Jumping into the micro market segment is not an easy business decision to make. Micro markets are a different model from vending in that there are more products to offer and varying ways to merchandise those items, not to mention a potentially higher risk for theft, the challenges of shifting employee responsibilities to manage the markets and much, much more. The rewards of micro markets, however, are vast, with generally higher sales and more consumer engagement.
So now you’re an operator who has made the decision to open your first market. You’re in the beginning stages of growth and aren’t quite sure where to go next. Or perhaps you’re still on the cusp of entering the micro market segment but the investment and planning seems daunting.
Whether you have one micro market, are approaching your 10th or are just looking to dive in, these five tips to managing your first markets will help you navigate this new, growing segment.
Start with an already stable account
If you’re an operator just looking to get into micro markets or already have one open and are looking for more, bring up the concept to an already solid customer. It can work in your favor to introduce the concept to a location you already have a great working vending relationship with. Tell them that although the concept is new to your company, it’s a great one and you’d appreciate trying it out and learning with them. If they don’t like the concept or have issues with it, you’d be happy to put the vending machines back in. The worst they can say is “No.”
Focus on product offerings
A huge concern for operators just getting into micro markets is the amount of SKUs available. Try focusing on 200 to 300 SKUs or less. Rather than purchasing a case, try ordering by the box to cut down on items in the warehouse and passing expiration dates. With regard to market only snacks, beverages and food, operators face the challenge of inventorying products for only one or a few markets. The sales velocity of some of the products, which need to be in the market, may be slow-sellers. It will be a little tricky in the beginning to get inventory under control, but successful operators note that as your micro markets grow, this becomes easier.
You can’t forget that in a micro market, people’s buying patterns change more rapidly than in vending because of the amount of SKUs, so be sure you’re going back and merchandising the stores once a quarter or twice a year to keep things fresh and drive more sales.
Learn from c-stores, grocery
Convenience stores are a good learning tool for micro market operators. Take a tour of a few of your local c-stores and gas stations in the area to see what they have and what kind of space they allot to each specific item. Then try the same thing in a grocery store. If the c-store or grocery store has half a shelf of a certain flavor of chip, make sure you have that flavor in the market. Next, look at the merchandising of the c-store to get an idea for how to layout your micro market. Roughly 60 percent of the micro market sales are beverages and people spend the least amount of time in front of the beverage coolers. Therefore, try putting the drink coolers farthest away from the kiosk. This will force people to walk through the store, right by the food, chips and candy. Many operators report seeing more impulse buys this way.
Food sales increase from roughly 9 percent of overall sales in vending to triple that in the micro market, depending on the market and location. Keeping the food coolers looking full as well as merchandising them to display the product in an appealing manner really helps drive those sales.
Lastly, you no longer need to price things in $0.05 increments, like in vending. You can now charge $1.59 for a bottle of soda, just like the c-stores and grocery stores, plus get sales tax and any bottle deposit fees at the kiosk.
Consider route driver options
Operators have different opinions on who and how to service markets with regard to personnel. Some believe it’s important to have a market-only driver, while others keep their drivers flexible between vending and micro markets. When you’re just starting out with only a few markets, it can be a tough thing to try and dedicate a route driver to just markets-only. Each operation will be different depending on region and resources. The key is to train the driver on properly servicing the micro market, such as facing shelves, considering how things look, cleaning, etc. There is no right or wrong answer to this challenge. Some operators choose to focus on a micro market-only driver when their micro markets reach the double digits.
It’s OK to reach out to other operators
Last but not least, seek out advice from other operators in the business. Chances are that other operators of your size have had similar challenges and could be a good source of help as you try and grow this segment of your business. There is an entire network of micro market operators who are continuously improving efficiencies in their business and growing while they do it. These are the men and women who can prove helpful as you learn to manage your first ten micro markets successfully.
As many veteran operators have commented, micro markets are a different animal than vending, so don’t be afraid to be different and try new things in the markets. In fact, micro markets could prove to be a useful tool when experimenting with what items to put back into the vending machine.