31 Jan Vending Machines Try Electronic Self-Defense
Tough economic times have spurred a rash of vending-machine thefts, prompting operators to fight back with sales-tracking devices and automated text-message alerts.
Theft rings have sprung up in Georgia, South Carolina, Florida, Mississippi and New York, among other states. More schools, hospitals and other big vending customers are complaining of such break-ins, especially with outdoor vending machines, according to loss consultants and machine operators.
While no one closely tracks the exact number of such thefts, these experts report a proliferation of websites and YouTube videos with instructions on how to break into the machines.
“My sense is that theft is on the rise as there are so many people in desperate times,” said Mark Manney, chief executive of Loss Prevention Results Inc., a Wake Forest, N.C., vending-theft consultant.
The industry already is struggling. U.S. sales fell 10% in 2009 to $19.85 billion, the latest data available, from $22.05 billion the year before, according to Automatic Merchandiser, a trade magazine. With profit margins as thin as 1%, losses from theft have an impact.
Police rarely get involved, operators say, because each theft seldom amounts to much money. Sometimes operators call the police but they usually arrive too late.
Others like Jodi Glimpse are cracking down on their own. “I’m starting to feel like my own personal detective service,” said Ms. Glimpse, owner of Camelback Vending Services LLC, which operates hundreds of vending machines in the Phoenix area.
She bought her first wireless warning devices in 2005 but usually missed alerts because thieves mostly struck her machines while she was sleeping. Last fall, thieves began using welding torches and bolt cutters on her vending machines on high school campuses.
Ms. Glimpse compiled a list of police-department phone numbers and switched her alerts to a ringtone and started sleeping with her cellphone nearby.
The day after Thanksgiving, a text message signaled a break-in, and Ms. Glimpse called police with the address of a high school where the machine was located. After watching a man breaking into another of her machines, officers arrested him.
“In the same way that retailers just assume there’s going to be a certain percentage of shrink, we’ve probably just closed our eyes and not done anything,” said John Mitchell Jr., an owner of Treat America Ltd. of Merriam, Kan., with about 12,000 vending machines.
While theft rings can steal hundreds of dollars in a night, operators generally assume that up to 3% of sales will disappear, as employees lift a dollar here and 50 cents there.
Because vending is largely a cash business, operators often have trouble tracking money as it changes hands between route drivers, managers and mechanics. Former employees sometimes visit machines with keys they kept illegally.
For keeping tabs on employees, some operators employ devices that record and wirelessly transmit real-time data.
Marcus Whitener, an owner of Refreshment Solutions LLC of Norco, La., began retrofitting his 4,000 vending machines in Louisiana and elsewhere with wireless devices in September 2009.
The devices, which cost about $300 each, let him remotely set pass codes on electronic locks that allow certain people access at certain hours.
When a vending door is opened at unauthorized times or power is cut, Mr. Whitener receives a text message and email.
Within nine months of installing the systems, Mr. Whitener said, seven of his 25 route drivers quit or were fired. Five quit after he started asking questions about cash shortages.
He said he pressed charges on two people who allegedly stole $60,000 in cash and products.
Meanwhile, Mr. Mitchell began using a system that allowed him to monitor each of his machines on a website that showed individual sales, inventory and the amount of cash collected.
He said his gross profit has increased by two percentage points on routes where he has installed the devices, partly thanks to a decline in theft.
Source: Wall Street Journal