In midyear 2017, micro markets continue to show a solid performance. In the Automatic Merchandiser Operator Confidence Index, operators report that "the majority of customers are moving away from vending and to micro markets," and that "consumer acceptance of the micro market continues to excel at a rapid pace."
According to the most recent survey, 50 percent of respondents said they experienced an increase of revenue from micro markets this year. The other 50 percent reported the segment remaining steady, with none reporting a decrease. A majority, 60.7 percent, indicated the sales outlook for micro market operations over the next three months ranged from good to excellent.
Challenges and opportunities
Previous vending accounts are being converted to micro markets, but operators also report a steady stream of new business. Customers that didn't want vending are much more open to micro markets and with less expensive kiosk options and operating costs, operators can be more flexible with where micro markets are installed.
"Micro markets continue to drive our business with both conversions of existing vending client and net new business."
- Full-service IN operator
Rising product prices is a challenge for operators, with some mentioning specifically a problem with the rate at which the increases are happening. Fresh food is also a challenge, although also one of the selling points for micro markets.
Ryan Harrington of Royal Vending in Portland, OR, says one of the company’s top micro market pain points is maintaining the appropriate levels of fresh food during sales spikes and valleys. "We are modifying our current route driver procedures to visually observe and report these trends so we can adjust levels accordingly in a timely fashion," he said.
"Food continues to be a leading indicator in every location we place Micro Markets."
- Full-service MI operator
While he says it’s "a bit too soon to tell" all of the potential challenges, Mike Clark of Hi Line Vending in Prescott Valley, AZ, explains one current challenge is access to fresh food due to being located in a rural area.
Aside from challenges related to food supply, accountability presents additional obstacles for operators. For Bruno of Servomation Refreshments Inc., accountability remains one of his main challenges. To address this, he is allocating additional labor to monitor and reconcile accounts, routes, kiosks and vending as close to real time as possible. "There is a need to encourage the client’s assistance to help fix serious accountability issues at the location level, provided there is specific and documented evidence of location and customer theft," he said.
Training and technology
Managing micro market inventory and delivery remains a pain point operators must address through various ways as they expand.
"Inventory control is still an issue."- Full-service WI operator
One solution operators have used is extensive employee training and using the reporting features available for more efficient operations.
"Extensive training for the delivery or route personnel is essential," said Mark Bruno, chief operating officer at Servomation Refreshments Inc. in New Canaan, CT. He believes in a necessary change in the company culture from 100 percent vending to view the micro market service as a convenience store alternative as much as a vending alternative. "Constant training and new product awareness keeps all team members thinking in broader terms. The employee must have a sense of the merchandising focus needed to market products effectively and gain maximum customer appeal."
Bruno suggests using point-to-point connectivity and forecasting software to create a plan-o-gram to help develop a product strategy that best meets mix and margin objectives. "It will also uncover areas of opportunity routinely overlooked in the past," he explained.
He also advises that micro markets should be pre-kitted and picked according to real-time SKU product depletion at the market as close to replenishment as possible. "If integrated into a vending route, it is extremely helpful if the vending route product is issued with SKU level movement and inventory as well, similar to the micro market, in order to protect accountability and product integrity in addition to efficient vehicle space usage," he said.
By addressing these challenges head on, as well as incorporating technology and training, operators can take advantage of the micro market segment's consistent upswing that appears to have a vibrant future full of opportunity ahead.