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Issue Date: Vol. 54, No. 1, January 2014, Posted On: 1/27/2014


Interactive Venders And Micromarkets Ease Retail Transition


by Stephanie Begley
TAGS: automated retailing, vending machine, vending operators, micro market, self-service checkout, micromarket, office coffee service, food service, route business, Vendors Exchange International Inc., Stephanie Begley

What happens when the food they want is not in the vending machine? In large office buildings, an alternative could be a store on the ground floor or the fast food restaurant down the street. Because of this competition, which keeps getting more intense, vending operators and equipment manufacturers have had to recognize that they are in a retail industry.

The growing variety and sophistication of retail outlets serving consumers away from home has compelled operators and manufacturers to look at vending machines as "automated retailing" appliances (as they were called half a century ago). What is different about mainstream retail is that consumers in that market segment make more planned purchases and have a wider array of options. Promotional marketing is hitting them from television, print publications and social media before they even enter a store. While vending certainly benefits from some of this, the effect has been chiefly a reflection of retail sales promotion efforts, mostly brand reinforcement.

LINE ITEM SALES ANALYSIS

A solution to making the vending machine into a more mainstream retail environment is the use of product planograms. While tracking the individual selections in each vending machine was impossible to do manually, today's data-processing technology has automated it. Planograms help the operator in several ways, from determining just where the inventory is going to identifying the products in a location that consumers have demonstrated that they want. Marketing at the location level shows a good understanding of your customers, and offers them the personal touch they appreciate.

There are other ways to integrate the machine into the location, making it more familiar and appealing to the clientele. One marketing tactic is to create a custom work of art right on the account's vending machines. Having a university logo, city sports team emblem or even a fast car racing across the machine can be a good way to grab attention. By engaging the audience with a fresh, attractive look, operators can direct the attention of potential customers to their appealing products.

In addition to adding client-oriented graphics to machine cabinets, operators have purchased video screens, new doors and other devices to add value to the business. Promoting a healthy environment by offering nutritional information or flashing an advertisement for a new product, on these fast-paced multimedia screens is a great tool to entice consumers -- especially the video-oriented younger generation.

Other operators are expanding the scope of vending with micromarkets. Transforming a location by installing a compact, automated local market enables employees to enjoy a wider selection of products, and micromarkets were made possible by the vending payment and audit systems with which operators already are familiar. Micromarkets require more attention to detail when executing, and have specific requirements for creating a functional space in each location. There are a few caveats when studying this type of environment, and our experience suggests a few tips.

KNOW YOUR LOCATION

It is important to know the location's physical structure and clientele. A micro­market is best in a closed location of 150-plus employees. Hybrid solutions that offer a micromarket-like setup for locations with fewer than 150 employees will be available, to combine vending with reach-in displays. In either case, the setup is important. Walk through the building to learn its layout. Observe where people congregate for breaks, lunch or meetings. A micromarket works best in high-traffic areas where people gather. It must be accessible to people in that environment, but must be "closed" in plan -- generally, this means a single way in and out. The location's clientele is important; knowing what drives them to make purchases and the quirky things they may want will help sales. For workers who arrive early in the morning, a hot cup of coffee and a fresh doughnut might do the trick.

OFFER VARIETY

They say variety is the spice of life, and this surely is true for micromarkets. Operators who run both traditional vending machines and micromarkets say a key factor in this retail type is offering the consumer a wide variety. Most micromarkets stock between 350 and 600 SKUs; some items change, depending on the season. Consumers increasingly are demanding fresh, locally grown ingredients; changing the sandwich or salad to take advantage of what's fresh and in season gives them the new offerings and healthy options.

A micromarket also can simplify the patron's purchase by accommodating multiple transactions on one ticket. So patrons who buy sandwiches can ring up their favorite beverages, sides and desserts at the same time. Clients enjoy the wider variety, and the fact that their workers are staying onsite to increase their productivity.

MANAGING THE MARKET

There are different perceptions of how best to manage the micromarket; it all depends on your business model. Locations want to offer something that's easily accessible and friendly to their personnel, while operators have other concerns such as theft or waste. When proposing to install a market, working on a "partner strategy" for these issues helps to build a strong relationship between your business and the account.

Theft can be deterred by holding training sessions when the market is installed, and enlisting the account's cooperation in a policy of terminating individuals who steal or deface market products. Surveillance cameras are common, and attendants are used in some cases to deter pilferage. Loss prevention specialists are hired by some operators to counsel locations about managing behavior, and losses are dealt with on an individual basis by the HR manager.

Waste is when a product sits on the shelf past its expiration date; operators with commissaries are very familiar with it. Acceptable date-coding is described in food safety regulations; a good place to start is foodsafety.gov.

Learning the best model for your environment can be daunting at first, but adapting to the consumers' wants is essential to surviving in a retail environment. Email is a tool that can ensure you are meeting the demand. Conducting surveys, building loyalty and running promotions through email are valuable activities to encourage new customers and win over previously unfamiliar faces.

The key to this growing retail model is knowing the consumer, then capturing and keeping their attention. No matter which way you choose to go, the micromarket phenomenon doesn't seem to be going away. The good news is that many techniques that work in building traffic at micromarkets also can be implemented on vending machines equipped with current technology.

Learning the best solution for your environment will keep your partnerships flourishing, in vending and micromarket locations alike.


Kevin Daw STEPHANIE BEGLEY is product-marketing manager of Vendors Exchange International Inc. (Cleveland). Begley describes herself as a passionate sales and marketing professional who enjoys pushing the envelope on new media. Her experience stretches from hospitality to manufacturing. At Vendors Exchange, Begley is involved in industry research, and regularly connects with experts and businesses in the automatic retailing world, which she endeavors to help shape.
--Stephanie.Begley@veii.com


Topic: Guest Columns

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