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Macy’s Installing iPod Vending Machines

Cincinnati — Federated Department Stores will begin rolling out iPod-dispensing vending machines to 180 Macy’s locations nationwide this fall.

The vending machines are owned and operated by Zoom Systems, a San Francisco company that has been placing its robotic CE “Zoom Shops” in hotels, airports and other high-traffic locations nationwide (see TWICE, Oct. 10, 2005, p. 25).

The latest deployment, dubbed [email protected]’s, follows a recent test at Macy’s’ Union Square store in San Francisco. According to Federated chairman Terry Lundgren, who announced the rollout during the company’s annual shareholder meeting here last week, the vending machines will initially carry iPods and accessories although other CE products and brands, including Sony and Motorola, may be added to the mix.

Lundgren said the department store chain targeted high-volume, mall-based Macy’s locations in 32 cities for the launch, and will add the vending machines to more stores in late 2006 and 2007 “as we gain experience.”

The units enjoyed a “great response” at the Union Square store, he noted, and will address the company’s desire “to do a better job bringing most-wanted, upscale consumer electronics back into our stores.”

Department stores largely abandoned CE to specialty dealers and mass merchants in the late 1980s as the category grew increasingly unprofitable for the channel’s format. More recently, Macy’s and its sister chains have been toying with various approaches to re-enter electronics, including leased departments, freestanding counters and online sales.

Zoom’s vending machines – and explosive demand for portable digital devices – could represent a compelling entry point for Federated. Zoom touts its 28-square-foot robotic shops as compact, customizable and affordable alternatives to full-scale departments that cost less than one full-time employee. Zoom owns the machines and inventory, limiting Federated’s exposure, and will share a percentage of their sales with their host.

“We have a fresh and fun model for offering this product to the customer,” Lundgren said, “[which] brings most-wanted merchandise into our stores in a unique way.”