In lots of cases it seems to be merchants operating their terminals wrong (chip & signature, chip without PIN, or even magstripe even though their terminal is chip and PIN capable). So in many cases they should retry with chip & PIN (especially if you ask them to)
Most vending machines support contactless, so if you’re not at your contactless limit you should be able to use that instead (or Apple or Google Pay).
Unfortunately yes, this retry flow won’t work if you don’t have any data
For what its worth, the fraction of these transactions that we process (and hence are now declining) is less than 0.1%