Talking With: Greg Herman, PepsiCo Foodservice, on unattended retail

Whether it's a bakery, a gift store or even a dry cleaner, hardly a day goes by that some retailer or brand doesn't announce a self-service offering.

Self-service concepts attesting to the growing importance of this consumer demand include "smart" coolers, biometric identity verification scanners and mobile delivery robots, to name a few.

PepsiCo Foodservice, looking to keep a pulse on consumer attitudes to these various solutions, conducted a consumer survey last year to gain a better understanding of what consumers are looking for when it comes to unattended retail. The company surveyed 1,000 consumers through an online questionnaire.

In response to these findings, the consumer goods giant has developed some of its own unattended solutions which it plans to introduce in most geographic markets in 2023.

Greg Herman

Vending Times recently interviewed Greg Herman, senior marketing director, beverage innovation, PepsiCo Foodservice about this research and the company's plans for unattended retail. Following are excerpts from that interview.

Q: What was the goal of PepsiCo's consumer study on unattended retail?

A: PepsiCo issued this survey to confirm our theory that retailers are looking to adopt these new solutions and gauge consumer sentiment of how and where they want to see it integrated into their shopping experience. We continuously keep a firm pulse on industry trends and have noticed rapid growth in the unattended retail space.

The industry is in need of innovation and PepsiCo is bringing those solutions because we see tremendous growth in this space for years to come.

Q: What were the most important findings?

A: Through the study, we confirmed our theory: consumers prefer unattended retail more than ever because they want to shop at their own pace. Consumers want control over their transactions, something that unattended retail gives them without the hassle of feeling pressured by an outside party. And when consumers feel more comfortable, that tends to translate to more sales — with our study finding that spending rose 20% to 40% more during unattended transactions.

Q: What were the most surprising findings?

A: Maybe less of a surprise to our team at PepsiCo but a general takeaway for the industry at large was just how open consumers of all demographics are to unattended retail. We found that consumers are constantly seeking new experiences and programs, with two-thirds of consumers finding unattended more convenient and one-third expressing their preference in browsing and buying without interacting with employees.

Q: What differentiates consumers who prefer unattended retail to those who prefer personal service?

A: Consumers who gravitate towards unattended retail seek convenience, less friction and full control of the experience. Unattended consumers are loyal to unattended, giving them the power to shop at their own pace without the presence of another person.

The unattended retail consumer base has grown due to the pandemic, with many consumers adjusting to this kind of model. Many now expect this kind of frictionless, low-contact experience as it has become their "new normal."

Q: What do you see as the most promising unattended technologies?

A: Whether standalone vending platforms or full-blown unattended stores, the technologies that are most promising are those that deliver on consumer demands without putting excess stress on operators.

Since the pandemic, we've seen that consumers are prioritizing three things when they leave home: convenience, simplicity and low-contact interactions. With that said, they do not want to sacrifice choice. The technologies that will win are those that can meet these consumer needs but still offer the variety of choices that people seek.

Maintenance is an important piece of this. From an operator standpoint, many are facing increasing labor cost pressures and look to unattended innovations to help simplify operations and look to their suppliers for the best technology and capabilities to alleviate that stress. The solutions must be intuitive and easily serviceable so that operators are not missing out on dollars.

Q:PepsiCo announced in April that it will be expanding its unattended cooler. What types of locations will be targeted?

A: We're building a portfolio of solutions in this space. Our biggest bet is Quik Pick — it's the future of vending. It's a smart, grab-and-go cooler, enabled by AI and computer vision tech for automatic product recognition — making it easy, frictionless and fun to grab drinks on the go.

Consumers just swipe or tap their card or mobile wallet, open the cooler, then pick out or put back as many drinks as they like. And once they shut the door, their card is charged and they're on their way. We are testing Quik Pick across workplace, college and travel channels. In addition to those channels, we also see potential in healthcare.

The Quik Pick has been tested across a variety of locations.

Q: Does PepsiCo plan to work in partnership with operator partners on these deployments or will the company operate the machines?

A: Quik Pick will be available in most markets and to vending operators in 2023.

Q: There is a lot of research that confirms consumer preference for loyalty programs. Has PepsiCo offered loyalty programs in its combination snack and beverage cooler?

A: No, we have not created a loyalty program for this particular innovation. Right now, we're focused on testing and learning with customers to see how Quik Pick performs in their respective channels.

Q: How long has PepsiCo tested this concept and what has it learned?

A: We piloted Quik Pick last summer with 30 placements across workplace, colleges and travel, and achieved phenomenal results:

• Consumers loved that the process was fast and appreciated the full selection of PepsiCo sodas, energy, coffee, tea and hydration products.
• Revenue was up 80% compared to sales of similar vending machines, driven mostly by how easy and enjoyable it was for consumers to grab multiple drinks at a time.
• Customers appreciated the strong reliability with over 99% product recognition accuracy, less than 3% product shrink and limited service calls.

We believe we have advantage with this platform and plan to introduce it to the marketplace later this year.

Q: What are the convenience services' industry's biggest challenges?

A: We often see two key challenges: space and profitability. As consumers seek to solve a variety of needs, there's an explosion of choice within the ever-evolving beverage landscape. We know variety unlocks new occasions, so our goal at PepsiCo is to offer options and solutions that address these challenges to ensure operators are staying competitive with choice without compromising growth. And of course, this is coupled with offering new and interesting choices and a fast, frictionless experience to excite consumers.

Photos courtesy of PepsiCo Foodservice.