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Micromarkets Add Flexibility Spur Sales In Vending Operation

Do you have bill acceptors on your vending machines? How about cashless devices? Does your company service locations where millennials work? If you answered "yes" to these questions and are part of the convenience services industry, then you must continue to evolve as the needs and wants of our clients emerge. We must be nimble and quick to find the exactly how today's consumers want to buy products at their places of work. We must strive to stay a step ahead and today work on what we may need tomorrow o...

September 30, 2018 | Chris Stave, Parlevel Systems

Do you have bill acceptors on your vending machines? How about cashless devices? Does your company service locations where millennials work? If you answered "yes" to these questions and are part of the convenience services industry, then you must continue to evolve as the needs and wants of our clients emerge. We must be nimble and quick to find the exactly how today's consumers want to buy products at their places of work. We must strive to stay a step ahead and today work on what we may need tomorrow or in a year. Nowhere is this truth more obvious than with micromarkets.

PRODUCT VARIETY IS THE NEW NORM

There are a number of factors driving the continuing growth of micromarkets. Just think about the bottled beverage segment – fifty years ago, having a few selections of ice-cold beverages at the workplace was fine. Then came seven-button machines, then nine-button machines. In the nineties, glassfront venders were introduced that held 40-plus varieties. Today, with consumers requesting flavor extensions of core beverages, flavored waters, a huge tea variety, RTD (ready-to-drink) coffees, zero calorie and decaffeinated alternatives, energy drinks and many more, we have outgrown the cost-effective delivery method of a vending machine. A reach-in cooler can merchandise a large variety of beverages, is very cost-effective, and has substantially fewer service issues. For the cost of one glass front vender, you can place four or five reach-in coolers and offer the selection that your consumer is looking for today, as part of your micromarket.

Now think about the candy and snack segment. Forty-five is around the usual maximum selection. How are you going to squeeze all the products that today's consumers want into 45 selections? You need the good old favorites, but also reduced-fat and/or low-sodium, plus the new "healthier" options. The list of flavor extensions is growing daily (think Wasabi Oreos).

Food is another consideration, as a wide selection is needed for today's consumer. They want access to the nutrition information as well as ingredients before making a purchase. If you want to keep location employees at the workplace, you need an enticing selection. But even beyond the staples, what about some sundries, umbrellas, or even phone chargers?

MORE FLEXIBILITY, GREATER REVENUES

The demographics of the workplace are evolving constantly. Younger employees are replacing the retiring baby boomers. Their snacking habits are different, and many don't carry cash. So what offers more options with product and payment? A micromarket!

Now, micromarkets are not for every client location, you need 100 + employees for a full-fledged setup and at least 50 for a smartphone-powered solution. Plus, you'll need a location with no public access and a little more wall space than vending. If you currently don't have a fresh food supplier who can provide nice¬looking and great tasting $4.00 + sandwiches and entrees, you should find one. When converting a vending bank with a food machine to a micro market, I have seen food sales jump from 8% – 15% of monthly revenue to around 33% +. Just think of chips, a beverage and maybe a candy bar going with most of the food purchases. You can easily see the potential revenue increase.

With credit/debit card sales and customer accounts creating your market revenue, your products are no longer confined to 5¢ price increments, and you can charge sales tax where applicable. All of a sudden you can mimic c-store pricing! You are bringing convenience stores to the workplace, so you can charge their pricing.

FINDING THE RIGHT PATH

So why aren't you taking a harder look at micro markets? The concept isn't as difficult as you may think. Consumers learn how to use kiosks in minutes. They can manage their accounts via their smartphones, and even check from their desks to see whether their favorite item is available.

Micromarkets and unattended retail aren't just a fad – they are here to stay. Improved checkout systems and inventory control may be developed the future, but the concept of an open, easy-to-use, well-stocked market with self-checkout will just continue to grow!

Don't let this trend bypass your company. When one of your largest customers calls and says they are leaving you for a company who can provide a micromarket, it may be too late. Talk with kiosk suppliers today, and see how easy the markets are to service right within your vend management system. After all, a lot of the infrastructure you need for markets is already in place. You should be able to route markets right along with your vending, which makes servicing the markets even easier. Sure, prekitting is a prerequisite because of the extensive product selection, but that can be accomplished via your VMS. The barriers to success with micromarkets are nothing that you can't handle.

Markets are an integral part of the convenience services industry and are rapidly taking over many of the best locations. Are micro markets right for you? If you have not explored the options, take a look very soon!

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About The Author

» CHRIS STAVE has been a pioneer and advocate for vending technology for more than 12 years. He got his start as executive director of the Vend Marketing Institute, a nationwide coalition of operators who worked together on marketing and purchasing initiatives. Vend Marketing Institute was later absorbed by Unified Strategies Group (USG), where Chris became vice-president of techno-logy and innovation. At USG, Chris successfully implemented numerous technological initiatives to help increase cost savings for a network of more than 700 member companies with over 1,000,000 vending machines. He joined Parlevel as the Director of Business Development to help operators adopt technology to navigate the path to better operational efficiency, improved margins, and sustainable growth. He can be reached at cstave@parlevelsystems.com.