .924 6.90 Kotex 58 .479 .45 26.10 • 714 35.6 1.243 9.28 NBC Fancy Cre9ts 85 .701 .30 25.50 .697 23.3 .797 5-95 Tom C ollin s Mix 96 .792 .25 24.00 .656 28.0 .900 6.72 NBC Ritz Crackers 83 .685 .25 20.75 .567 20.0 .556 4.15 Crieco, (1 lb.) US .396 . k c 19.20 .525 22.5 .579 4.32 NBC Premium S altin es 93 .767 ,2C 18.60 .508 25.O .623 4.65 Dog Food 120 .990 .15 18.00 .492 43-3 1.045 7-80 NBC Slim Jane Pretzels 89 • 734 .20 17.80 .487 25.O .596 4.45 Maple Syrup U9 .404 .35 17.15 .469 27.1 .623 4.65
05oa TABLE 12 (contd.)
P e r c e n t Per cent Price of Total Per cent Per cent of U n i t o f T o t a l p e r D o l l a r G r o s s Total Gross G r o ss I te m Sales Unit Sales Unit S a le s S a l e s P r o f i t P r o f i t P r o f i t
Pork and Beans 98 .809 $.15 SiU.70 • U02 25.0 .39U $2.91+ Treet Pak - Dry Breakfast Pood 1*1* .363 .30 13.20 .361 22.3 •395 2.95 Whipped Cream 26 .215 .50 13.00 •355 20.2 . 3U8 2.60 C hili and Beans 35 .289 • 35 12.25 •335 22.9 .375 2.80 Pillsbury Biscuits s i .668 • 15 12.15 •332 1*0.0 .651 1*. 86 Campbells Chicken Hoodie Soup 6o .4-92 .20 12.00 .328 25.O .U02 3.00 Evaporated Milk 79 .652 • 15 11.85 . 32U 6.7 .106 .79 S u g a r 79 .652 •15 11.85 . 32U 20.0 • 318 2.37 northern T oilet Tissue 115 .9^9 .10 11.50 • 3lU 25.0 .385 2.87 Caliph el Is Vegetable Soup 7& .627 .15 11. ’40 • 312 16.7 .255 I .90 Salad Dressing ^3 • 355 .25 10.75 .291* 21*.0 . 31*6 2.58 C h eez W hiz C r a c k e r s 30 . 21*6 •35 10.50 .287 25.7 .362 2.70 P op C orn 37 .305 • 25 9.25 •253 32.0 • 397 2.96 2.20 Grapefruit Juice 1*1* .363 .20 8.80 . 21+1 25.O .295 — /* —• Cottage Cheese 27 .223 .30 8.110 .230 20.0 .225 1.68 Ballard B iscuits 55 . 1*51+ •15 8.25 .226 1*0.0 .1*1*2 2.20 K le e n e x 28 .231 •30 8.10 .221 21*.9 .271 2.20 Lux Liquid Detergent 16 .132 .U5 7.20 •197 31.1 .300 2. 21+ Planters Peanuts 18 . 1H6 .1*0 7.20 •197 27-5 .265 1.98 TABLE 12 (contd.)
Per cent Per cent Price of Total Per cent Per cent of Unit of Total per Dollar Gross Total Gross Gross Item Sales Unit Sales Unit Sales Sales P ro fit P ro fit P ro fit
Grape Jam 17 .140 •3 . 40 $ 6.80 .196 26.2 .238 $ 1.78 Hersheys Chocolate Syrup 27 .223 .25 6.75 .184 25.I .228 1.70 Kaiser*s Aluminum F o il .206 .25 6.25 .171 44.0 .368 25 O' 2.75 Milk, White (£ p O 57 • .10 5.70 .156 40.0 .305 2.28 Pancake Mix 25 .206 .20 5.00 .137 30.0 .201 1.50 Ketchup 24 .198 .20 4.80 .131 17.5 .113 .84 Mustard 14 .116 .20 2.80 .077 35.0 .131 .98 D ixie Cups s .066 .30 2.40 .066 30.0 .096 .72 Campbells Tomato Soup 10 .083 .15 1.50 .041 30.0 .060 -45 J el lo, S trawberry 15 .124 .10 1.50 .041 24.7 .050 •37 J e llo , Orange 15 .124 .10 1.50 .0 4 i 24.7 .031 •37 Jello Pudding, Chocolate 9 .074 .15 1.35 .037 40.0 .072 .54 St. Joseph’s Asprin 2 .017 .50 1.00 .027 40.0 .054 .40 Shampoo, Woodbury 1 .008 .60 .60 .016 38.3 .031 Strawberry Jam 2 .017 .30 .60 .016 26.7 .021 .16 Total 12119 $3657.85 20.4 $746.36 *Price changed, during test period. Source: Howard's Quick Shop: an analysis prepared by Verne A. Bunn and Alton E. Harness, Copy righted I960, reprinted by permission.
VDO carrying 15.6 per cent margin, waa the only item in the top ten for contribution to to ta l dollar gross margin with a gross margin o f under
20.0 per cent. This group contributed an average of 21.3 per cent gross profit. The gross profit from all sales averaged 20.U per cent of total sales. The average sale was 30.2 cents for the control period and prices ranged from a low o f ten cents to a high o f eighty cents. Numerous items carried a higher margin than normal in a super market in that area. Eggs and one pound ground coffee were exceptions.
Eggs had a 2.3 per cent margin and coffee had only a 1.3 per cent margin se llin g at only a cent over cost.
After the test was concluded,an attempt to determine the degree of acceptability of the installation was undertaken. A Questionnaire was designed and mailed with instructions to the 2,300 persons who re ceived the regular mailer from Howard’s. No attempt was made to de velop a representative sample. Factors of time and expense were in volved and Multi-Vend, Inc., was more interested in the number of re turns than in the representativeness of the sample. A small gift was offered to those who completed and returned the questionnaires to the supermarket.
A total of 305 completed and uBable returns were received, a 13-3 per cent return. Of these, 260, 85-3 Per cent, indicated that they had used the machines; U5, lU.7 per cent, indicated that they had not.
The response was biased by the very nature of the sanple in favor of those who had used the machines. An additional bias was introduced by not following up the non-respondents. Undoubtedly there was a higher response from those who had used the vending machines than there was from the non-users and from the nonr-Howard's customers.
Of those using the machines, 237 or 91.2 per cent reported making
Sunday purchases. The next highest day was Saturday with 28 or 10.2 per cent of the respondents. The lowest day was Tuesday with 5«0 Per cent reporting having used the machines. The general Sunday closing of supermarkets in the area appears to have had a decidedly favorable influence on Sunday sales through the vending machines. Other ob servations were that 59*2 Per cent had utilized the machines in the period from 8:00 a.m. to 9*00 p.m., 4-8.9 Per cent from 9;00 p.m. until midnight, 16.2 per cent from 6:00 a.m. to 9*00 p.m., and 9*2 per cent from midnight until 6:00 a.m. Nearly 55 Per cent stated that they used the machines less than once a week. Nearly two thirds of the users purchased more than one item at a time.
Question 9 was, nHad you ever shopped at Howard's IGA prior to the in sta lla tio n o f Howard's Quick Shop?"
Yes 24-9 95.8# No 8 3.1 No response 3 1*1
Qupstion 10 was, "Have you ever shopped at Howard's IGA at any time since the in sta lla tio n o f Howard's Quick Shop?"
Yes 253 97*3$ No 4 1.5 No response 3 1*2
The analysis of the response to these two questions by Professors
Bunn and Harness was as follows:
On the surface, at least, it would appear that the installation of these machines had a decided effect on 93 patronage o f Howard’s . The number who had anPwered NO to question 9 be-® been reduced by one-half in responding to question 10. If this is the case, it can be stated that this installation has actually helped to bring new customers to Howard's.^
One may question the statement that the vending installation
actually brought more customers to Howard's. The movement of people
to and from the area could account for even greater variation than was
observed. The difference was only *4 out of 260 responses. In a
normal three months period, there would probably be more than 1.6 per
cent of the families who would be new in the area. When reported in
a trade magazine, however, the analysis became "A fairly significant
percentage o f those who had not shopped at Howard's IGA before using
the machines began to shop there afterwards. This definite customer
attraction would presumably work on those outside the area of the 111 - questionnaire, and even to an uncertain extent on transients."
Even dismissing the apparent sample bias, there is no statistical
basis for including that the machines had a decided effect on Howard's
patronage.
The Howard's Quick Shop was unique in that it is the only experi
ment in grocery vending that did not attempt to vary the product mix
by the substitution of other items in an effort to maximize sales. In
most other tests, the movement of the various items was evaluated and
slow movers were replaced with other items in an effo rt to maximize
the sales potential.
^Verne A. Bunn and Alton E. Harness, "Howard's Quick Shop: An A nalysis!1 ( a mimeograph), U niversity o f Wichita, 19^0. P* 8. ^1"A l6g~Hour S ellin g Week with Vending Machines," Super Market Merchandising. June, i960, p. 86. 9U
Sho-p *1! Treat
In iTovember, i 960, The Vendo Company, Kansas City, opened a unique automated combination eating-pla.ce and retail market in the
ou tsk irts of Kansas City, M issouri, at 75t *1 Street and Womall Boad.
Using coin operated automatic vending machines, the drive-in offered
a variety of 37 food and beverage items, combining both groceries and prepared foods.
The grocery vending reportedly was, more or less, a side issue
at Stop-U-Treat as the installation was primarily set up to test the
acceptability and economies of applying automatic vending to a high
traffic drive-in restaurant. Since extra space was available in the
1^00 square foot open front, modernistically designed structure and
since Vendo Company had some new Visi-Vend equipment adaptable to
grocery vending, a grocery experiment was included. Seven new Visi-
Vend machines were installed in a grocery section occupying lU^ square
feet of area.
Vendo officials held prior grocery vending tests to be incon
clu sive because proper equipment was not availab le. The new equipment
was easily adjusted to handle assorted sizes and machines were avail
able to provide a combination of two temperatures so related items
could easily be sold from the same machine. The machines could sell up to ten selections of items with a capacity ranging from 50 one-half
gallon cartons of milk or ice cream, up to 3OO smaller items. Units 95
in the grocery included two frozen food vendors at zero degrees tem perature; a cold unit at 34v’“400; a combination frozen over cold, and
U p three room temperature unite.
Prices were in multiples of five. Odd cent pricing was possible with the vending machines, but it was felt that the feature of 24-hour
service and convenience permitted higher prices. Products featured were snack items and the best selling items in large supermarkets.
No e ffo r t was made to match supermarket prices and products were re placed with other items when they did not move. Table 13 lists some
of the items offered with Stop 'N Treat prices.
A large Milgram Pood Store u n it, open evenings and seven days a
week, was located in a shopping center directly across the street. A
drug store adjacent to the drive-in also stocked snack items and was
also open evenings and seven days a week.
The initial response to the automatic grocery vending was de
scribed as a "fair" amount of sales by a Vendo Company spokesman.^
The five top sellers in the order of popularity were milk, bread, potato chips, cookies, and eggs. Bulk ice cream probably would have been among the top five, but the compressor on the ice cream machine
had fa iled and the machine had been removed.
^^Eonald Cohen, "Automatic Drive-In, Mart Planned in Kansas City," Super Market News, November 28, i 960, p. 30*
^3"Vended Groceries Sales Pair at Drive-In Venture," Super Market News. December 14, i 960, p. 23. 96
TAB IE 13
Partial Listing of Grocery Items Vended at Shop-'N-Treat, i960
Item Price
Kraft Miracle Whip flalad dressing (S oz.) 25/ C & E Granulated Sugar (2 lbs.) 30 Stokely-Van Camp’s Pork and Beans 20 Charmin Paper Hapkins (package of 60) 15 Campbell’s Chicken Hoodie Soup (can) 20 Flavor-Klst Lady Finger Cookies (package of 12) 35 Guy' 8 Potato Chips, pre-priced 25# bag 25 Heinz Ketchup (1^ oz.) ?° Folger's Instant Coffee (2 oz.) 45 Folger's Drip Grind Coffee (1 lb .) 80 Holsuo Bread (1 lb .) 25 Peter Pan Peanut Butter 1+5 Snow Crop Frozen Orai^e Juice (6 oz.) 25 Birds Eye Frozen Grapefruit Juice 20 Birds Eye Frozen Strawberries (10 oz.) 30 Milk Bread Cookies
Ice Cream
Source: Super Market Hews, December lU, 196o» p* 23. 97
The sales of the prepared, foods for on-premiBe consumption far exceeded expectations. The drive-in food prices were approximately the same aa regular drive-in prices and in some cases were lower.
Featured items were hamburgers, 15#, French fr ie s,Vj After being in operation for three or four months, the grocery section waB discontinued. The drive-in prepared foods were expanded into the area previously devoted to grocery items. The Shop-’H-Treat installation was later sold by Vendo to a private operator and is 8 till in operation. Arthur D. Stevens, vice-president in charge o f commercial de velopment at Vendo, made the following comment on the Shop-'N-Treat installation, "'rfe are doing applied research on profitable and practical ways of applying automatic equipment to the sale o f grocery products and to the operation of the average restaurant, in addition to testing the appeal of coin-opprated equipment in drive-in establish ments . Imperial Oil Limited-Baker Vending Services Limited (Don M ills) Baker Vending Services Limited and Imperial Oil, Limited, with general offices for both located in Toronto, Ontario, teamed together in late i960 for a joint test of the potential of automatically ^"Vending Machine Drive-In Forecasts Hew Food Eetailing Tech nique," Progressive Grocer, June 1961, pp. 6l, lh5. merchandising groceries at three service station locations. The ob jective of the test was to find what products would sell through automatic vending machines at a service station location and what the effect would he in increasing general traffic at the service stations. The additional potential gasoline sales could be an important con sideration to the oil companies. The available space and the regular service station traffic were factors that aroused considerable in terest on the part of the vending company for evaluating that type of installation. The in it ia l in sta lla tio n was opened about December, i 960, in the Toronto suburb of Don Mills. It was located on the premises of the Esso service station at Lawrence and L eslie S treets. Nine machines were installed in a specially designed booth, 2 k x f feet, with glassed front and ends which was heated to 65 degrees (see Figure 15). An illuminated sign called attention to specialties and refreshments. Becently developed general purpose Rowe machines dispensed about thirty grocery items. Other vending machines were cup dispensers for hot and cold drinks and for candy bars. The cost of the installation was over $20,000 and practical volume was to be between $100 and $200 ad ay.^5 Among the items in cluded in the test were bread, milk, eggs, butter, cheese, bacon, sausages, slice d meats, canned fr u it, canned vegetables, canned soft drinks, instant d esserts, soup mixes and cupped drinks (for on-the- spot consumption). ^5”Vend Groceries with Gas,n Food in Canada. February 196l» p. 7* 99 Source: left “ •Eaa4 ^ right - Canadian Automatlve Trade Figure 15. Joint Tests "by Imperial Oil Ltd. and Baker Vending Services Ltd. ( le f t ) Toronto Suburb of Don M ills, Ontario (right) Vancouver Suburb o f Burnaby, B ritish Columbia, 1961. 100 Baker Vending Services, in addition to testin g the public re sponse, the rela tiv e movenent, and p r o fita b ility o f the items offered, was also interested in the pjq>erience to be gained that would be use ful in modifying existing vending machines and in designing new units for grocery vending. The test, shortly after opening, encountered difficulties with township authorities who complained that a building permit had not been obtained. The building was actually a covered double-deck tire display rack that had undergone extensive remodeling and improvement. Building permits were not required for the tire racks, as such. When a building permit was applied for. Imperial Oil and Baker Vending were told that a building permit could not be issued for a building already constructed and the existing building would have to be dis mantled and a permit then applied for. This difficulty necessitated discontinuation of the test after having been in operation for about fiv e and a half months. Plans were underway to expand the service station and, as both parties were anxious to continue the rapidly developing test, a build ing permit was requested to house an exnanded installation of vending machines. Local authorities did not issue the permit as they then said that under Ontario law, which limits the item sold by the vari ous categories of retailers, a service station could not legally sell the grocery products that had been sold from the dismantled operation. Sales had started from a low level but had increased continuous ly. Sales averaged about $^65 per week for the last five wedes that 101 the installation was in operation. About $350 was flum grocery sales, the balance from refreshments for on-premise consumption. Milk and bread were the top volume items followed by half-dosen cartons of eggs, coffee (for on-premise consumption), miscellaneous canned goods, packaged bacon, sausage, luncheon meats, cheese, instant coffee, jelly powders, pudding mixes and packages of cookies. The installation had not reached the breakeven point, but was coverii^j costs other than depreciation and site rental or com m ission.^ It is unfortunate that the end of this experiment came so abruptly as the season of more favorable weather was approaching. The summer months are normally the best months for sales. The service station was located in a residential area and about one-half of the purchases from the vending installation were made by walk-in customers. The availability of walk-in or neighborhood trade would be an important consideration in any future grocery vending tests involving service station locations. (Burnaby) The Becond join t te s t by Imperial O il, Limited, and Baker Vend ing Services, Limited, was at the Imperial Central Park Service Sta tion , 3731 Kingsway, Burnaby, B ritish Columbia, a location one block T!im Dickson, nCoin-op Grocery Stores Hew Retail Experiment,? Marketing (Canada), March 10, 1961, p. 1. ^Conversation by the author with Donald H. Storey, Vice Presi dent and General Manager of Baker Vending Services Limited. 102 from Vancouver's city lim its. Shortly before the opening of the grocery vending installation, the station had been remodeled and a striking illuminated canopy added. The station had then started to operate 24- hours a day. The vending operation was established parallel to the highway at the back of the service station lot and adjacent to the service area. Baker Vending supplied a 12 by 42 feet prefabricated ste e l and glass structure like that at Don Mills housing ten vending machines. The vending service was introduced with a saturation radio ad vertising campaign and the first two weeks of the vending operation was accompanied by a 20 per cent increase in gas sa les. The third week, without the benefit of advertising, gas sales settled back to a 48 10 per cent increase. A wide selection of grocery products was offered including bread, milk, packaged coffee, canned tuna, bacon, pickles, et cetera. Gen eral merchandise items offered included adhesive bandages, shaving equipment and headache remedies. Public acceptance was good but the location on a heavily traveled dual-lane highway, largely dependent upon transient trade from only one side of the highway was unable to develop sufficient sales from the automatic merchandising in sta lla tio n to even approach the break even point. The experiment was discontinued. 48 "Service Station 'Super Markets' Boost Gas Sales," Canadian Automotive Trade. April, 1961, p. 30* 103 (Montreal) Imperial Oil and Baker Vending cooperated on an additional teat at an Esso station outside of Montreal, Qjiebec. The location was somewhat similar to that in Burnaby in several respects. It was at the fringe of the c ity . It was located on a dual lane highway and also pulled customers traveling in only one direction on the highway. Sales at the Toronto test were also unsatisfactory and the test was discontinued. Empire Petroleum Company The Automatic Merchandising Division of Empire Petroleum Company, Denver, Colorado in sta lled 32 Grocerette Machines in 17 apartment ■buildings beginning operation June 8, 1961. Most of the in sta lla tio n s were in high income apartment houses, averaging 92 apartments (never less than 60) and about 150 people (generally all adults) per location. Most of the installations utilized two machines, one refrigerated and one nonrefrigerated. There were a few locations with single units and a few with three units. Most o f the machines were concentrated in plush new apartments in central Denver. The Automatic Merchandising Division was managed by Chet Waitz and B ill Hand. Managers of the apartment buildings were contacted and after the convenience provided by grocery vending ma chines had been emphasized, the appropriate amount of space was leased. Lobby locations were preferred but machines were installed in other locations, when necessary to secure space. 10U A promotional letter over the apartment manager’s signature was prepared, pointing out that staple food items were available through vending machines to save an extra trip to the store. The items vended varied from time to time. Among them were milk, bread, breakfast rolls, donuts, boxed cookies, coffee, cheese, luncheon meats, weiners, crackers, tomato Juice, eggs, snack items (Fritos, potato chips, et cetera), a variety of tinned heat and eat foods, as ham and beans and stew, Qpick-Solv and Tampax. The most popular sellers, in order, were milk, bread, tomato ju ice, half-dozen cartons o f eggs, baked goods, including Bweet r o lls and coffee cakes, followed by a variety of ”heat and eat” prepared item s.^9 Four machines were tried in two busy automatic laundries and sales were disappointingly slow. Owners of smaller apartment houses with 30 to Uo apartments requested machines but such reauests were turned down unless a location could be secured that would be con venient to the tenants of several apartments.^ Two installations in low income locations (with children) resulted in excessive vandalism, p ilferage, bad coins, and fouled coin mechanisms. The machines were serviced once a day. Checks on time required to service the machines, distance traveled, and sales volume led to the conclusion that one serviceman could handle 60 or more machines. ^ P e r s o n a l correspondence by the author, letter from William F. Hand. 50"Grocery Vending-Coming Off the S h elf?,11 Vend. December 15, 1961, p. U6. 105 Prices were 10 to 20 per cent higher than in supermarkets to cover the higher cost of operation and the location rentals. Sales varied from $33 to $l6l per month per machine. The operation was discontinued April 1, 1962. Mr. Hand is veiy pessimistic about the potential of automatic groceiy vending. His feeling is that public acceptance is lacking. Gaining acceptance would have required a great deal of promotion, advertising and edu cation. Dummy packages for use in the display window of the machines were either difficult to obtain or unavailable, especially for the more perishable products. Commenting on their experience, Mr. Hand said: We spent approximately $100,000 in machines, equip ment, promotion, labor, location rentals. We feel that we gave it a thorough and exhaustive test. In short, results were all bad - disastrous 15^ Empire Petroleum Company has disposed of its interest in the automatic merchandising Bubsidiaiy after unfortunately finding the venture to be unsuccessful. Mutual Supply Company has purchased the machines and has them in storage for r e s a l e . 5^ Dominion Stores Limited Executives o f Dominion Stores Limited, Toronto based Canadian food chain, became interested in testing the potential of automatically 51Eand, lo c . c i t . ^Personal correspondence by the author, letter from W. C. Evans, Assistant to the President, Empire Oil Company. io 6 merchandising supermarket merchandise. Baker Vending Services Limi ted,^ the vending firm already servicing some of the Dominion Stores with refreshment vending machines, was contacted about the availability of suitable equipment for take-home grocery vending. The recently developed ten-selection Grocerette, for which Vend- omatic Services Limited held the Canadian franchise, was recommended. Grocerette had conducted tests, in the Long Beach, California area, which indicated that daily minimum sales of $15 were necessary, at a markup on cost of U5-5O per cent, to make a location profitable. A U0-50 per cent mark-up on cost would be equivalent to approximately a 30 per cent margin at retail. The going margin on grocery items Was S in a range of 12 to 20 per cent. Accordingly, sales of grocery items, if normal margins were to be maintained, would have to approximate $30 daily per machine in order to be profitable. A location for the test was selected at the large Rexdale Shop ping Plaza, Islin gton and Rexdale Boulevard in suburban Montreal. The location was in the parking area in front of a l6,000 square foot Dominion Stores supermarket. Dominion erected a fla t roofed building, IS x UO feet, with a protective canopy extending approximately six feet from either side. The ends of the structure were closed. The interior of the structure was brilliantly illuminated but there was neither illumination on the exterior of the building nor an ^^Baker Vending Services Limited w ill hereafter be referred to as Vendomatic Services Limited, which was formed in June 1961 as a resu lt of a merger o f eight Canadian firms engaged in vending, manual food service, and vending machine manufacturing. 107 Illuminated sign to help attract attention at night (see Figure l6). The neighborhood of the large 3^ store shopping center contained a mixture o f middle income homes, high r is e publicly-owned low rent apartments, light industry, and an eighteen hole golf course. The main highway In front of the center was an access route to the near by expressway system which by-passed metropolitan Toronto. Dominion was interested in testing the potential for increasing staple grocery sales by selling when the supermarket was closed. Vendomatic supplied and maintained the eight G-rocerette machines, three of which were refrigerated. Dominion stores supplied the mer chandise, stocked the machines and maintained the records. Vendo matic also installed three other vendors, a cigarette machine, a siat- selection cold-drink machine, and a fresh brew coffee unit. These were stocked and serviced by Vendomatic with Dominion Stores receivin g a commission on sales. The supermarket was open from 9:00 a.m. to 6:00 p.m. on Monday, Tuesday, Wednesday and Saturday and from 9:00 to 9 :00 p.m. on Thursday and Friday. The supermarket was closed on Sunday, as were all grocery stores in the area. The "Vending Centre," short a couple o f machines, which were installed August 11, 1961, was opened July 2h, 1961. There was no fuss or fanfare. A Dominion official was quoted as saying, "It's Just on an experimental basis."5^ During the first month the vending 5^"The Truth About Vending Supermarket Methods. January, 1962, p. lU. 1 108 Source: Supermarket Methods Figure l 6. Dominion Stores, Rexdale Plaza, Toronto, Ontario, 1961 . 109 center waa only open when the supermarket was closed. This was in keeping with the original interest of testing the Bales that could he generated hy utilizing automatic merchandising to sell staple grocer ies during the 102 hours a week the supermarket was closed. Movable partitions were put in place to close the vending installation during the 66 hours that the main store was open. The vending operation was opened for around-the-clock, seven day service on August 21, 1961. The low-pressure approach was continued. No mention was made of the Dominion name in reference to the grocery vending; there was no advertising or pu blicity. Local newspapers carried two publicity stories with a photo of a Grocerette unit but no mention was made o f Dominion. One story identified the location of the in sta lla tio n as being the Rexdale Shopping Plaza. National brands were featured. The only private label merchandise stocked in the vendor was one selection of butter. A total of 52 grocery items were available through the seven Grocerette u n its. Sales increased for a time, leveled off, then fell with the coming of cold weather. On December IS, 1961 the operation was closed. According to a sign, it was '’closed for the winter, ”55 but i t was never re-opened. Supermarket Methods made this observation, "We'd estimate that though volume was fa ir, i t wouldn't have been high enough to warrant any excitement at Dominion."^ Dominion Stores Limited has considered the resu lts o f their Rexdale Shopping Plaza 55lbid. 56Ibid. 110 experiment to 1)6 of a confidential nature. The only official comment was that more volume or a lower capital investment was necessary i f an automatic grocery vending operation was to be profitable.^ During the summer o f 1962 Dominion Stores used two Grocerette units for vending milk and bread at the front of the headquarters store at 605 Rogers Road, Toronto, Ontario. The in sta lla tio n was in sta lled on]y for customer convenience, since the supermarket was closed at that time on both Sunday and Monday. It was f e lt that making bread and milk available would provide a needed service and would eliminate the need for customers to shop a t competitive stores for those items. When the store went back to a six-day schedule, the use of grocery vending machine was discontinued.-^ Pro-Vend Co. Pro-Vend, a subsidiary of Progressive Cafeterias,opened an apartment-house pantry featuring grocery product vending Monday, August 28, 1961, in the 280-unit Stratford House, 555 Cornelia Avenue, just off of Lake Shore Boulevard on Chicago’s North Side. A three machine vending bank, called "Your Pantry of Better Brands" was set up in a small room o ff of the lobby of the new apartment building, which was not fully occupied (see Figure 17). Joseph M. Christensen, S7 ^Personal correspondence of the author, letter from Thomas G. Bolton, Manager of Research, Dominion Stores Limited. ^Telephone conversation by the author with Thomas G. Bolton, Manager of Research, Dominion Stores Limited. I l l | ntry r n a MAUDS A t t t V t C l O f *M-.VB»-CQ Source: Vend. Figure 17. Pro-Vend Co., "Your Pantry of Better Brands," Chicago, 1961. 112 President of Progressive Cafeterias called the installation "the first of many" Rt the time of the op en in g.59 The equipment consisted of three Vendo Viei-VendB, two regular refrigeration models and a freezer model for frozen foods and ice cream. A ll products were merchandised by “brand name. Included were Borden’s milk, 3 Per Huart; Burney Brothers “bread, 25^ per loaf; and Chase and Sanborn coffee, U5^ per half pound. Prices included tax. Other products were Sw ift's bacon and cold meats, frozen din ners, ice cream, cheeses, orange juice, frozen pot pies, tomato juice, frankfurters, cottage cheese, instant tea, cookies, hamburger patties, h a lf and half cream and cube steaks. It was hoped that sales would average about $150 a week.^® Expectations did not materialize. When total sales leveled off at $200-$210 a month, the three machines were removed. Mr. Christen- sen referred to the operation as their "first and last experience." When the author v isited Stratford House in December, 1962, "Your Pantry of Better Brands" was gone. A dairy had placed a machine vend ing quart cartons of milk in the vacated space. ^Apartment House Pantry, Chi cago Daily Hews, August 2g, 1961, p. 11. ^"Grocery Vending-Coming Off the Shelf?," Vend. December l6, 1961, p. h6. ^^Phone conversation by the author with Joseph M. Christensen, Chicago, December, 1962. 113 Vendo-7-Eleven, "Handy Pantry" Plans were announced in January 1962, for a success fill bantaoft supermarket chain, and The Vendo Company to cooperate in a large scale test involving the vending of food away from a supermarket. The site would he a huge 3»000 family apartment development in the Washington, D.C. area. Vendo would supply a battery of twenty-nine machines that would dispense hOO d ifferent iterns.A complete listing of the items to he vended by product, brand, and siz e was printed in Pood T o p i c s . ^3 national brands completely dominated the l i s t , only three private label items being listed, Circle T brand hamburger patties, ground beef and Mexican dinners. This was to be the only Immediate public clue that the 7~Eleven chain was the co-sponsor. Numerous other trade papers carried reference to the soon-to-be initiated test. In October, 1961, the Vendo Company had announced that a com p le te ly automated convenience-type grocery store, which would handle 500 or more popular selection, was now possible as a result of the development o f two models of automatic equipment introduced by the Vendo Company. Within a few weeks Vendo would open a completely automated grocery store using the new equipment and a selectio n of other coin-operated models. It was anticipated that within a year, "Washington Test Ushers in New Chapter in Pood R etailing," Pood Topics, January, 1962, pp. 6- 8, 12. 63Ibid. Ilk a number of similiar facilities would "be found in various cities, making sales around-the-clock.fill The opening was delayed numerous times when difficulties were en countered in locating the in sta lla tio n . The announced s it e at the 3,000 family apartment developement did not materialize and, after an apparent futile search for other locations, a site was selected in Wheaton, Maryland, a Washington suburb. After delays in the completion of the building to house the installation, a fully automated bantam supermarket, known as "Handy Pantry," was opened in October, 1962 at llU ll Amherst Avenue (see Figure 12). In contrast to the extensive advance information available a year earlier, the opening of the in stallation was without fan-fare and veiled in secrecy. "Mo infor mation is available" was the standing comment. For some time, there waB no sign on the building other than the lettering "Open for Busi ness, Handy Pantry," on the store windows.While 7“Eleven was the operator, there was no publicity or advertising to associate the automated bantam with the 7-Eleven name. The installation was, for all practical purposes, strictly "on its own." Hours followed the usual 7-Eleven schedule: "JiQO a.m. to 11:00 p.m., seven days a week. Around-the-clock shopping, usually asso ciated with vending machines, was only available from an outside ice- machine. The hours offered only a slig h t extension of the normal 9:00 a.m.- 9 :00 p.m. week day hours at nearby supermarkets. ^"Hew Equipment Completes Automatic Grocery S tore," Hews Ee- lease, The Vendo Company, October, 1961. 115 Source: Vendo Co. Figure 18. Vendo-7-Eleven, "Handy Pantry," Wheaton, Maryland, 1963. Il6 Competition was abundant, as supermarkets operated by Food Fair, Safe way, Giant Food, Grand Union and the Greehbelt-Consumer Co-op were located within a one-half mile radius of Handy Pantry. Prices were comparable to the usual prices in the 7~Eleven ban tam stores in the Washington Area. These, however, based on conven ience, were considerably above supermarket p rices. A few tr a ffic - iterns, such as milk, were competitively priced. Prices were rounded- off to five cent increments except in the dairy section of the Handy Pantry. Table lU compares Handy Pantry prices with those of a nearby supermarket.^5 The considerable spread is obvious when the prices are compared. In addition to lower prices, the supermarkets also of fered numerous price specials and trading stamps. The interested reader is referred to Food Tonics. January, I963 for a complete listing of products offered at Handy Pantry along with prices.1^ Included in the offerings were fast moving staples, cake mixes, potato chips, pet food, frozen food, dairy products, tea, sp ices, paper goods, baked goods, canned foods, candy, cigarettes, health and beauty aids and six-pack beverages. Most items were car ried in only one brand. An innovation was the use of two new types of vending equipment, known as Visi-Mart models, specially designed to sell grocery ^ n7-Eleven Launches Its Automated Bantam," Food Topics. January, 1963. p. 32. r r "What Handy Pantry S e lls," Food Tonics. January, 19o3» PP* 29-30. 117 TABLE 111 Comparison of Prices at Handy Pantry with Prices a t Nearby Supermarket Handy Super- Pantry Market Item Price Price Campbell's Chicken Noodle Soup (10^ 02.) 20<* lfy Del Monte Pruit Cocktail (#303) 30 22 Del Monte Sweet Peas (#303) 30 18 Libby's Beef Stew (#303) ^5 35 Underwood Deviled Ham (Small can) 25 21 Gerber Strained Baby Poods 15 10 Swanson Prozen Turkey Dinner 70 59 Sealtest Grade A Milk (£ gal.) >9 > 7 Pillsbury Buttermilk Biscuits 2/25 3/25 Maxwell House Instant Coffee (2 oz.) 50 »+l Log Cabin Syrup (12 oz.) 35 31 Domino Sugar (5 lb .) 65 ?3 Peter Pan Peanut Butter (12 oz.) 50 *3 Sunsweet Prune Juice (q t.) 60 47 Nabisco Premium Crackers (1 lb.) 35 31 Wonder Bread (2H oz. white loaf) 35 32 Kellogg's Corn Flakes (12 oz.) ,3° 2k Vet's Dog Pood ( l lb . can) 6/60 6/53 Tide (Regular size) Uo 31 Windex (6 oz.) 20 15 Coca-Cola (king size, 6-pack) 65 59 Rise Aerosol Shaving Cream SO 63 Source: Pood Topics. January, 1963. 118 products. One model, the package merchandiser, wp.s designed to vend packages from five to twelve inches in width with a great variety of p ossib le lengths and depths. The machine vended a maximum of 2$ se lections and had a capacity of about 200 items. The vendor utilized gravity feed and was rear loaded. Merchandise was almost completely v isib le behind large p lexiglas show-windows. The customer inserted nickels, dimes and quarters in any combination to accumulate the sales price, which could vary in increments of five cents from 5# to $1-25 and touched a push-bar directly in front of the item selected. The f ir s t package in the display dropped to a hopper where i t became available upon opening a large door. The other new unit was a Visi-Mart can merchandiser which of fered as many as 79 different canned products with a capacity of up to 750 cans. The can merchandiser was loaded from the rear by placing the canned goods in channels. Purchase was accomplished in the same manner as with the package merchandiser. Other units included in the installation were Visi-Vend machines for frozen foods and refrigerated foods. An automatic rack merchanr- diser dispensed U9 health, beauty, and sundry items from coin operated dispensing rods. A carton vendor, which could also dispense sacked products, sold six-pack soft drinks and a regular candy machine dis pensed candy bars. The Wall Street Journal in its July 30, 19&3 edition reported: In Wheaton, Md., Vendo Co., a vending machine maker and the 7"Eleven grocery chain will soon close an experi mental ‘automatic1 grocery store they have been operating 119 since October. Sales have been ’disappointing,” says Elmer F. Pierson, Vendo President.®7 Correspondence with executives at The Vendo Company and at the Southland Corporation, parent organization of the 7**Fleven chain, denied authenticity to the above mentioned article but neither con firmed nor denied "disappointing sales" or an "early closing." Both reported that they were not at liberty to release any information on the experiment. Several trade magazines confirmed the rumor that the Handy Pantry was closing. The Discount Merchandiser reported: The automatic ’bantam" supermarket, opened last October in Wheaton, Md. by 7“2leven, Dallas-based grocery chain, had its current turned off. The pioneer venture offered 4-00 grocery, dairy, frozen and non-food itemB through 36 Vendo Co. machines. ’Disappointing sales' were attributed to late opening hours of nearby super markets, cutting the robot outlet's advantage as an off-hour convenience. With prices rounded out to nickel totals, the outlet was more expensive on some items. And it didn’t offer trading stamps.^ Another trade publication had the following to say: That experimental automatic grocery in Wheaton, Md., was a failure, and will close. The store, which was equipped with vending machines, was a cooperative effort of a vending machine manufacturer and the 7“ Eleven chain. But nevertheless, the idea of selling food in vending machines is still a big profit-maker. Sales in 1962 totaled nearly $3 billion, up 7 per cent from 1961.^9 ^Norman C. M iller, J r ., "Some Customers Balk as Vending Ma chines Move Into Food Field," The Wall Street Journal (Midwest ed.I, July 30, 1963, p. 1. 6fi>"Robot Grocery Flops," The Discount Merchandiser. October, 1963, P. 3^* 69nAutomatic Market a Flop," Super Market Merchandising. October, 1963, p. 9*+. 120 The experiment thus closed after "being in operation for slightly less than a year. Undoubtedly, much had "been learned concerning the application of vending to grocery retailing. The public, however, w ill have to await the release of any information. For now, it may be sufficient to assume that the operation did not prove to be profitable. CHAPTER V OTHER GROCERY VENDING VENTURES In addition to the major vending test9 and experiments, cited in the previous chapter, there have been a number of other tests and experiences that, though they may vary widely in their contribution, nevertheless add considerably to our knowledge concerning the appli cation and potential of automatic grocery vending. A number of the following installations have been mentioned in trade publications, others have received no publicity. For most of the cases little has previously been recorded concerning their development and current status. The case histories are presented in the chronological order of their installation. Mayflower Doughnut Shop The Mayflower Doughnut Company in Pittsburgh pioneered store front vending, when an experimental, one-of-a-kind packaged doughnut vendor was installed in the front of a down-town store at its opening in February, 1953* ^de vendor was loaned to Mayflower by Rowe Manu facturing Company, Inc., and was serviced by Allegheny Cigarette Service Company, the Rowe representative and also the operator of the cig a rette machine within the Mayflower shop* 121 122 The vendor was strictly experimental and special problems in volved "both the machine and the product. The machine became inoper ative several times each week. Powdered sugar from the doughnuts would s i f t through the cardboard container and jam the coin mechanism. Cartons also tended to wedge in the delivery chute. Highest sales were shortly after the shop opened in February, I953. The store-front vendor then handled the overflow trade from the crowded service counters insid e. The doughnuts were vended in a carton of six for 25 cents. Breakdowns at night caused additional problems. Night breakdowns caused disappointed customers and the loss of p lu s-sales. Furthermore, doughnuts le f t in the vendor in the morn ing had to be discarded, as they could no longer be sold for "fresh." Early evening breakdowns resulted in substantial inventory "losses." Peak sales started at $80 to $9® f°r a twenty-four hour period, but dwindled to where, in the la st several weeks before the removal of the vendor in la te 1957. sales were only one or two cartons during the hours the shop was closed. The repeated breakdowns and failu res to vend when accepting money suggested that many customers expected the machine to be inoperative. Over the years the doughnut shop had changed in character from a take-home doughnut shop to a snack and ligh t lunch operation in ad dition to the take-home doughnut sa les. Late in 1957 the vendor was removed and the window space, once occupied by the vendor, was u tiliz e d for additional booths.^- ^Fred Amann, "The Mayflower Experiment,11 Vend. July, 1958. pp- 7^75- 123 Jewel Tea An outdoor milk vendor occupied a space in a Jewel store parking lo t in Northlake, I llin o is for nearly three years, "beginning in 1955* The vendor was operated jo in tly by The Jewel Tea Company and the Chicago based Dean Milk Company. Jewel had the vendor removed early in 195&* A Jewel executive said, "The machine took up too much space and sales didn't justify its existence. '.v"e finally decided that the parking space was more impor- # l P tant to the customer than the milk vendor. Dari Miller, Jewel merchandising manager in Chicago said , "The company has no further plans for milk or other outdoor vending at this time."3 A represent a tiv e o f the Dean Milk Company added, "The store hours were extended during the period of the installation. This fact gradually cut down the need for the machine. But maintenance and pilferage were a constant problem too, and added to that of the parking space. Several years e a r lie r , Jewel had announced plans to in s ta ll ven dors dispensing frozen foods, groceries, and dairy products on the west wall of the "Store of Stores" at Keystone and Grand Avenues to be opened for Jewel's 25th anniversary in 1957 ^"I’bod Chains Look at Outdoor Milk Vending," Vend. July, 1958. p . 94. 3lb ld . 4bid.. p. 96. ^"Supers S h ift Vending Plans Into High Gear," Ibod Topics. November 19, 195^. P* 3« I2U In early 1957 i t was announced that the plsna to in s ta ll the vending machines had been abandoned. A spokesman said: We have given the installation of automatic vending machines a lot of thought and discussed their practic ability with a number of operators who have had experience with them. It is now our opinion that we are neither ready nor in a position to further explore this method of merchandising food stuffs.” As recently as 1963 some consideration was given to the incor poration of vending in the new "Jewel Pantry," experimental stores to be located in two high-rise apartment buildings in Chicago. It was decided that vending operations were not yet appropriate from a sell ing point of view. Conventional but glamorized supermarket instal lations are planned. Sol Atlas The builder o f the $30,000,000 Cross Country Shopping Center in Yonkers, New York, revealed, in early September, 195^, that around- the-clock vending service would be offered as a basic part of the $10,000,000 Essex Green Shopping Plaza under construction on Prospect Avenue in West Orange, New Jersey. The Conn-Post Shopping Center to be constructed near Milford, Conn. was also to incorporate prototype machines. The automatic vending operation was to start with basic neces sities. A portion of the units was to be refrigerated to handle items as eggs, butter, milk, cheese and soft drinks. Other u n its would ^"Jewel Tea Pigeon-Holes Blueprint for Vendors at 'Store o f Stores;•" Ibod Tonics. April 18, 1957, P* 12. 125 dispense coffee, tea» 'bread, cake and "breakfast foods. S t i l l other units would stock cigarettes, cigars, pipe tobacco, tooth-paste, aspirin and other commonly used household items such as soap, de tergent and cleaning compounds. According to plans, each bank o f vending machines was to have been an integral part of the store in the shopping center which would handle the particular type of merchandise sold in the machine. The machines were to be built into the walls of the store, so that they could be serviced from inside of the store before the store was closed, and left fully stocked with merchandise which the public could buy while the store was closed. I-.r. Atlas believed that the proposed addition of 2^-hour, seven day merchandising v ia vending machines would be o f material assistance in his plans to make his centers of maximum service to their areas. Prom the experience learned in the two centers, store owners would learn what to stock and, of more importance, would find out if that method of making merchandising available after hours was a service that the public desired.7 7n2b~Hour Vending Units Set for Shopping Center," Supermarket News. September 2, 1956* P* 1- "Machines W ill Vend Pood, T o iletries 2U Hours a Day in Two New Shop Centers," American Druggist, September 10, 1956* P* 5* "Automatic Vending for Centers," Chain Store Age, October, 1956. p. 307. Plana were changed and the announced vendors were not in sta lled . Mr. Atlas said, "We have toyed with the idea of putting in food and other vending machines in our shopping centers. We discarded the idea of any food vending machines completely as we felt that this would perhaps "be a profitable venture in downtown areas, hut not in any shopping center. Kroger-Sterling, Illinois Kroger experimented with milk and bread vending at the Sterling, Illinois unit of the Peoria Division. The installation was made in July, 1956 and terminated in early 1957 a fter a UO-week te s t. The vendors were located in the parking lot adjacent to the Kroger store. Results were very poor. The machines were then moved several times to test the effect of various neighborhoods, but no significant change in sales resulted.9 Similar tests were also conducted at the same time, in Indian apolis, Indiana, under the supervision of the Indianapolis Division. The vendors were tried out at stores in various residential districts and then moved to a big store. Here they were placed on the sidewalk adjoining the entrance and then moved into the parking lot.'*'® The ^Correspondence of the author, letter from Sol G. Atlas, Sol G. A tlas Realty Investment, April 12, 19^3- ^Personal correspondence of the author, letter from E. R. Plorea, Tice President, Baked Poods Division, The Kroger Co., April 11, 1963. •^"Vendors Tested in Kroger U nits," Pood Tonics. July 23, 195&, p . 2. 127 results were poor. Sales were low, machines gave increasing mechanr* ical difficulties, and the required expenses did not appear to he justifiable. The Indianapolis test was also discontinued. N elson^ Market Richard Nelson in sta lled three Vari-Vend u n its at his small supermarket, Nelson*s Market in Richmond, C alifornia in December, 1956. Mr. Nelson was pleased with the results that he obtained. His 5,000 square-foot store was open seven days a week from 9*00 a.m. to 11:00 p.m. He found that his store expenses increased faster after 7:00 p.m. than did profits. By February, volume totaled about $30 a day for the three machines with the gross receipts up considerably on holidays?1* On Christmas Day sales reached 5325- ^r* Nelson came to the store three times during the day to replenish the stock in the machines. The three machines were arranged, with their backs together in the form of a triangle, on the parking lot about twelve feet from the entrance of the store. An all-night diner was next door and may have contributed to night traffic at the vendors. The store was located in a working area and workmen stopped by for items to fill their lunch buckets. Initially 65 items were stocked. That number was reduced to 60 and later to h8 items, on the basis of sales experience. One machine ■^Bert Goldrath, "New Test for Outdoor Vending," Vend. March, 1957. PP. 50-51. 128 was non-refrigerated and stocked with staple groceries; two machines were refrigerated. Milk was “by far the fa ste st moving item, followed by "bread. Cold tomato and orange juice were next in line. These were unusual items to "be among the top sellers, "but their heavy movement may "be explained "by the workmen adding items to their lunch buckets. Mr. Nelson was acquainted with the Vari-Vend distributor and had the equipment on loan. When he wished he could lease or buy the equipment. The clerks in the store continually boosted the outdoor vendors by helping educate the customers of the store to the use and advan tages of vendors. The vendors were launched with a six column, 15 inch advertisement in the local newspaper, followed by a regular weekly newspaper advertisement. Some special p rices were used in i tially but prices were generally the same as in the store. Some of the items sold were milk 22# a quart, two brands of white bread 22#, hot dogs at 4-7#, butter 80#, whipping cream 47#, half and half 29#, canned ham 32.10, canned beans 20#, jam 30# and sliced cheese at 29#^ . Dispensed in the non-refrigerated unit were one pound cans of coffee, facial tissu e, sanitary napkinB, pancake mix, candy, nuts and tea. Exact change was required as the machines did not refund over payment. Nelson had hoped that the vendors would build up to average sales of $100 a day, but this was never achieved. Mr. Nelson in July, 19(53» said that the three machines settled down to an average total sales 12Ibid. . p. 51. 129 of approximately $25-30 Per day. The machines were removed in June, 1958 when Mr. Nelson remodeled and enlarged his store.^ Mr. Kelson fe e ls there is a place for outside vendors when the right equipment comes along. Freeman About the time of the Nelson installation, Freeman markets in San Leandro, C alifornia, tested one Vari-Vend u n it. Joe Lr.e, the San Leandro manager o f the 15 unit supermarket chain said, "It was strictly a trial basis, offering coffee, milk, bacon, eggs, juices, but it did not prove successful. After a couple of months we lost interest."^ The vendor was removed after only a few months' use. He attributed the lack of success to the little foot-traffic in the vicinity of the store, to poor street lighting in the area and to the newness of the idea. The Freeman Store was open 9’*00 a.m. to 9*00 P * IQ a Food King Food King, Portland, Oregon, in sta lled two Vari-Vend machines outside i t s new market when i t opened January 29, 1957* The machines were installed on the front walk, under the store canopy and at the side of the store entrance. ■^^Phone conversation by the author with Kichard Nelson, July 1, 1963. ^"Elea Gidlow, "One Vendor Setup Bate 1,000, Hearty Unit Strikes Out," Food Tonics. April 8, 1957. P* 63. 130 A hand-out sheet was prepared, announcing that Big Chief Pood King offered 24-hour shopping with the new machines for the convenience of their customers. The announcement farther pointed out that the machines would accept pennies, nickels, dimes and quarters and that the machines were lighted for use at night. Public acceptance was re ported to be good. Prices were the same as were charged inside of the store. Items stocked included tomato juice, peas, pork and beans, corn, coffee, dog and cat food, instant coffee, orange juice, several kinds of packaged meat, canned milk, tuna fish , pancake mix, soup, salad dressing, cottage cheese, eggs, margarine, sanitary napkins, bread, sugar, toilet tissue, cheese and cake, and quart and half-gallon containers of milk. No information is available concerning the later history of Ibod King in sta lla tio n . Correspondence was returned undelivered. Other correspondence revealed that Pood King Supermarket no longer existed in Portland. Murray Vending Early in 1957. Murray Vending pioneered outdoor grocery voiding by a vending operator with a twenty-four hour outdoor operation featuring take-home grocery products. The in sta lla tio n , a twelve selection Vari-Vend refrigerated unit, was located adjacent to ll£ South Payette Street in the center o f Washington Court House, Ohio. ^5Bryce White, "Outside Vendors at Coast Unit," Supermarket News. February 11, 19571 P* 28. 131 The installation was in a little recess in the front wall of a "build ing owned by Tom G. Murray, the owner of Murray Vending, and leased to a restaurant operator. The recess had room for two machines with a small pastry-type cupboard between them. A candy bar vendor was placed along with the Vari-Vend. A metal canopy projecting out in front of the machines carried the name nShop-0-Mat." The fir s t year sales averaged between $U0-$50 Per week with a 20 per cent gross margin. Items sold included bread, milk in quarts and half-gallon containers, half-pints of chocolate milk, half-pints of plain milk, half-pints of orange drink, packaged meat, eggs, butter, and sanitary napkins. Bread and milk were the fa stest moving items. Sales of milk were two or three times those of bread. Ifegs, butter, and packaged meats moved very slowly. The best sales day waB Christ mas when Murray had to r e f ill the machine every two hours. The dairy and bread suppliers, who were supplied with a key to the pantry, made their d eliveries early in the morning. About 9*00 a.m. Mr. Murray stocked the machine and made mechanical adjustments necessary. Vandalism and d iffic u ltie s with the coin mechanism were problems. Mr. Murray made 26 changes on the vendor so that i t would operate more dependably and require fewer service calls. After the vendor had been in operation for about three years, the wiring shorted due to continued condensation within the machine. The repairs needed to restore the machine to operating condition were too extensive to warrant reconditioning. Later Mr. Murray bought a used 36 selection Vari-Vend that had been on location in an apartment house 132 in Cincinnati. He plans to do th® necessary reconditioning to put the replacement unit in serviceable order. It will be installed as a replacement for the unit that has been out of operation for the past several years. A sign in the window of the non-operating vendor on location reads, ”Out o f order. A new 36 selection machine w ill be installed in the near future to replace this 12 selection machine. Murray Vending S ervice.” Mr. Murray says, ”I f I had been paying rent in the location I probably would have installed the new unit some time ago but as it is, it doesn't cost me anything.*5 Mr. Murray arrived at an interesting solution to the pricing problem. While h is machine would not make change, it would take pennies for odd-cents pricing. Discussions with customers convinced Mr. Murray that customers would rather not bother with the additional pennies. Prices were established in increments of five-cents to the next higher nickel, except when the price was only one cent * v r r a nickel increment. Then the price was adjusted downward one cent. Night sales were predominate. Customers recognized the convenience factor and were apparently willing to pay for it. Eberhard Poods. Inc. A flurry of outdoor grocery vending in sta lla tio n s was under-way as Vari-Vend, Inc. developed their sales organization and both sold machines and made additional test installations in scattered locations throughout the nation. ^Conversation with Mr. Murray, Owner of Murray Vending. 133 Eberhard Foods, Inc. leased two u n its, one refrigerated and one nonrrefrigerated, for a four months test. Jobbers Service, Inc. of Coldwater, Michigan, the Vari-Vpnd distributor for Michigan and Indiana, worked clo sely with Eberhard*s in making arrangements. The two machines were installed adjacent to a Dairy Queen store on the far side o f the parking lo t at the Eberhard Supermarket, 2201 D ivision Street South, Grand Eapids, Michigan, on April 15, 1957* Division Street was a heavily traveled artery with a considerable amount of residential traffic. Mr. L. V. Eberhard, President o f Eberhard Foods, In c., planned to test the ability of the outdoor vending installation to provide: l) express service for customers who wanted only one or two items and did not want to go into the store during rush hours to £et them and 2) 2l+-hour shopping where the most commonly wanted items could be pur chased at any hour o f the day or night. A variety of twenty-two items was stocked at store prices plus state sales tax (see Table 15). The machines accepted coins in any combination of quarters, dimes, nickels and pennies. The correct amount had to be inserted as no change was returned by the machines. The experiment was discontinued after the four-month test period. Mr. L. V. Eberhard described the te s t as "a complete fa ilu re - so l i t t l e volume that i t didn't count. Sales were under $5*00 a day per machine."^ ■^Conversation with Mr. L. V. Eberhard - June, 19&3* 134 TABLE 15 ProductB Vended, Eberhard1 s, Grand Rapids, Michigan Product Price Bread - Dutch C. $ .25 Bread - Old Fashion .23 Buns - Hot Dog .25 Eggs (£ doz.) .25 Pried Cakes .36 Hot Dogs .61 Bologna .32 Cheese, American • 35 Butter •71 Coke (large bottle) •23 Milk (£ g a l.) .41 Shurfine Catsup .24 Shurfine Whole Kernel Corn .16 Shurfine Evaporated Milk .14 Eberhard Vacuum Coffee 1.00 Eberhard Instant Coffee (4 oz.) 1.23 Campbell's Vegetable Soup .15 Aunt Janes D ill Pickles .41 I.B. Jar Olives .49 Spam •^7 Ken-L-Ration Dog Pood • 17 Modess .41 Source: Company records - Jobbers A ssociates, Inc. In analyzing the reasons for the poor showing several factors may he considered: l) Consumer habits change slowly. 2) Neighborhood customers may have •’soured", as there was considerable mechanical dif fic u lty on the f ir s t few week-ends. Customers put in th eir money and received neither product nor refund from the machine. Some of the customers came into the store later when it was open to complain and to receive a refund. 3) There was little advertising or publicity for the in sta lla tio n other than newspaper feature sto ries. *0 Mr. Evei'- hard was of the opinion that not enough variety was offered to inter est the customer.*7 Thriftway - Dan Dee In May, 1957. two installations of single Vari-Vend units were made in Cincinnati, Ohio. One installation was made at the Thriftway supermarket owned by Mr. Joseph Fay iu Stratford Manor; the other was at the Dan Dee superette owned by Mr. Henry Schweirs in the Price Hill neighborhood. The E. Kahn’s Sons Co., local meat packers, supplied the machines to test their potential for merchandising luncheon meats and weiners. Other items stocked included tubed biscuits, eggs, milk and bread. Prices were the same as those within the individual markets. Milk and bread sales were highest. Most of the business came after-hours and on Sunday. Mr. Bay installed the machine to provide a service for his customers after 136 store hours. Shy's store was located in an apartment development, several miles away from a late hour source of bread or milk. Mr. Schweirs was anxious to compete with the carry-outs near him selling milk, haked goods, and luncheon meats until midnight or later.^ The te sts were discontinued after about fiv e months. Kahn's found that the low volume o f luncheon meats sold did not warrant their participation. Mr. Fay agreed that the high cost of the machine and servicing eliminated any possible profit. Mr. Schweirs was sadly disappointed with the performance of the machine. He felt that it was mechanically too difficult for the average person to service and too limited in selection and p r i c i n g .^9 Schneider's Dairy Schneider's Dairy in Pittsburgh, Pennsylvania secured Vari-Vend machines in mid-1957 to vend milk and dairy products. Mr. Edward C. Schneider commented: Our experience was very costly and unsatisfactory due to vandalism and the inefficiency of the machine. If the machine could be constructed to withstand the abuse that most vending machines receive outdoors, they would be a definite asset. However, our sales, even though they were above average, did not compensate for the repair to the machine and time spent for ordinary adjustments al most d a ily . 20 ^"Superette Takes Dip as Ohio Tests Two Outdoor Vendors, n Food Tonics. May 20, 1957, P* 20. ^Personal correspondence of the author, letter from J. Arthur Silberhorn, Vice-President, Kahn's. ^Personal correspondence of the author, letter from Edward C. Schneider, President, Schneider's Dairy. 137 Kelley* b Charles Kelley, owner of Kelley's Supermarket, 2151 South Chester Avenue, Bakersfield, Qal^jfprnia, in sta lled a leased Vari-Vend machine in June, 1957* Items offered through the machine included hread, hamburger buns, hot dog buns, topato juice, orange juice, sausage, coffee, weiners, mustyrd^ tea, margarine, fresh milk, mayonaise, eggs, and canned milk. The supermarket closed at 7 ' 0 0 p.m. and waB open Sundays. In 1957 there were no food stores open a fter 7*00 p.m. A middle income residential area surrounded £he store location. Prices for items in the vendor were a little higher than in the store. Milk and bread were priced a couple of cen^s above the store price. Sales were good and Mrr K elley stocked h is machine twice a day. There was a low capacity for bread an<^ milk; stocking was required to 1 maintain a sufficient supply. Sales were satisfactory, averaging $80 to $100 per week. Mr. Kelley had the machine removed at the end o f August a fter i t had been in operation for three months. His reason for discontinuing what appeared to be a successful installation was constant difficulty with the change mechanism, Sometimes the machine would take money and vend no product; other times it would return the money and give away the product. Mr. Kelley has spld his supermarket and now operates a variety store in a nearby town. He says that the conditions which made a satisfactory sa les volume possible in 1957 ao longer e x ist. Where 138 there were no stores open In the area after 7s00 P*m» in 1957. in 1963, there are two nearby liquor stores selling "bread and milk until PI 9:00 p.m. and two nearby food stores are open 21+ hours a day. Six Chicago Apartments A news release in the summer of 1957 reported that multiple- product grocery vending machines had been installed in two Chicago apartments and lis te d four other apartment buildings where in sta l lations would soon be made. The release continued with the comment that each machine’s gross sales was reported to "be in excess of $150 a week. Single unit installations of the 36 selection Vari-Vend machine had been made at 2970 Lake Shore Drive and at 3318 North Lake Shore Drive. In stallation s were soon to be made at 3^30 Lake Shore Drive; Canterbury Court Apartments at 1220 N. State Parkway; 1000 pp Lake Short Drive; and 830 S. Michigan Avenue. Supermarket News reported in the issue o f August 5. 1957 that six Chicago apartments had been equipped with single-unit instal la tio n s of Vari-Vend machines. The in sta lla tio n s were usually in a service room, just off the lobby entrance. "One installation iB said to be doing over $200 weekly volume in milk, eggs, butter, cheese, soft drinks, jello, potato -ealad, and so forth."^ 2*Pbone conversation with Mr. Kelley, July, 1963. 22News Release, The Bishop Company, Chicago. 23"Six Apartment Buildings Get Vending U nits," Supermarket News. August 5, 1957, p. 32. 139 The managers of the aforementioned apartments were contacted and three responded with information. The reply from the Canterbury Court Apartments, 1220 North State Parkway indicated that pricing had been the same as in the grocery stores. There were 178 apartments containing 300 people in the building. The grocery vending operation was unsuccessful due to a large A & P store next door and because of the many send-out items from the numerous restaurants in the area. Mr. Lawrence A. Ventresca, Resident Manager at 1000 Lake Shore Drive responded that the machines were never installed. A response was re ceived from the firm operating 3318 N. Lake Shore Drive Building in dicating that when they acquired the building in January, 1962, there were none of the vendors in the building. Sid’s Sid H. Larson installed three refrigerated Vari-Vend machines October 1, 1957* in front of his newly remodeled Super Duper Market, South 6th and Walnut Street, Yakima, Washington. Sid's Super Duper was used as a pilot store by the Red and White affiliated group. The newly remodeled store had square feet of selling area and was open, in common with other supermarkets, from 9**00 a.m. to 9;00 P*m* including Sunday. Sid's was the only store with vending machines. Prices were the same as in the store. Sales from the three ma chines averaged £20 a day. The top pelling items were bread, milk, eggs, and coffee. Other items offered included cream, ground beef, ju ices, canned milk, canned meats, et cetera. Conditions changed, by July 1, 1959 mo8t markets were open from 9:00 a.m. u n til midnight. Some in the area were open 24~hours a day. The sale of items through the vending machines stopped completely. 24 The operation was discontinued in January, I960. The Orocerette Story A new firm, Orocerette Vending Machines, In c., Denver, Colorado, was chartered in October, i960 to manufacture and distribute dairy- grocery product venders. The corporation was organized by several Denver meat-packing executives interested in finding a way to vend fresh and/or frozen meats. Thp Crocerette multiple vending machine was manufactured in Wichita, Kansas by Paramount Manufacturing Company.^5 The ten selection unit, available in either refrigerated or non- refrigprated models, vended up to ten different product selections of varying dimensions. The machine had three shelves, each with a maxi mum of five vending tracks. Onp shelf held a maximum of 55 quarts of milk, 28 loaves of bread; or 20 dozen eggs, 26 pints of juice and 40 pounds of butter; Prices could rangp from 5^ to $1.14. Refrigerated models held the temperature between 33 an The machines could be leased for $47.43 per month for non-re frigerated units and for $50.83 per month for refrigerated units. ^Personal correspondence of the author, letter from Sid H. Larson, A pril, 19^3- ^5«Grocerette Test Maps Customer 'T astes'," Vend. March 1, 1961, p. 63. lUl The leases were for a minimum of three years, after which the mar* chines could be continued on lease indefinitely for $10 per month plus of 1 per cent of monthly sales, or $5* The first payment, and the last three payments, were payable in advance upon execution of the lease. Leases were available on either an exclusive or a nonr- exclusive basis. An exclusive franchise required the purchase of an assigned area quota of machines over a two and one-half year period. A branch office of the Denver Company was Opened at UO Atlantic Avenue, Long Beach, California by Mr. Jay Sullivan, company board chairman. Mr. Sullivan was in charge of the initial testing program which took place in the Long Beach Area. Tests were conducted over a period of eight months. Sixteen machines were utilized in the test at eight different locations. Prices were set to return a mark-up of per cent over product cost. Grocerette reported that their prices were about 10 per cent over regular supermarket prices and that customers were generally willing to pay the premium in return for the convenience. While not all of the original locations were profitable, Grocer- ette concluded that sales of $15 per day would make a location profitable. The most successful locations were reported to have been apartment houses, motels, trailer courts and other multiple»residence locations, gas stations and bowling alleys. Less successful were bus stops, factories and shopping centers. pfuDillard Haselbush, "Electronic Groceries Successfully Tested," The Denver Post. June U, 1961, p. 2D. 1U2 Consumer preferences were reported to hare "been remarkably conr- sistent. Top items in the refrigerated units were homogenized and chocolate milk, fresh orange juice, eggs, butter, bologan, bacon, weiners, tomato juice, and American cheese. Top items in the non refrigerated units were white bread, Roman Meal bread, Boston pie, chocolate and white doughnuts, French pastries, petit fours, and c o f f e e . ^7 Sugar and cake mixes in small sizes were very slow, soups had practically no sales; spaghetti was slow, canned corn and peaches also moved very slowly. The conclusion was reached that in automatic selliig of grocery items, emphasis should be placed on foods cu* tomers plan to use right away. Some machines were placed on a no-commission basis at gas stations and bowling alleys as traffic builders. Other machines were placed on a space ren tal b a sis. A flo u r ish of news sto r ie s and advertisin g appeared in trade journals in mid-1961 and created considerable in terest in the machine. Numerous installations were made in the sum mer of I961. A number of those installations have already been dis cussed in the previous chapter or will be described in this chapter. Letters written to executives of Grocerette Vending Company were unanswered. Litigation involving a principal of the firm resulted in difficulties for Grocerette. Reorganization of the company was reported to be underway in the spring of 1963.^® 27nihe Grocerette Story," Amerlcan Automatic Merchandiser. March, 1961, pp. 106, 108. ^Correspondence of the author, letter from VJillard Haselbush, Business Editor, The Denver Post. April 22, 1963. 1U3 Hot and Cold Water-'Service, Inc. Early in 1961, Hot and Cold Water Service, In c., Columbus, Ohio, "became interested in the potential of the recently introduced Grocer ette unit. Pour units were ordered and placed in operation at two locations about Hay 1, 1961. Installations of one refrigerated and one non-refrigerated unit were made in Columbus at the Williamson Shell Service, West Broad Street and Central Avenue, and at the University City Pure Oil, Olentangy River Road and Ackerman Road. Hot and Cold Water, Inc. made a mailing o f large siz e postal cards telling about the Grocerette 214-Hour Food Store and listing the two Grocerette locations. An introductory offer was made of a free, one-pound package of Schmidt's Montrose Brand All Meat Skinless Wieners and a package of buns with each lubrication at either of the service station locations. The card listed bread, milk, eggs, meats, cheese and fifteen other basic foods as being available. Daily sales averaged about 310 to $12 per machine on week-ends, but only averaged about $6 per day for the entire week. Officials of the firm said that a minimum of $12 a day sales per unit was necessary to cover costs. Some itpms just didn't sell. Hot a single dozen of high quality eggs was sold at 65# a dozen. The price was reduced to 50^ and no sales resulted. The price was finally reduced to 25^ a dozen and still the first dozen was not sold. The machines were removed from location and two units were in stalled at the Caravan Trailer Park, IOU9 Jackson Pike, Columbus, Ohio. The sales at the trailer location were described as "terrible." 1^1+ A supermarket, open evenings, located a block away was the source of groceries for many of the occupants of the 3^5 trailers. Children, or possibly adults, frequently broke into the machines or jammed them. The machines were removed w ithin a few weeks and held for re turn to the factory. The experiment cost the firm, na couple of thousand dollars," according to a former executive of the company. He described the unit8 as "well engineered and very good mechanically but ahead of their time for public acceptance."^ Wise I.C.A. Merle W. Wise, the owner of Wise IGA Supermarket, 879 East Center Street, Marion, Ohio, became interested in outdoor grocery vending when his son, who was in service, told him about the grocery vending machines that he had seen in operation at Port Bragg, North Carolina. The publicity about the Grocerette machines stimulated his in terest further and Mr. Wise made arrangements to lease four units from Grocerette. The four machines that Hot and Cold Water had re leased were delivered in la te August, 1961. They were in sta lled under an illuminated canopy at the side of the supermarket parking lo t. A drive-in restaurant, open until midnight, was adjacent to the back of vending machines. 29 •^Interview with Fred Hammer, former President, Hot and Cold Water, Inc., and Yern Backus, O ffice Manager. H+5 Sales totaled about $75 Ppr week for the four machines. The vending operation was discontinued after being in operation for a year when children became proficient in "jack-potting" the contents. Two of these units were then installed within the West Towne Laundry, 1+1+g West Center Street in Marion in November, 1962. This large automatic laundry was open 2h hours a day, 7 4ay& a week. When visited in the spring of 19&3 the sales from the two machines were averaging a to ta l o f about $J0 per week. The items stocked and the prices, which were generally slightly above supermarket prices, are listed in Table l6. Competition for grocery sales at the automatic laundry was pro vided by a neighborhood carry-out less thpn a block away. It stocked a fairly complete line of groceries and was usually open from 6:00 a.m. until midnight. The other two Grocerette units were in storage. Mr. Wise is considering trying them in either an apartment location or in a trailer court. He is rather philosophical about his experience thus far. He says, "When you try new things you can’t expect a hit every time. At our market we have established a reputation o f being f ir s t . n^° Brown1s Good Foods Brown’8 Good Foods, 119 Herkimer Street, Hamilton, Ontario, owned and operated by Gordon Bennett and Fred Edmonds, in sta lle d two 3®Phone conversation with Mr, Merle W. Wise. 1U6 TABLE 16 Products Vended and P rices, Wise I.G .A., West Towne Laundry, Marion, Chio, 1962 Item Price Refrigerated Machine Beef Pranks (1 lb .) JQ<£ Boiled Ham 70 Bologna !+5 Velveeta Cheese (g oz.) UO Blue Ribbon Margarine ( l lb .) Pillsbury Biscuits (10 count) 15 Isalys Vitamin D Milk (l q.t.) 30 Isalys Vitamin D Milk (i gal.) 50 Isalys Chocolate Milk (l q,t.) 35 W ise's Eggs doz. Carton) 30 Uonr-refrigerated Machine Chef Boy-Ar-Dee Pizza 50 Pop Corn (1 lb .) 20 Hu-Soft (5^ off label) 50 Oreo Cream Sandwich 40 Campbell's Chicken Hoodie Soup 20 Premium Saltine Crackers (7 oz.) 25 Planter's Cocktail Peanuts UO Chase & Sanborn Instant Coffee (6 oz.) 90 Doughnuts (1 doz.) 30 1^7 Grocerette units outside of their supermarket in July, 1961. The machines were owned "by Essex Packers Limited, a firm interested in automatic vending as an additional outlet for their own canned and luncheon meat products. The market was located in an older, very densely populated resi dential area consisting of many apartment "buildings, rooming houses, and individual dwellings on relatively small lots. Approximately 10,000 householders resided within a radius of three-quarters of a mile. Store sales were above one million dollars annually. All food storeB were closed on Sunday. At the time the two u n its (one refrigerated, one non-refrigerated) were installed., Essex Packers was in the process of creating an organization to stock the vendors. Since the organization was not yet ready to function, Messrs. Bennett and Edmonds stocked the vendors themselves and billed Essex Packers for the grocery products at cost. Essex Packers, in turn, reimbursed Brown's Good Poods a percentage of the gross sales. Sales reached a peak of about 3l60 per wedt. An overwhelming proportion of total sales was represented by milk and bread. Sales peaks came on holiday week-ends. Several visits were required on Sundays and holidays to re-stock the machines. Items stocked included bread, pork and beans, canned meats, canned stews, milk, butter, eggs, bacon, cold meats, et cetera. Later, Essex Packers Limited took over the stocking of the ma chines. The owners had stocked the machines several times on Sundays and holidays, but it was too costly for the packing company when the lhg extra coats of extra holiday pay, overtime, call-out time and other factors were considered. Thus, the machines were not adequately serviced at times of peak demand. Sales fell until they reached the low level of about $12 per week.3* The coin mechanisms were temperamental and, at times, did not function properly. The dispensing mechanism,when dispensing flat packages as cooked ham or bologna, would occasionally dispense two packages at a time. Mr. Bennett* s description of the treatment that a vending machine may sometimes "be expected to receive in an outdoor, public location was moBt vivid. His description followsj The vendors held an unholy attractive for children. They stuffed the coin-slot with paper, foil, tooth-picks, twigs, leaves, tongue depressors, bubble gum and several other things and also took to beating the vendors with sticks and steel bars, probably to see if they could dis charge the merchandise from its slots.32 The only opportunity that Mr. Bennett sees for the development of automatic merchandising of food, with its low margins, is when the cost of stocking and servicing the machines w ill not be a significant cost. He suggested that possibly an organization could efficiently stock and maintain the coin mechanisms, pt cetera, on a great number .of vendors. ^^Bersonal correspondence of the author, letter from J. G. Bennett, Brown's Good Foods, June 12, 19&3* 32Ibid. ]>9 Essex Packers Limited Essex Packers "bought five Grocerette vending machines in July, 1961. The purchase was made to conduct an experiment to determine whether or not the vending machine might create an additional outlet through which their meats might "be marketed. The experiment was continued for a year, using various inside and outside locations. At the end of the test the conclusion was reached that, while vending might become popular in the future, it was not satisfactory at that time. The machines were removed from operation in July, 1962 and Essex Packers concluded that vending machines,as a method of market ing for them, could not "be used successfully. 33 One test was at Brown's Good Poods, discussed previously. An other test involved placing three machines in an apartment "building containing 100 units and 400 people. Milk @ 25/ per quart, "bread @ 20/ per loaf, and twelve-ounce cokes @ 15/ accounted for 85 per cent of total sales. A total of 30 items were stocked. Sales were higher on Saturday end Sunday. One o f the machines grossed about $75 & week and the other two grossed about 515 to $25 each per week. Other apartment and store locations were tested but the machines could not pay expenses. Mr. McKee, Secretary-Treasurer of EBsex Packers Limited, ob served that price had no apparent effect upon sales as customers used the machines for emergencies. Experimentation was done in the pricing 33personal correspondence of the author, letter from C. J. McKee, Secretary-Treasurer, Essex Packers Limited, August 9» 19^2. 150 of luncheon meats. There was no noticeable effect upon the rather meager sales of luncheon meats by pricing them either somewhat lower or higher than supermarket p rices. Kemper House Two Wittenborg ’UOO vending machines, stocked with grocery and dairy products, were opened for the residents of Kemper House, Cleve land, Ohio, in the fall of 1961 (see Figure 19). The 50 unit apart ment was located in a high income area, at South Woodland and Kemper Hoad. Several negative factors would obviously have to be offset, if Vend-Ease Company, a local vending company, were to have a successful installation. The installation had an unfavorable location in the garage area in the basement of the apartment. The building had only fifty apartments and the machines were not available to other families in the area. A high quality supermarket was less than a block distant. The residents, with above average income, were probably interested in frozen-prepared foods, but no frozen foods were vended, Vend-Ease circularized the tenants of the apartment prior to the installation with cards telling that they could easily shop for Oscar M a y e r meats, dairy products, et cetera from the handy Vend-Ease machines in the apartment garage. Sales were unsatisfactory and the machines were moved to another apartment at 12700 Shaker Boulevard. Here sales were fair. Th*»y were next installed in an apartment, housing slightly over one hundred families, on Fair Hill Hoad. Sales were about $20 a week. 151 •W "1" .Vc ' »*! ’0U2 f £ *»tl« * M «* It* ’ **< Source: Food Topics Figure 19. Kemper House, Cleveland, Ohio, 1961. 152 Milk was the hast selling item at all three locations. Vend-Ease withdrew from apartment vending a fter their unsatisfactory experience in three different locations. Dairy and Bakery Kiosks Kansas City became the scene for-a unique grocery vending experi ment when, in late 1961, the first of ten kiosks housing vending machines was opened. A large dairy in partnership with a regional "bakery chain opened the ten installations, each with five Visi-Vend machines and changemakers housed in attractive kiosks (see Figure 20). A wide variety of dairy and bakery products were dispensed. Two machines were stocked with hot bread, another contained cakes, and two refrigerated machines were stocked with half-gallons of milk and a variety of other dairy products. The tests continued for about eight months. After the test was completed, the in sta lla tio n s were dismantled. nThe installations were closed for reasons not related to the test itse lf,n according to a Vendo executive.3^ No information was released concerning sales. Credlmatlc. Internationa^. Frederick A. Wise, who brought the food-freeser plan to Canada in 1950. was the promotor behind the Credimatic International Vending Corporation. Mr. wise is President of Town and Country Food Marketers 3%‘ersonal correspondence of the author, letter from Alex Izzard, Vice President, Public Relations, The Vendo Co., June 10, 1963* 153 Source: The Vendo Company Figure 20. Bakery and Dairy Vending Kiosk, Kansas City, 1961. 15U and of Credimatic. WiBe pioneered the plan, in Canada, by which con sumers buy a freezer through hia organization which then keeps the freezer stocked. Hia Town and Country organization sold about $3 million worth of food last y e a r . 35 Wise designed a food vending machine that consisted o f dispensing equipment inside a modified 22 cubio-foot freezer cheat. Each of ten channels contained a different food item ranging from packaged chicken, ice cream, and vegetables to meats of all kinds, the total selection of all items not exceeding ten. Ferranti-Packard Electric Limited developed the machine from Mr. Wise's idea and has the ex~ elusive manufacturing contract with Credimatic. Franchises are award ed on a territorial basis to distributors who in turn sign up fran chised dealers to keep the freezers stocked. The units are installed in apartments with 50 units or more. The tenants are invited to join a "food club." Those who join pay a fee of from $1 to $3, get a key and a supply of 2h credit tokenB, numbered to identify the customer and color coded for different prices. The tokens will buy each customer about 515 worth of frozen foods a month. The key opens the freezer and the tokens, of various values, when inserted into a slide unit, activate a mechanism to release the food package selected. It the end of the month the tenant is billed for the total value of the tokens used and his supply of tokens is replenished.3^ 35npash-button Grocer," Business Week. May U, 1963* P» 63* 3^"Toronto Now Has Packaged Food Vending Machines in Apartment Houses," Canadian Vending. November, 1962, p. 20. 155 Prices run 8 to 10 per cent higher than food chain p rices. The apartment owner received a percentage of the revenue. Wise says that if each of the tenants in a 50~apsrtment building spends about $2 a week, it is profitable for the dealer. The dealer purchases the freezer from Credimatic. Canadian Vending lis te d the cost o f a com plete unit at about $1,675*^ Six months later Business Week men tioned SI,995 aB bb® selling price.3® The in itia l units were in stalled in apartment buildings in Toronto and Vancouver. Installations in the United States were plan ned for June, 1963* in New York, but the venture was delayed while the equipment was checked by the Underwriters Laboratories for Fire Department approval. The New York franchise dealer then postponed in stallation u n til September, when vacations were over. The West Coast was reported to start receiving the fir s t of 1,200 units in June or July but inspection was also required there and it was antic ipated that shipments would start in September. Franchise holders are reportedly being signed up in many major cities.. Several interesting questions w ill eventually be answered by the succesB or failure of the installations. Will the lure of credit buying be as effective a sales tool as extended payments were in the food plan promotion? What proportion o f fam ilies w ill pay to join "the club"? Will their weekly purchases approach the $2 average 37Ibid. 3$Push Button Grocer, op. c lt. suggested by Mr. ’/lee? 7111 a selection limited, to only ten items, while both convenient and on credit, offer the consumer sufficient variety and Incentive to increase her frozen food purchases substanr t ia lly over the average purchase now made by consumers from the sev eral hundred frozen food items stocked in supermarkets? W ill the owners of desirable apartments be willing to sign a five year con tract (presumably exclusive) to locate the freezer-vendor on these premises? Will the unit, whosp mechanical functioning bears a con siderable resemblance to the gate-type soft-drink vendors, so popular in the 19^0*8, be the desirable equipment? Or w ill i t quickly be made obsolescent by a unit of more modern mechanical design providing the customer with a much wider choice of selections from a unit requiring less floor space because of more effective utilization of available v e rtica l space? 5upermat-2h The Supermat-2h, produced by the Ventronics Corporation, Phil adelphia, Pennsylvania, received wide publicity when it was announced in the spring of 1962. Production, however, was delayed and ultim ate ly ten units were produced in the spring of 1963* Machines were placed in operation in four states by June, 1963- A brochure dis tributed in 1962 liste d the cost of the Supermat-2h at $7,950 P.O.B., Philadelphia. In an up-dated brochure in 1963. 00st WaS at $9,950- The Supermat-2U was a self-contained, coin-operated, variety food store handling up to 36 items (see Figure 21). One-half of the 157 Source: Super Market Merchandising Figure 21. Supermat-2H, 1963. 158 machine was refrigerated. To operate, a customer merely inserted coins in the amount necessary to cover desired purchases, pushed a "button to make the selection, and received the merchandise from a weather-tight bin. Mr. Harry Schraeder, Saginaw, Michigan, the Supermat-2U distrib utor for Saginaw and "Bay counties in Michigan, in June 19^3t received one of the initially produced ten machines. Mr. Schraeder first located the machine at a service station located at Davenport and Bay Streets on Saginaw's west side. The unit was moved within a few weeks when Mr. Schraeder found a more desirable s ite . The new location was at the Conlee Oil Company Service Station, Birch Run, Michigan at the U.S. 23-Interstate 7*+ interchange. The service station had developed a growing snack and refreshment business and was operating thirteen vending machines, dispensing a variety of beverages, sandwiches, pastry, cigarettes, milk, candy, and other snack items. The snack and refreshment machines were installed in a glass-enclosed portion of the service station. Mr. Conlee had also erected a large pavilion at the 9ide of the service station area and provided picnic tables to encourage trav'- elers to stop. The pavilion represented an expenditure of over $5,000, and was considered as a convenience feature, to encourage patronage of the service station. Mr. Conlee was veiy receiptive to the suggestion that a Supermat-2U be installed on his property as he was interested in any idea that would attract attention and bring more 159 customers. In la te June, 1963, the Supermat-2H was in sta lled in an area "between the service station and the pavilion. The location appeared to "be excellent, "but the coin changer on the machine and the electronic switches were temperamental and the machine was out-of-order much o f the time. Canadian coins would Jam the mechanism and the machine would be inoperative u n til repairs were made. Only six half-gallon cartons of milk could be stocked on the conveyor belt. If the belt were loaded heavier, it would not complete the vend cycle. A service man had to be ca lled from Saginaw to put the machine back into operation. Mr. Schraeder estimated that i f Supermat-2H had ever been in operation for an entire week, total weekly salee would have been ap proximately $100. The machine operated without difficulty over the Labor Day week-end and sales were about $60 for the holiday week en d .^ Sales began to d eclin e a fte r Labor Day. Many o f the summer customers had been tourists who purchased snack items to eat while traveling. Mr. Schraeder, an accountant, had no previous experience with either the vending industry or with merchandising. When on October20, 2963, he had a change of responsibilities on his regular full-time job and had to spend three days per week in Detroit, Mr. Schraeder discontinued operation of the Superaat-2U. In early November, Mr. Conlee purchased the idle Supermat-2h from Mr. Schraeder. He planned to operate it along with his other vending 39phone conversation by the author with Mr. Harry Schraeder. i6o machines. The problem of maintenance would be simplified, a® the men at the station, experienced in maintaining the other vending machines, would be on duty to make any minor repairs as they arose. Mr. Conlee expressed considerable desire to have the newest in vending equipment at his station and i t was his opinion that the Supermat-2h would be of value to him for advertising purposes even though, as an operating unit, it might not prove to be profitable. Supermat-^ news releases pointed out that a "sellout" of the store only one day each week was su fficien t to provide the operator with an excellent return on his investment.^ A sales brochure, "The Story of Supermat-2H" supplied a listing of refrigerated and non-re- frigerated products under a heading "’Vhat can it sell?" Listings by item included the categories cost, sales.price, profit per item, total sales and total profit. A notation was made that all prices were ap proximate—based on the Philadelphia Market. The three products with the lowest contribution to total profit and the three items with the highest contribution to total profit, as given in the sales brochure, are listed in order of ascending contribution to total profit. Other excerpts from the brochure are also noted. ^Phone conversation by the author with Mr. Cliff Conlee. ^"Coin-Operated Supermarket a R e a lity ," Food Mart News. May 15, 1962, p, 32* "Business Highlights," Progressive Grocer, August, 19&2, p. 1S6. l6 i Total Total Sales Profit Item Cost Total Total Products Cost Price /item Canacitv of Mdse. Sales _ P ro fit Bread •19 .30 .11 13 $ 2 .1*7 $ 3.90 $ 1.1*3 P retzels (6 oz.) .21 .30 .09 22 1+.62 6.60 1.98 Milk (£ g a l.) . 1*2 .55 .13 17 7 . 11* 9-35 2.21 lig h t hulhs ( 1* pack) •52 1.00 . 1*8 26 13.52 26.00 12.1*8 Bologna .30 .60 .30 1*1+ 13.20 26.1*0 13.20 Lunch Meat .60 •95 • 35 1*1* 26.1*0 1*1.80 15.Uo 1,222 $1*10.39 $612.65 $202.26 Grand total (listing of 32 products). How Much Total cost of Superaat-2h $ 9.950.00 Set P rofit Down payment 2,950.00 (plus tax, from i f any) Su-permat-21*? Balance to he financed $ 7.000.00 (as long as 5 yrs.) Total yearly income $10,517.52 (only I k . 2 $ o f 30 day sello u t— just one day each week*2) Total yearly rental 600.00 (location) Balance $ 9,917.52 , LeB8 loan repayment $ 1 ,960.08 ($163.31* per mo.) Net p ro fit $ 7.957.1*1* (per year) Net p rofit $ 153*02 (per week) ^This is interpreted hy the author to mean that the yearly income o f $10, 517.52 would he only lU.2 per cent or 1/7 o f what i t would he i f the machine sold out d aily o f the lis te d items. No natter how you figure thlB is a sound. highly profit able business. Imagine—based on your lSupermat-24l 1 se llin g out1 only one day per week, your return would “be a to ta l yearly Income of $10,517*52* This means that the store w ill have completely paid for itself in just about one year!! Multiply net p rofit by the amount o f income you want to get the number o f Supermats you need. Return on Investment 79 per cent. The figures shown here are of course subjec to: Type of location Shod price structure I ton carried Common?-sense management tfe believe they are conservative. . .but the operator is an important factor. ^ The costs of operation are given: Monthly Location rental (includii^ electricity) $ 50.00 Finance payments $213. 3U Annually $2, 560.08 Note; In order to present conservative figures, we have shown "Finance Payments" under operating costs. As these payments w ill not e x ist i f the unit is not financed, or a fter the finance period has ended, this cost would reasonably be omitted h e r e .^ ^"The Story of Supermat-2U," sales brochure published by Ventronics Corporation, Philadelphia, Pennsylvania, 19^3* 163 The sa les potential implied by Supermat-2U assumes a product sales mix equal to the machine's capacity for each item, i.e., 13 loaves of bread, 17 cartons of milk, U4 packages of bologna, HU packages of lunch meat, et cetera. Sales of milk and bread would thus be $9.09 - li per cent of total sales of $612.65 resulting from a complete sellout of all the items stocked. Since other experiences indicate that milk and bread, which are typically low margin items account for from 30 to more than 50 per cent of sales, the profits suggested in the brochure appear to be considerably overstated. I t would also seem that a number of expenses have been neglected and not included when operating expenses were determined. Location rental (including electricity) may be considered as satisfactory and w ill be le f t as i t was given. Finance payments have been included- as part of operating costs. They should be treated separately and de preciation should be included instead. Depreciating the machine over a five-year period would give an annual depreciation of $1,990 or $165.83 a month which is approximately the same as was deducted for payments. However, in the determination of net income, interest expense would need to be recognized. Other expenses which were given no consideration include: Freight and installation expense (would be added to cost of machine and would increase depreciation expense). In some operations, freight and installation would be considered as an operating expense. Taxes and insurance. This would include personal property tax on the machine and the cost o f various insurance coverages that would be necessary or desirable. 16U Delivery expense. The cost of transporting men and merchandise to the machine. Maintenance and repairs. An expense that ■would vary with the individual machine, the amount of use and the amount of abuse that it receives from the public. Hired labor unless the owner did a ll the work him self. There would be labor expense for stocking the machine, housekeeping, purchasing merchandise, et cetera. Administrative expense. Telephone, licenses, office supplies, office salaries and accounting expense. Promotional expense. Some promotional expense would be needed to introduce the machine to the public. A continuing expenditure would be ju stifie d to maximize sa les. A revised cost of operation could be similar to that which follows: Per year Location (including electricity $ 600 Depreciation (on installed unit-5 years) 2,050 Taxes and insurance 180 Delivery expenses 180 Maintenance and repairs 300 Hired labor 600 Administrative expense 120 $4,030 The minimum overhead expense would thus be $77*50 Per week. Assuming a 20 per cent gross p ro fit, which is very optomistic con sidering the high proportion o f sa les typ ically represented by bread and milk, minimum weekly average sales of $387*5® would be necessary just to break even. Sales of $387*5® would represent about 1,000 to 1,200 individual transactions. If sales averaged 60 cents per cus tomer (the average in bantam supermarkets with a selection of 1,000 to 2,000 items is 90£ to $1.00), 6U5 customers per week or nearly 95 customers per day would be required. CHAPTER VI EUROPEAN TAKE-HOME VENDING Takfr«Home Vending in Europe Take-home vending has been more highly developed in Sxrope than in the United States. Many individuals, when commenting on the po tential of take-home grocery vending in America, have referred to the successful automated merchandising of take-home products in Europe and inferred that it would "be only a matter of time "before the American public would be able to purchase in a similar manner. European manufacturers have been the -prime-movers in the develop ment of vending machine for off-premise (take-home) consumption while American manufacturers have le d in the development o f vending for on premise consumption. The foreign manufacturers have expended much time and energy to develop machines that would dispense a great va riety of merchandise. Only in recent years have American manufac turers exhibited more than passing interest in the design or manu facture of multiple-purpose vendors for take-home consumption. The primary emphasis o f American manufacturer has been in the technolog ic a l development and improvement o f sp ecialized machines each vending one commodity, as cig a rettes, candy, coffee, so ft drinks, ic e cream bars, et cetera. 165 166 Take-home vending has developed most rapidly in Sweden, Germany, Belgium, Holland, Denmark, and Switzerland, hut progress can he ob served throughout most of the other European countries. Most o f the vending installations are designed for outdoor vending. In many locations, regulations require the operator to close the vending machines for those hours that the shop is open. Structure of European Food R etailing The structure o f European food r eta ilin g is characterized hy a great number of small specialty shops. Only in recent years have supermarkets experienced substantial growth. The move to suburban!- I zation, so common in America, with the accompanying supermarkets, has made less progress in Europe. However, in many urban areas, newer- type stores are rapidly becoming established. The increasing sales of supermarkets, at lower than customary European margins, may have a decided influence on the future growth of vending. A Beport on Swedish Vending Hay 0. Harb, Executive Secretary of the Cooperative Eood Distri butors of America, traveled in Europe in 1957, studying the use of vending machines in retail food distribution. Mr. Harb reported that in Sweden there were over 7.000 stores, mostly food stores, with out door vending machines. Other shops with vending machines included tobacco, delicatessen, camera, variety, perfumers (selling health and beauty aids) and candy shops. Most of the food stores were very small and carried only one type of food, such as groceries, meat, fish, vegetables, or baked goods.1 At closing time the owner would roll a vending machine out into the shop entrance and then offer his products during the hours when his shop was closed. Other shops had display windows that could be rotated to expose the display window when the shop was open and a vending machine when the shop waB closed. Store Hours Are State Regulated The hours that shops are allowed to be open are very closely regulated in most o f the European countries by sta te or lo c a l autho]>- itles. Swedish stores are required to close at 6:00 p.m. on week days and at U:00 p.m. on Saturday. There are absolutely no Sunday hours. According to the shop-closing law, German shops have to close at 6:30 p.m. weekdays, and at 2:00 p.m. on Saturday. Vending machines are allowed to operate after shop-closing hours. Holland and Switzer land have laws that machines may only be r e fille d during normal shopping hours. Harb suggested that total sales from vending machines indicated that they were more a convenience than a big money maker.2 Konsum, Stockholm The Swedish government began permitting the sale of food through vendors in 1952. Konsum, the cooperative society that operates a ^ a y 0. Harb, "A Eeport on Pood Store Vending Machines in Europe,n Quality Grocer. January, 1958, p. 8. i6s large Swedish food chain, opened four automatic grocery "service sta tions" at points of heavy pedestrian traffic in 1953 ani* 195*' oldest installation, built into the display windows of a grocery Btore in the Vestertorp suburb o f Stockholm, was a 20h compartment in sta l lation. The inventory carried in the installation amounted to $7* and i t was grossing an average of $*55 per month, after being in operation for over a year.3 A newer installation, opened April 10, 195*. was, for some time, the largest installation in the world. The 336 compartment instal lation occupied an entire wall of a grocery in the Blackeberg shop ping center in Stockholm. Average sales were $167 per week (prices were comparable to United States prices). The sales distribution was Monday, $12; Tuesday, $lH; Wednesday, $21; Thursday, $15; Friday. $13? Saturday-Sunday, $97- Estimating gross margin at 20 per cent would give a yearly gross profit of $l,hOQ.* Konsum was one of the better operators and had good locations. Hot all vendors were doing as well as the Konsum installation. Bea Live, Stockholm A large vending installation that received considerable publicity Was a 100 foot long out-door installation opened in November, i960, in Stockholm, Sweden (see Figure 22). The installation, located at 3George Ed Williamson, "The Automatic Grocery," Vend. December, 195*. P* 57 . 4 b id . Source: Mr. Jack Low Figure 22. Grocery Vending, Stockholm, Sweden, 1961. 170 the busy corner o f G-otgatea and Rirgvigen, is in the southern section of the Swedish capital. It is owned "by the Stockholm food store chain, Bea-Livsmndel. The "battery has 1,5*5 compartments, U92 o f them re frigerated. The site is very strategic. An estimated 250,000 people pass the corner daily. Rental on the space is high and 1b even greater than the depreciation on the vending machines. One man is employed full time to take care of the machines, order merchandise, and fill the machines. The machines are not operated during "business hours "but are open evenings, Sundays, and holidays. A very wide range of products are offered including milk, dairy products, pork cutlets, bacon, beef steak, prepared meals, cheese, sausages, canned goods, bread, cakes, pastries, confections, coffee, fruits and cooled beverages. Pricing is in fu ll Crowns (about 25 cents) and, in general, goods are selected to be sold in full crowns. After some experience and change of as sortment, it was decided on rare occasions to add a supplementary item to the item vended in order to dispense products of one crown in value. Milk and other dairy products carry a higher maik-up than the low margin at which they are sold through food stores. Milk is the highest volume item sold from the machines. Weekly sales started at about 6,000 crowns and rose gradually to about 10,000 crowns or ^ Z ^ ,0 0 0 crowns annually. Sales are considered to be satisfactory. About half of the sales are on week-day evenings and h a lf are on Sunday. Milk sa les are l60 lit e r s d aily and 900 171 1,000 lit e r s on Sunday. Swedish bread sales are 60 loaves d a ily , 350 on Sunday. Holiday weekend sa les are even greater. A guard i s on duty evenings from 7s30 P»m. u n til 10:00 p.m. and on Sunday from 11:00 p.m. until 10:00 p.m. to make change for customers restock ma chines if necessary, assist customers with purchases, and to provide hags for purchases.5 Automatic Super Market, Vienna An even larger installation has opened recently on Mariahilfer Strasse, one of the main commercial thoroughfares in Vienna, Austria. With a total of U,000 compartments, its name is the "Automatic Super Market." Products sold are supplied by 58 different companies which rent varying amounts of space in the installation. A complete range of super market products, including foods and non-foods, is offered to the public. A permanent guard is on duty. The guard w ill make change for paper currency. Two change-makers are a part of the installation. Zirbot, Zurich Two units of a unique and promising vending machine were instal led on July 15, 1963, by Lebensmittelverein, a Swiss cooperative chain in Zurich, Switzerland. The machine, called Zirbot after its in ventor and builder, Ernst Zindel of Zurich, can keep a running total ^Translation of offprint from Swedish periodical Salvestjaning (Super Market), February, 1962. 172 of items purchased and then except one payment for the purchases and refhnd the proper change. All of the purchases are then delivered at one time to a pick-up counter. Each machine carries 50 different items, including beverages, frozen foods and fragile goods, and can vend 12 items in U5 seconds. A Zirbot unit costs about $25,000, including turnstile, enclosed dis play area, electron ic payment computing system, and merchandise storage and delivery equipment. Maintenance has been tunning about $75 Per month. Purchasing is a very simple process for the customer, who moves through a turnstile and steps on a contact mat starting the machine. Products are on display. The customer simply presses a button below each item desired. Up to four units of the same article may be se lected. A running tally of total purchases is automatically mainr* tained. When the selection is concluded, money is inserted in a coin s lo t u n til an amount su ffic ie n t or in excess o f payment for the se lections has been deposited. The delivery equipment starts and the goods are delivered to an adjacent counter by a delivery belt. Over payments are returned. Should insufficient money be deposited, the purchases are cancelled after a 30 second wait and the amount de posited is returned. The turnstile is automatically unlocked and another customer may enter and begin the purchasing process. European Shopping Habits Shopping habits in Europe are vastly different from those in America. A great many European housewives shop each day — or even 173 several times each day. Most homes in Europe do not have storage space or refrigeration capacity to permit less frequent shopping. Shopping once or twice a week as many Americans are accustomed to is virtually unknown. Shopping in one store, as is common in the United States, is virtually impossible for many European shoppers. Instead, the consumer must make a series of stops at the various specialty food shops to purchase her food needs. Another factor favoring the development of food vendors in Europe is the heavy flow of pedestrian traffic. Many fewer shoppers travel by auto in Europe than in America. Public transportation is also much more popular in most European countries than i t is here. C ities are more densely populated and shoppers walk to the store. Take-Home Vending: A Response to Consumer Needs Perhaps the greatest single factor favoring the growth of take- home vending in Europe has been the various regulations requiring shops to close daily at about 6:00 p.m., still earlier on Saturday, and to remain closed on Sunday and holidays. Christmas Day in the United States is the only day in the year that American r eta ilin g c lo ses. Tending sa le s have responded to the Christmas closing in much the same manner as on closed days in Europe, but machines cannot be successfully installed when they w ill be in fhll operation for only one day a year. VendJ.pg installations have developed in Europe to f i l l a need that p x ists as a resu lt of lim ited 17^ store hours. Retailing in the United States operates with much longer store hours and consequently there is less need for vending machines. Should le g isla tio n he enacted in European countries to lib er a l ize store hours the role of take-home vending, in satisfying consumer wants, might decline. On the other hand, the increasing competition from supermarkets may stimulate food shop owners to consider instal ling automated food stores, which would not be controlled by shop- hour legislation. This possibility is dependent upon the development of effective automatic equipment. CHAPTER VII AUTOMATIC GROCERY STORES Visionaries have foreseen the coming of robot stores ever since the arrival of the voiding machine on the retailing scene at the be ginning of the century. Keedoozle Clarence Saunders, founder of Piggly Wiggly stores and one of the outstanding innovators in food retailing, in 1937 opened a robot grocery store called Keedoozle in Memphis. When asked about the name, Saunders said, "I got it out of my noodle.'1 A Memphis reported of fered the explanation "Key Does All".^ Complicated electrical and mechanical apparatus sold merchandise from glass-fronted display cases containing a single sample item. Prices were cent to 3 cents over cost and offered customers a saving of 10 to 15 per cent from regular prices. The electrical circuits failed and customers were left waiting. Saunders closed the store long enough to revamp the electrical system and to change the type of key. Electrical troubles again forced him to close. *John Kord Lagemann, "From Piggly Wiggly to Keedoozle," C o llier1 s . October 30, 19^8, p. 20. 175 17 6 Two years later in March 1939* reopened with new wiring and another new key. It was estimated that,by this time, Saunders had invested $300,000 in the development of his automated store. Business was good but mechanical difficulties again forced him to close. Saunders had granted franchises for several cities and had others about ready to close. The shopper in Keedoozle received a key, somewhat similar to a revolver in appearance but with a lip at the front. The customer in serted the lip in a slot adjoining the product she wished to purchase. When the customer pulled the trigger, paner in the gun was pushed against a line of type above the slot and a printed imnression was made on the paper stating the name of the item and the price. When the customer had completed her shopping, she took the key to a cashier who punched the items by number into a retail register. Simultaneously the items purchased were released from a mezzanine stockroom and con veyed to the side of the register. There the purchases were sacked p and carried to the customer’s car. The war delayed Saunder1s plans to get into operation again as he had to await the resumption of civilian production to make neces sary parts available. In I9US Saunders launched the newest of his series of Keedoozle stores (see Figure 23). The key and selector Bystem had been modified. Bather than printing the name of the product, as was done previously, the new system u tiliz e d a cribbage- board pattern of 33 electrical contact points. The customer put her ^"Saunder*a Keedoozle Hits Stride," Business Week. April 15, 1929, p. hi. 177 a. Source: C ollier18 Figure 23. Keedoozle Store, Memphis, Tennessee, 19^8. 176 key into a receptacle in front of the display case and pressed a white selector button hearing the letter that corresponded with the letter identifying the product in the display case (see Figure 24). The 33 contact points punched price, item, profit, and control information into a tape. The new Bystem no longer required a cashier to ring the items on a reg ister. Instead, the cashier would run the r o ll o f tape with the punched information through a calculator which indicated the amount o f the purchase, ''/hen payment was made, the cashier activated a release mechanism and the purchases were delivered to the customer. Saunders Automatic Systems Corporation was formed to franchise the system. The franchise holders paid $10,000 apiece, to be for fe ite d i f they had not opened for business w ithin a year. Franchise holders Included a former newspaperman, an automobile dealer and several food wholesalers. Terms of the franchise gave Saunders’ corporation one-half of 1 per cent of gross sales and also gave him complete control over physical facilities, advertising, brands, and mark-up. Saunders predicted that within five years, a thousand Keedoozles would be se llin g $5,000,000,000 a year. Saunders closed his store in July 194g saying, "It’s too far ahead of the buying habits of the public. It was Just too much for the average mind to grasp, too far in advance of the public think ing. ^Charles R. Goeldner,"Automatic Selling—Will It Work?," Journal of Retailing. Summer, 1962, p. 44. Source: Colliers Figure 2 k . Customer Shopping at Keedoozle, 19^8. Abandoning his effo rts to create a fu lly automated store, Saunders designed a new system, Foodelectric, that made the customer his own cashier. The key was replaced with a tiny adding machine which, when pressed over a notched key putting out beside the display item, recorded the price and delivered the desired item into a re ceptacle below the showcase. The customer picked up the item and put it in her shopping basket. The cashier's duties were reduced to collecting for the amount shown on the tiny adding machine and bagging the purchases. Mr. Saunders death on October ih-, 1953# t^e ®Se 72 marked the end of the Foodelectric venture. The opening of the new store was to have been within a few weeks. Nothing has ever been h, done to complete the development o f the Foodelectric. Auto-Serv A mechanized grocery store, Auto-Serv was designed by Paul M. Farmer, an e le c tr ic a l engineer. Dohner and Lippincott, ind ustrial designers in New York designed the sty lin g . Auto-Serve was announced in the New York Times, on April ’4, 19^5» as a mechanized post-war grocery that could be constructed as soon as materials were available. The Auto-Serv utilized wall cabinets which displayed samples of products with perforated tags beside each item (see Figure 25). The customer took a tag for each desired item and presented them to the cashier. The tags were to be fed into a machine that utilized Personal correspondence of the author, letter from Lee Saunders, June, 1963. Source: New York Times Figure 25. Auto-Serv Food Store, I9H5. electronic controls to release the merchandise from dispensing racks in stock rooms. The order would appear from behind the scenes on a conveyor belt to be wrapped by a delivery clerk. There is no knowl edge that any installations were ever made. Elmersel The Independent Grocers Alliance (I.G.A.) made the first public showing of the Elmersel at their convention held at the Waldorf- Astoria Hotel in Hew York City in July 195^. I.G.A. stores incor porating Elmersel (Electrical Merchandise Selector) would have rows of glass-enclosed, upright showcases, each approximately 7 foot high, 10 foot long and 2 foot deep. A variety of merchandise would be dis played upon the tiers of shelves within the showcases. Each item was tagged with a specific number-letter combination. On a ledge below the display were two rows of push-buttons, similar to a juke box. One row had le t te r s and the other row had numbers. The shopper in serted his key into a slot on the ledge and lightly pressed down on the number and letter for the desired product. The information was transmitted to a tape contained in the key. The shopper continued making selectio n s u n til h is shopping was completed. The key was taken to the cashier who inserted it into a register and pressed an acti vator. The desired merchandise was released from storage and deliv ered on a moving b elt; the reg ister delivered an itemized s lip and totaled the cost. In the process, the tape was erased and was ready for use by another customer. 183 The system greatly reduced, space rerruirements and made possible automatic stock rotation, greater volume, faster selection, and faster checkout. It provided neat attractive surroundings. It eliminated shopping carts, price marking, and customer pilferage. Labor costs were reduced and inventory control and longer hours would be possible since one employee was su ffic ien t to operate the store during slow ppriods. I.G.A. gave up the idea when it was found that coats would exceed what they were interested in investing in the idea. Bruno V. Stiller, the inventor and builder of the Elmersel, has continued to modify and refine the prototype unit of the Automatic Elmersel System. His investment includes ttft years o f hard labor and considerable financial contribution. He remains enthusiastic about the potential of his system. At about the same time, I.G.A. considered supplying cards to customers who could punch them indicating purchases desired, in their own homes. Once brought to a store, the cards would be fed into a machine. The machine would automatically release merchandise, which would be delivered by belt to a check-point. The interest was not implemented and no installations were made. Mr. W. H. Longenbaker, director of the Engineering and Store Development Department for I.G .A., has been one of the food industry's most enthusiastic advocate of the automatic merchandising of grocery products. Longenbaker fee ls that automation in retailin g would reduce labor costs. 181* Throckmorton1 s Throckmorton's Incorporated, a hardware store located at Spinning and Kemp Roads in suburban Dayton, Ohio, is a working model o f a semi automated system that has been tried for food stores in France and Swpden. Called "Select-A-Card Shopping," the system includes display of numbered merchandise samples mounted on display panels on the sales floor. The customer selects IBM punched cards corresponding in number to the item desired from an adjacent card rack. These cards are placed in numerical order and taken to a cashier who runs the cards through an IBM U02 printer. The customer receives a receipt indi cating itemized prices, federal and state tax, and the total amount due. The cashier puts one copy of the invoice in a horizontal stove pipe going to the stock room. She then turns on a switch which starts a fan that blows the invoice to the stock room area. The switch also controls a buzzer in the stock room. A stock boy on roller-skates shuts off the buzzer and, with an order basket in the crook of his arm, skates up and down the aisles, picking the order from bins ar ranged in numerical sequence. The customer, having paid for her purchases, steps up to a space assigned to her at the stock room window and is given the merchandise.^ The stock room also supplies two other conventional Throckmorton hardwares in nearby towns. ^For a more detailed description, the reader is referred to! E.B. Weiss, "Unattended Store: How Close Is It?," P rin ter's Ink. January 11, 1963, pp. 13-11*. E. B. Weiss, "Preview o f Automated Re ta ilin g , " Advertising Age. September 10, 19^2, p. 102ff. 185 Superdls. Mce. France A Superdis super market in M ce, France tried an IBM punched card system that fa iled . Customers were asked to pick up an IBM card along with the product for each item purchased. When checking out, tabu lators established a detailed b ill for the customer and also provided management with information on sales, margins, stocks and taxes. The system worked fine for stock control and for store operations, but was not successful with the customers. Two-thirds of the customers found the check out operation to be too time-consuming and too complicated. c The system was discontinued. Neomatic First displayed at the Hanover Fair in 19^2, Neomatic, a new concept in automatic stores, was installed in the front of a food store in Strade, Germany, a small town near Hamburg. The manufac turer, Nordwestdeutsche Automaten-Vertriebsgesellschaft then sold its factory to Automatic Canteen and i s using the proceeds to enter the operating sid e o f automatic vending. In the summer o f 1963 i t opened the first of ten automatic stores, under construction in North German c it ie s . The first unit located at Bremen, Germany, offers a selection of UOO food and non-food items in a 376 square foot store. The merchan d ise is stocked in the basement and delivered on a conveyor b e lt. The Neomatic is surrounded by smaller automatic vending machines. ^"Oh Non Monsieur," Super Market Merchandising, A pril, 1963. p. 8. IS 6 Automatic Canteen has another unit, "Lial-A-Sale, " produced in Germany and shown in the United States in the fall of 1962. "Dial-A- Sale" reportedly could "be adapted to 9^ Per cent of the items sold in food stores. RingBtrom C. A. Ringstrom, a Swedish supermarket operator, is utilizing a system very similar to that used hy Throckmorton's. He expects his 3,000 square foot store to gross over $500,000 a year. He has re portedly almost doubled profits and cut operation costs by more than 15 per cent. One item of each product is displayed with punched cards in a slot below it. A card is taken instead of the product. At the check out, the cards are fed into a computor. The customer receives a copy o f her order and another goes to the stockroom where three stockroom boys gather the order and deliver it outside of the store while the customer is paying her b ill. Labor savings and a reduction in pilferage are the reported advantages of the system. Daltch-Shonwell Professor William N. Breger of Pratt Institute in New York de signed a model o f an automated food store for Daitch-Shopwell. The model was displayed at the Food Exposition and Country Fair held in the New York Coliseum in the fall of 1959* Many spectators were interested and some didn't understand it. The scale-model was a cyclindrlcal, multi-storied supermarket with conveyor "belts to carry food. Moving sidewalks would move the shopper around the store (see Figure 26). Entering the store, the shopper would take an elevator to the top, and cariying a sp ecial marker with a code number, she would descend on a moving ramp past the food displays. When she saw an item she wanted, she would stamp the item with her "brand, drop it into a conveyor slot, and step "back on the moving ramp. Her purchases completed, she would arrive at an automated checkout where a computer would to ta l her purchases and an automated cash receiver would accept her money. Professor Breger reported that the project was never technically developed to a significant extent.? The Supermarket o f Tomorrow nThe Supermarket of Tomorrow" is scheduled to actually operate as a lifesize working model in the World of Food Pavilion at the New York World's Fair in 196^-1965. The opening is scheduled for April 21, 196 h. Some of the highlights o f the Supermarket o f Tomorrow w ill "be push "button product selection, pprsonalized menu planning, credit card payment, and automatic delivery of purchases. The guest operator of the supermarket was announced to "be H. C. Bohack Co., In c., ^Personal correspondence of the author, letter from William N. Breger. 188 Source: Super Market Merchandialng Figure 26. Scale Model o f an Automated Supermarket. 189 Brooklyn, New York.® Bohack withdrew in May, 1963. however, and the World of Food, Inc., is in the process of securing another operator or making other arrangements. It is not known how many of the orig inally announced highlights will he incorporated into the final market. I t would he p ossib le for the "Supermarket o f Tomorrow" to have considerable influence on the attitudes held by manufacturers, re tailers, and consumers toward automatic merchandising. A successful operation might well "fire the imagination" of numerous individuals, while the opposite is likely to occur if results are less favorable. CHAPTER VIII EVALUATION APE POTENTIAL OF AUTOMATIC MERCHANDISING OF GROCERY PRODUCTS The automatic merchandising of grocery products for off-premise consumption receives continual mention in trade releases as an area where considerable growth is imminent. I t is described as the coming revolution in food retailing. Why Automatic Merchandising? The idea of automatic merchandising is not a new one. J. H. Stevenson, thirty-five years ago, in reviewing the place of automatic selling in the retail store had this to say. From the point of view of the public, then, auto matic retailing boils down to a matter of convenience; less waiting for service, quicker procurement, no 'suggestive selling1 annoyance and more convenient accessibility of standard products. Therefore, this augmentation of store services should prove popular, provided, first that the mechanical merchandising is intelligently directed; second, that the machines function easily, simply and dependably.* The customers needs were soon met, not by automatic retailing as Stevenson proposed but by a new revolution in retailing; self service. ^■J. H. Stevenson, "The Place of Automatic Selling in the Retail Store," Advertising and Selling. November 2g, 1928, p. 23. 190 191 Customers were f ir s t introduced to s e lf-s e r v ic e In food stores. The consumer rapidly accepted self-service because: 1) Prices Of products purchased “self-service" were lower than with traditional clerk service. 2) The customer was able to buy with no forced or hurried decisions. 3) Other items could be selected to substitute for out-of-stock items. U) Leisurely shopping was possible. 5) customer was presented with a mass of merchandise, in a wide assort ment, and skillfully displayed for convenient selection. The machines, Stevenson referred to, had not yet been developed to offer a wide selection of products and function “easily, simply, and dependably." In I93O James T. Mangan in discussing automatic merchandising said, "We do not propose to substitute machines for clerks. But what we want to say i9.* before any automatic store machine can be successful, it must be able to do the greater part of what a clerk p 1b able to do, and that in a more efficient and perfect manner 1" Elmer Hinkle, American Automatic Canteen president in 1957 said, "The big secret in thi9 business is to know what not to vend.“3 "Thus vending men don1t expect that wholly automatic supermarkets w ill make much headway because supermarkets already have low labor costs but they do look for a big increase in outdoor machines to keep sa le s clicking a fter normal business hours. 2James T. Mangan, "Automatic Merchandising" (Chicago: M ills N ovelty Company. 1930)* P* 21. 3"The Clink of Coins-Louder," Newsweek. August 5* 1957* P* 76. ^Ibld. 192 Earlier, in 195&* Hinkle had cautioned retailers, Crawl before you walk before you run in auto matic merchandising. It is as important to know what not to s e l l as what to s e l l . There i s no place for a vending machine when you can sell at a profit the ordinary way.5 Robert Z. Greene, President of Rowe Manufacturing Company in 1957 said, "Automatic merchandising w ill never sell merchandise that c can be sold better by over-the-counter salesmen. 1,0 Potentials of Automatic Merchandising Automatic merchandising offers a number of potentials in its * * use: 1. It remains available around-the-clock, making sales at hours and days when stores are normally closed. 2. It can produce sales from areas outside of the store. 3. It can supplement the efforts of the sales force during busy periods and serve as an "express lane" for a super market. For those who know what they want i t can speed purchasing by eliminating a wait at the cashier. U. It could permit a reduction of store hours without loss of service to the public. 5n,Enndreds o f Vendors' to be In sta lled in Outdoor Locations Throughout U.S.," Food Topics, November 5. 1956* p. 2. c °"Dollar-in-the-Slot? Vending Machines Could Influence Marketing Strategy," Printer's Ink, November 22, 1957. P* 37* 193 5. It could, reduce sellin g ', wrapping, cashiering, delivering and other bookkeeping expenses. 6. It could make it practical to stock and sell merchandise in locations where it would not be practical to operate a store. 7. It could reduce customer p ilfera g e and damage to productB by handling. The strong point for automatic merchandising is that a machine can do what could not economically be done with people. Disadvantages of Automatic Selling There are, however, some disadvantages. A mechanically perfect distributing machine is not necessarily a good selling machine. A machine is in effect, simply an order-taker. It is cold, inanimate, and completely impersonal. Most machines have been coin-operated. Customers have soon tired of putting coins into a machine. Securing change has also been a problem. The development of the bill-changer has eliminated some of the change problems and the development of credit-card acceptor devices will make purchasing still easier. The Zirbot makes it possible for the customer to make a series of pur chases and then automatically pay for all in one transaction. The opportunity to make multiple selections substantially increases the probability of increased customer purchases. Automatic merchandising machines have been both limited in selection and in capacity. The selection may not be sufficient to attract customers and the capacity may be insufficient to prevent out-of-stock conditions between refills. 19^ Many customers wish to fe e l or examine the merchandise "before purchase and this is not possible with automatic merchandising. Many, other wise potential customers, are reluctant to put their money into a machine when there is a chance that they may get neither a product nor a refund of their money. Automatic merchandising is not the least expensive form of retailing; in fact, it has "been basically a high cost method of retailing. Selling products at aomewhat above store prices creates definite customer resistance, especially for food items. Machines, which by their very nature lim it pilferage of products from store displays, may invite break-ins or even be sub jected to malicious destruction when located in an unprotected, public location. Many problems have been solved but a need remains for frequent mechanical or electrical adjustments to keep the complicated mechaiv- ic a l and electron ic equipment in working condition. Bulky products may lim it the capacity of the machine and some may not be vendible. The physical size and shape of some packages may be unsatisfactory for automatic merchandising. "Vendibility11 Not every product may be sold by machine at this time and some never w ill. Some factors may help one predetermine the potential sales of items through machines. 1. The product must be one that is so standardized that the customer w ill not wish to feel or handle it before buying. 195 2. The need should exist to consume or use the product in a relatively short time, otherwise the customer w ill probably prefer to make the purchase at a regular store. 3. The product must he vendible in su ffic ie n t volume to be profitable for the operator. Otherwise there is no economic justification for utilizing machines. H. The product must be "pre-sold" through advertising or by public acceptance. 5. Packaging should be standardized and be of a type that w ill dispense without difficulty. R esults Pew of the grocery items that have been sold automatically for take-home consumption have sold in sufficient volume to be economically profitable. The two highest volume products, milk and bread, are both bulky and low margin items. Operators, who offered a limited se lection, suggested that maybe a wider variety of products in the machines would have encouraged increased customer traffic and greater sales. But operators with more extensive offerings found that most of their total sales were still accounted for by a very small propor tion of the items carried. Many items had such meager sales that they made little contribution to gross profits. The high volume items were the low margin "traffic" items that are the rapid selling items in food stores. Operators experienced little success in selling higb- margin impulse sale products through machines. Consequently the 196 Bales through machines did not result in a product mix comparable to that of a supermarket where customers not only buy the low margin products but also purchase numerous items that return a higher markup to the retailer. P o t e n t i a l Automatic merchandising has had a substantial growth in recent years and probably w ill continue to grow. It does not, however, pose a serious threat to the retail store. Expansion w ill continue to be in the lines of convenience goods that account for the greater part of vending sales. Prepared food service, currently the fastest grow ing phase of vending, w ill continue growing. Much of the growth w ill come from serving customers in captive locations. Experiments in take-home grocery vending have produced somewhat less than satisfactory results. Experiments, however, w ill continue. Supermarket chains have little interest in further vending or automated store experiments. The general feeling among food trade executives is that successful store automation is a long way off. They indicate that they prefer to let someone else do the experiment ing. They feel that when something really "big” comes along that they w ill still have plenty of time to be a part of it. Other executives feel that they have many problem areas which w ill yield more returns from additional attention than w ill efforts expended to develop automatic merchandising. Vending operators have little interest in grocery vending. Those who have experimented have found that they had a high expense 197 operation in a low-margin "business. They found also that the grocery "business was completely different from their cigarette and candy operations. Experiments in grocery vending will likely result either through sponsorship by a manufacturer or as a result of promotional activities with persons neither connected with the vending or the food industry. CHAPTER IX SUMMARY AND CONCLUSIONS It was the purpose of this study to l) consider the reasons for the present interest in the automatic merchandising of grocery prod ucts, 2) consider possible advantages offered "by this method to the vending industry, the food industry and to the consumer, 3) determine the lim ita tio n s, and H) determine the poten tial o f th is method of grocery merchandising in the American economy. This study was important for several reasons. First, very little consideration has been given to the general category of automation at the retail level and, in particular, to grocery merchandising. Furthermore, it is important to determine the factors which make auto matic vending advantageous or disadvantageous in a particular situa tion, to enable management to make the proper decisions whether or ' not to automate grocery merchandising and, i f 30, to what extent. The proper decision could save management large sume both in money and in opportunity costs. This study consisted of a thorough review of literature related to the subject and extensive interviewing, both personal and by telephone, with operators, machine manufacturers, and others inter ested in the vending and food retailing industries. In addition, several hundred personal le tte r s were w ritten to vending suppliers, 198 199 vending machine manufacturers, vending operators, business newspapers and magazines, and to those in the food industry who have actively engaged in installations designed to automate food retailing. Based on the findings of the study as they relate to the above objectives, the following conclusions have been drawn. 1. There has been an increase in interest in some quarters con cerning the utilization of vending machines in grocery merchandising in order to stabilize or reduce the apparent ever-increasing cost of retail operation. More and more supermarkets are remaining open for longer and longer hours. This combined with over-storing in many areas and ever-increasing wage rates has tended to push upward the cost of doing business. There have been great pressures on profits in many segments of retailing including food retailing. Many retailers are looking for additional sources of income. Consumers express a greater and greater interest in convenience. 2. There is little reason to be optomistic about the automatic merchandising of grocery products. Automatic merchandising is ■un likely to become a mass distributor of grocery products. Grocery vending tests and experiments have almost unanimously fallen far short of being even marginal operations. Past tests and experiments, with recognition given to numerous shortcomings in many of the operations, have been almost complete business failures. Furthermore, conditions which have been unfavorable to the vending of grocery products, in prior years, have become even more adverse in recent years. Retail food store hours have lengthened, until the average 200 supermarket i s open J2 hours a week and 37 per cent of the super markets are open on Sunday. Customers are generally accustomed to large and wide selections, at favorable price levels. The items normally considered vendible in the grocery line are primarily the demand items in a food store. These items are sold at very low mark-up in the supermarket. Machines, while being improved in their a b ility to merchandise grocery products and while being improved in th eir appearance are becoming increasingly expensive as they become more sophisticated. (Change makers, to ta liz er , et cetera, a l l increase c o sts.) The factor of dynamic obsolesence stimulated by the continual intro duction of new models with new styling, and new features and tech nological improvements has necessitated the u tiliz a tio n o f accelerated depreciation schedules. Heavier depreciation charges in turn neces sitate greater sales, and/or, higher margins to off-set the additional operating costB. 3. Certain individuals have suggested that it would be advan tageous to remove some of the low profit demand merchandise from the food store to enable the operator to better utilize his space and to concentrate on higher margin merchandise. This sounds like a good suggestion but the high volume demand merchandise that has moved the b est from vending machines is bread and milk. Here we have a combination of high bulk when compared with most vending machine capacity and relatively low price when related to the food store. The combination of bulky product, low price le v e l, and low gross margin is such that there are few situations when there is even a remote pos sib ility of a profitable operation under current operating conditions. U. Based upon the above observations, there are few situations 1 under existing conditions that offer any potential for a profitable automated grocery merchandising operation. Vending, per se, offers little opportunity for the food store operator and at the same time offers little threat to the established food retailer. The fully automated food store holds little promise for the food operator in the foreseeable future. There is no doubt that food merchandising w ill become more and more automated through the u tilization of improved packaging machines, price marking machines, change makers, etc., but the automation of the selection process which is currently done by the customer with little resistance and generally with considerable pleasure must of necessity remain in somewhat "the something to talk about stage" in the future. Automation of this stage would add to costs and reduce sales through the elim ination of many impulse sales currently gener ated by exposure to displayed merchandise. The more traditional re tailing establishments are likely to continue to attract the majority of consumer purchases for a long time. Human relationships are still highly regarded by the American consumer. We w ill not have a truly push-button store u ntil someone invents push-button customers. Received without pare(s) Filmed as received. University Microfilms, Inc. BIBLIOGRAPHY "A and P Inetals Multiple-Unit Outside Vending Machines," Super market News, December 12, 1956, 23. Albert, Richard. "The Profitable Use of the Point of Sale Recorder, " Stores. XXXIX (January 1957), 20-21. Amann, Fred. "IGA's 'Outer Space' Plan," Vend. October 1955* 52~53* Amann, Fred. "The Mayflower Experiment," Vend. July 1958, 7^—75- Anderson, Mary Jane. "Outdoor Venders In sta lled by Kroger," Super market News, July g, 1957, 1, 18. 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New York: Super Market Publishing Co., 1937* AUTOBIOGRAPHY I, Vern A. Vandemark, was born In Pairgrove, Michigan, Novem ber l6, 1917. I graduated from Fairgrove High School in 1936* After one year of college at Albion College, Albion, Michigan, I trans ferred to Michigan State University, East Lansing, Michigan, and re ceived my Bachelor of Science degree in I9H0. My undergraduate major was crop production. I operated a certified seed and registered dairy farm from 19^0 through 19hS. I returned to Michigan State University in the spring of 19^9 an<* received the Master of Science degree in 1950* While working toward the degree, I was an assistan t in the Department o f Agricultural Economics. I was awarded a scholarship by the National Association of Food Chains and received a Master of Arts degree in 1951 from the School of Business at Michigan State University. My major area of study was the curriculum In food distribution. I was engaged in public relations and in retailing from 1951 u n til 1957 when I accepted a p osition at The Ohio State U niversity as Specialist in Food Merchandising with the Cooperative Extension Service. 216