Are You Ready For New Competition For Your Micromarkets? Here They Come!

by Paul Schlossberg
Posted On: 1/9/2020

  • Printer Friendly Version
  • Decrease Text SizeIncrease Text Size
  • PDF


Micromarkets have become a successful line of business for many operators. You know the facts: more product categories and SKUs; higher priced offerings; higher ticket averages; lower equipment investment versus vending sites; and more.

There is no need to get too deep into all the benefits of micromarkets. It’s a win-win-win proposition. We improve our offering for clients. Shoppers get “more” -- better product selection and a positive shopping experience. Operators get increased sales and profits.

The competition within our industry has been increasing among the providers of micromarket technology and equipment. We’ve seen continuing innovations in the equipment and merchandising capabilities for micromarket deployments.

The competition outside our industry is not asleep. In December 2018, my posting addressed the news about Amazon Go stores being targeted at locations we serve. If you want to refresh your memory you can reread -- “Is Amazon Go Planning To Compete With Our Micromarkets And Vending Machines?

Amazon alone would be a formidable competitor. What should we anticipate from other retail brands? Are we about to face an entirely new wave of competitive entries in the micromarket line of business? Will “they” simply be upgrading their own retail stores? Or will “they” be pursuing the locations we are serving?

The competitive pipeline is now open with some new developments for us. Have you shopped at Lunchbox yet? A new venue and shopping experience should not be a surprising announcement in retail these days. It is a new frictionless store concept.

In case you missed the news, there was a posting here on Nov. 25 -- “Supermarket Giant Ahold Tests Frictionless Store In Massachusetts” announcing it. If you have not seen it, stop right now to read it. Just click on the link in the previous sentence.

What should concern you is who is behind the introduction of Lunchbox. The operator is Retail Business Services. This is from the U.S. operation of the international supermarket giant Ahold Delhaize. Its retail brands include Food Lion, Giant Food, Giant/Martin's, Hannaford and Stop & Shop.

This is critical and intensely important. It is directly competitive with micromarkets being deployed by companies from our line of business. Did you catch some of the key points in the posting about Lunchbox? Allow me to highlight a few for you:

Ÿ You can purchase a “carton of milk on your way home.” They’re thinking about the ancillary sale and about saving time for people -- who could now skip a stop at a store to buy milk (on the way home). How many of our micromarkets are selling “take-home” products like milk?

Ÿ They’re operating in their own office cafeteria serving 1,000 associates. It is a functioning system. They developed their own solution rather than taking on one of the established micromarket systems.

Ÿ The system is working effectively with as many as 12 people shopping at the same time. It can deal with a surge of people for break periods or the lunchtime rush.

We might soon be facing a new and powerful group of competitors. Consider these points:

Ÿ When Ahold Delhaize USA applies one of its supermarket brand names to a micromarket store, the branding power will be very strong. It will resonate effectively with the decision-makers and shoppers at locations where we currently operate or are pursuing micromarket placements.

Ÿ If Ahold Delhaize can do this, how long will it be before we see other supermarket operations (around the country) take their brands into the micromarket business?

Ÿ Look beyond supermarkets and think about what the future might be like if convenience store brands look at our micromarkets successes and see an opportunity. The technology exists and can be adapted for their existing retail stores or in (new) micromarket deployments.

To put this in perspective for you, there was a WSJ Pro feature on AI, artificial intelligence. The headline was “Cashierless Stores Make Inroads in U.S.” It covered the efforts being made by “…U.S. retailers large and small are pressing ahead with testing the use of artificial intelligence to track what products shoppers pick up and to automatically bill their accounts when they walk out the door, eliminating the need for checkout lines.”

The WSJ article noted that “…nearly 100 companies worldwide are trying out (cashless) systems…” Across the U.S. you can find experimental stores, offering high-tech, cashier-free shopping. U.S.-based companies mentioned included Sam’s Club (testing in Dallas), Giant Eagle Inc. (deploying at a convenience store in Pittsburgh) and Zippin – Vcognition Technologies Inc. (in San Francisco).

While my emphasis here is not to be a pessimist, there are other important, exciting and potentially threatening developments in frictionless retail shopping occurring. We need to be aware of and alert to these innovations. If it was only Ahold Delhaize USA pursuing what is a micromarket solution, we might not have to be too concerned about a competitive challenge from retail store brands.

Just a few months ago, we accidently discovered what might be the largest micromarket (we’ve ever seen). Let me share what we found.

Is This The Biggest Micromarket Ever? 

There are big changes coming to traditional retail (supermarket) shopping. We got to see a view of the future.

It was a Sunday afternoon in May about 4 p.m. We were walking, in a nice neighborhood. It was a warm day and all our water bottles were empty. We paused for a moment to look for a place to shop.

One member of our group wandered into a nearby food store. He emerged with a big bottle of water and said to me, “You’ve got to see this place. You’ll love it.”

We walked in and found what seemed to be the biggest micromarket in my experience. Okay, it really was not a micromarket. It was, as you will learn soon, an object lesson for micromarket and vending operators (and supermarkets and convenience stores, too). 

Maybe we skipped over a few facts. We were in Paris, France. Our location was just off the Champs Elysees, not too far from the Eiffel Tower. The store is a new operation from Casino Group – the multi-brand French retail and supermarket company.  It is Le 4 Casino. The company introduced it in the press “The Casino Group unveils its new concept “Le 4 Casino” near the Champs-Elysées in Paris.”

What it said: “Visible from the street, the augmented reality digital display delivers a whole new experience for shoppers before they even enter the store. Once inside, customers can choose from a selection of carefully curated gourmet products, sample dishes concocted by a guest chef and do their daily shopping using a giant digital wall -- the Picking Wall -- through which they have access to the full range of products available from Casino’s online store (www.mescoursescasino.fr), for delivery that evening.”

Once in the store, we discovered that there were three different shopping environments. There are photos nearby. The upper floor was their discount showroom. The lower floor (basement) was a limited selection supermarket set-up. The main or ground floor was the most interesting for me. Beverages. Food. Interactive screens. Self-checkout lines for shoppers who wanted to be in and out quickly. The environment was bright and clean. The staff, when we needed to interact, were energetic and ready to assist us.

The store is in a densely populated area. There were apartments nearby and a wide variety of retail stores at street level. As we wandered the store, we thought that it was likely that many of the shoppers are from local apartments. We spoke with a few folks in the store. Some were from the U.S. or other countries. They were shopping for daily food for their (short-term) rental apartments.

What Casino has done with Le 4 Casino really appealed to me. We have a Whole Foods Market 365 about 15 miles from our home in the Austin area. There is no comparison for me. Le 4 Casino is a much more appealing and interesting shopping experience.

While we’ve not visited a Lunchbox operation yet, it would be very interesting to see how it compares versus our expectations of micromarket installations. Have they been able to leverage their supermarket expertise to deliver a different shopping experience? Just because it might be different will not guarantee that it will be a better shopping experience. That challenge will be the crucial test.

The micromarket business is about to change. Are you ready for what might well be the next generation of micromarket shopping? Why? Because big retail brands are bringing their own innovations to this shopping environment. They have the capability and resources to apply their merchandising expertise, buying power and brand names to new and different frictionless stores. This will be the toughest competitive battle our industry has ever encountered.

If you want to sell more stuff, here are three suggestions: (1) Pay even more attention when RFPs are announced for micromarket locations. See if there are “new” players submitting -- especially if that includes supermarkets or convenience stores. (2) Work on improving every element of your micromarket operations. Re-examine and reconsider everything -- products and categories being sold, merchandising equipment, packaging, pricing, promotion, etc. (3) Think “frictionless” and find ways to make shopping easy and uncomplicated for the people you serve.

Our business is becoming even more competitive every day. You must be focused and driven to deliver a great shopping experience. Do you want to sell more stuff? Make your micromarket business better today than it was yesterday. Do that every day.



Approaching the store entry at Le 4 Casino


One of the front windows at Le 4 Casino

Self checkout counter at Le 4 Casino

Interactive kiosk for Le 4 Casino shoppers

Shopping screen from Le 4 Casino store kiosk




Snacks displayed at Le 4 Casino



Sandwiches on display at Le 4 Casino



Connected display panel for pricing and promotion information at Le 4 Casino



Messaging on the communication panel on the shelves at Le 4 Casino

PAUL SCHLOSSBERG

Paul Schlossberg is president of D/FW Consulting, working with clients to merchandise and market products in impulse-intense selling environments, such as vending, onsite foodservice and convenience stores. Based in the Austin, TX, area, he can be reached by emailing to Paul@DFWConsulting.net, calling him at (972) 877-2972. The company is online at www.DFWConsulting.net