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SPECIAL ANNUAL REP ORT: ness model account for much of this change. The most successful operators reported analyzing their business more closely to focus on proftability and limiting waste better than they did in the past, which often required technology implementation. There was a decline in the number of extra-large operators in 2012, as defned by revenue. Declining same store sales, loss of accounts and location downsizing were the most reported reasons for reduced sales which also led to staff reductions. More than half of operators made no staffng changes in 2012, however. Of the owners that did make staff changes, more increased their delivery staff than other positions, followed by nearly equal increases in sales and repair staff, see chart 4B. Reductions in staff were also overwhelmingly in delivery personnel and usually brought on by dropping revenues. Operators used a variety of strategies to handle rising costs in 2012 and were asked this year to report all steps taken, therefore the total in chart 6 will not equal 100 percent. However, the top ranking strategy was raising prices mostly in the candy, snack and confection category, shown in chart 7, which continues a four year trend. Operators were also likely to increase prices in cold drinks, OCS and vended food. Many operators reported they were more comfortable raising prices in 2012 due to other retail segments also increasing prices. The need for all food retailers to raise their prices is supported by a forecast from the National Restaurant Association, which tracks data for full and quick-serve restaurants, bars as well as cafeterias. The NRA reports that wholesale food prices continued to rise in 2012, by 2 percent, making the aggregate increase for the last six years 30 percent, minus a 3.8 percent drop in 2009. While more than half of operators reported absorbing extra costs, slightly more operators chose to remove unprof26 Automatic Merchandiser STATE OF THE VENDING CHART 7: SEGMENTS WHERE PRICES WERE RAISED, 3-YEAR REVIEW PRODUCT 2010 2011 2012* Candy/snacks/ 28.07% 28.03% 87.60% confections OCS 12.57 11.72 46.3 Ice cream 7.02 6.28 20.8 Sundries/ 1.46 2.09 6.8 toiletries Milk 5.56 7.53 19.6 Vended food 9.65 10.46 42.9 Bulk vending 0.88 0 1.9 Hot beverages 7.6 5.44 26.4 Condoms 0.29 1.26 0.3 Bottled water 3.22 2.09 8.7 (not single-serve) Music Cooperative service vending Cigarettes Cold drinks Manual foodservice Other 0.2 0.58 0 0 0.3 0.9 3.22 17.54 2.05 1.26 21.76 1.26 3.1 52.5 6.2 N/A N/A 2.5 * Includes multiple mentions CHART 8A: ADJUSTED PRODUCT MIX TO REDUCE DELIVERIES, 2-YEAR REVIEW ●2010 ●2011 ●2012 48.8% Yes 51.8% 37.8% 51.2% No 48.2% 62.2% CHART 8B: FOR THOSE WHO REDUCED PRODUCT VARIETY, REDUCED IN THE FOLLOWING AREAS, 3-YEAR REVIEW: PRODUCT 2010 2011 2012 OCS 32.65% 33.80% 78.20% Ice cream 3.06 8.45 13.7 Vended food 5.1 2.82 11.3 Hot beverage 9.18 9.86 19.4 Cold drinks 2.04 1.41 4 Sundries/ 2.04 0 1.6 toiletries Bottled 2.04 0 3.2 water (not single serve) Milk 2.04 0 1.6 Other N/A N/A 2.4 * Includes multiple mentions VendingMarketWatch.com June 2013 INDUSTRY itable accounts compared to 2011, where rearranging accounts was the third most used strategy reported, shown in chart 6. The number of operators postponing part or equipment buys in 2012 dropped slightly, decreasing from the sixth most used strategy, to the eighth. This is supported by operators claiming 2012 into 2013 is when they are investing in technology and new growth opportunities. Interestingly, vendors adjusting their product mix to reduce service frequency dropped last year to a level seen prior to 2010, indicated in chart 8A. For those that did reduce their mix, the candy, snack and confection category saw the greatest contraction, although again, the 2012 percentages in chart 8B will not directly relate to the prior year's because operators were asked to choose all the segments that applied. Another way vendors reacted in 2012 was to expand into new services. Fiscal 2012 witnessed the largest percent increase for this in the last fve years. One new service reported was micro markets, which was broken out as its own segment for the frst time in 2012 and showed more than half the growth, see chart 9B. More operators also began offering water service in 2012 than in 2011 as a way to compete with both other operators and water companies approaching locations with add-on vending. Operators also reported it as a way to increase same site sales and replace a declining bottled water business. While offce coffee service has been a big area of expansion, 2012 saw a drop in operators adding OCS, indicating the market is saturated. Most vending operators now offer OCS to locations. However, while the number adding OCS has declined, operators report that the revenue for OCS is increasing, covered in chart 12. The real surprise in 2012 was the number of operators reentering the bulk vending business. Operators reported investing in bulk for a number of reasons. Some did it to eliminate these machines from existing locations.