Micro markets have been part of the automatic retail industry for over a decade. They have become a popular way to augment the service vending operators provide to their clients, as they make it possible to sell a greater variety of food and beverage products.
Office coffee service (OCS) operators use micro markets as well, and there is room for growth in that segment of the industry. When asked if they offered micro markets, just over half of the respondents to Automatic Merchandiser’s 2019 State of the Office Coffee Service Industry reported that they currently provided them.
In order to succeed in offering coffee in micro markets, it is wise to identify and address the challenges involved, develop a “retail experience” and offer promotions to customers.
Steve Closser, Head Integrator at Translucent LLC, said there are a few challenges involved in providing OCS through micro markets.
One of the most critical challenges to solve is finding a way to keep the coffee machines clean, he said.
“The high-end coffee machines have a specific cleaning cycle and procedures that need to be followed or they will produce a bad cup of coffee, which just destroys the coffee business,” Closser said.
He recommended that OCS operators arrange for janitorial staff on site to clean the drip tray on the machines periodically throughout the day.
Closser said it can also be difficult to get consumers to try coffee in a micro market due to the misperception that vending machines don’t offer high-quality coffee.
“Vending coffee has such a bad ‘rap,’” Closser said. “Typically it’s cheap coffee, cheap powdered condiments, the machines are old and don’t produce a good cup of coffee for today’s consumer. Vending has a bad ‘rap’ when it comes to this area.”
Closser suggested OCS operators work to change that image.
“Remember retail! Today’s consumer is willing to pay for brand-name good products,” Closser said. “Get the consumer to relate your market to the outside retail model, and you will change your margins for the better.” It’s also important to put time and effort into providing the best products, he added.
“Treat the coffee as well as you treat the fresh food,” Closser said. “Get the best bean possible. Have someone in your firm who loves coffee be a taster.”
Developing a retail experience
OCS operators can create an elevated experience by providing a “true retail experience” in lieu of traditionally brewed coffee that the client company pays to have available in airpots that are set apart from the rest of the break room. Closser said the latter option is the least preferable way to sell coffee in a micro market.
“This is typically a lower-end coffee and doesn’t generate a flow through to the markets, as its being in a separate area doesn’t drive folks to the market for additional purchases,” he explained.
Instead, providing brand name coffee — whether that’s locally or nationally known — and using high-quality sugars and creamers, perhaps even real milk and creamer if available, is key, he said.
Nearly half of the respondents to a 2019 State of the Office Coffee Service Industry question about the importance of brand to their customers said that it is “pretty important,” while just two people said brand was “not important for the majority.”
Closser said that when Translucent chose a particular highly recognizable brand for a recent client and charged $2 per cup, they enjoyed a lot of success every day. When in doubt — and when the budget allows — go with a strong brand name option.
Another way to improve the customers’ experience is to use a bean-to-cup coffee service system, Closser said.
The Automatic Merchandiser survey found that bean-to-cup is very popular among systems, as roughly one-third of respondents who offer micro markets said it is their system of choice.
Closser said using bean-to-cup helps create the “true retail experience”.
“We prefer to see a bean-to-cup brewer in the market as part of the experience of the retail vision,” he said.
Closser also noted that receipt printers are unnecessary to use in a micro market.
“With the development of phone apps, we don’t need to add to the landfills with paper that 99 percent of the customers don’t need or even want, especially with credit card usage,” Closser said. “If operators are required to have receipt printers, they should just make sure they have an option for ‘no receipt’ in checkout.”
Closser advised that OCS operators who are interested in expanding micro markets should implement customer promotions to encourage repeat visits and loyalty.
Closser said it is wise for OCS operators who wish to have micro markets to use promotions effectively.
That can start week one at the client site.
“Give huge coffee discounts during the grand opening week and then scale it back,” Closser said.
He added that operators should run promotions frequently on coffee, which 365 Retail Markets can help them accomplish through its 365Pay app. Creating a coffee club through 365’s loyalty program is another way to promote the micro market with the company’s technology, which makes promotions easy to set up, execute and track.
“Some operators are wanting to have the coffee machines ‘connected’ to the kiosk so the customer pays first for the coffee and then the machine makes the coffee. This is not a positive ‘retail’ experience. It basically says, ‘You will steal coffee but not the other 300 plus products in the store.’ However, 365 Retail Markets has solved this issue with the amazing flexibility of the 365 Beacon technology. You can add a button on the kiosk screen for the coffee, you can create a barcode and customers can scan and then add on the beacon and customers can pay for their coffee with the phone, along with other items. You can pay and watch your delicious coffee being brewed. Then tack on the loyalty program and you have your own coffee club,” Closser said. “The amazing technology continues to add to the consumer experience. 365 Retail Markets completely reduces the payment friction in the service cycle.”
Full steam ahead
As micro markets continue to grow in the automatic retail industry, their relationship with OCS will likely increase. Gaining the ability to efficiently operate both is ideal.