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INSIGHTS

The Year in Review and A Look Ahead

December 10, 2021

The Year in Review and A Look Ahead
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There is no simple way to sum up this year. In the convenience services industry, 2021 was expected to put micro markets, vending and office coffee service into a rapid recovery mode, offsetting much of the devastating losses dealt during the first year of the COVID-19 pandemic. Instead, like much of the U.S. economy, the industry’s recovery was hampered by another virus surge and supply chain troubles. Amid these adversities, however, demand for micro markets at workplaces remains stronger than ever.

Joe Hessling, chair of the National Automatic Merchandising Association and CEO of 365 Retail Markets, explained, "The biggest change COVID brought out was not in the convenience services industry. It was in every other industry that realized unattended and self-service what they need to help recover and grow their businesses.”

The end of this year not only marks 22 months into the pandemic, but it also closes a period of important changes in the micro market segment. As the industry recovers itself, it has become increasingly recognized as a resource to help the nation’s recovery at work.

This year, micro market highs included some large mergers and acquisitions among equipment and technology providers. On the service side, operators contended with changes brought about by the pandemic. Here’s a 2021 reprise of trends and news events:

1. Touchless solutions in flux

Even though it’s been scientifically proven that the coronavirus rarely spreads through surfaces, but instead almost always spreads by discharge of aerosols, we continue to deep clean and reduce touchpoints as part of the COVID-19 protocol. Despite that, a clear belief that touchpoints were dangerous and needed to be minimized persisted, and so the convenience services industry in 2020 responded with smartphone apps and a wide variety of touch-free ways to deliver snacks, a cup of coffee or to check out from a micro market kiosk without touching anything but the finished product. But is all that necessary now?

On the West Coast, Matthew Marsh of First-Class Vending, which operates micro markets in Las Vegas and Los Angeles, observed, “From our experience, the clients that have received [touchless] are not using it. It is a neat gimmick, but I do not think it’s going to stick. It’s just not necessary.”

Back East, Judson Kleinman of Corporate Essentials, which services clients in the New York City market, predicted touchless technology is here to stay, but its prevalence will diminish over time. This year, touchless was a common talking point in his market. “Touchless comes up in almost every conversation with clients who are ready to bring back their employees,” Kleinman said.

2. Payment leader enters micro market business

Cantaloupe Inc. bought Delicious Nutritious LLC, dba Yoke Payments, a Los Angeles-based micro market payments company. Through the acquisition, Cantaloupe, the industry’s largest digital payments company, signaled it’s investing significantly in the fastest-growing segment of self-checkout retail.

“Every operator I’ve spoken to recently is looking to add micro markets to high-value locations and redeploy vending machines in other parts of their operation,” said Cantaloupe CEO Sean Feeney. He noted that the micro market segment is expected to grow between 15% and 30% in 2021 and predicted that growth will accelerate in 2022.

Feeney’s assessment is supported by separate studies conducted by Automatic Merchandiser and the National Automatic Merchandising Association that predict micro markets will lead the industry’s post-pandemic recovery. NAMA projects sales at micro markets will grow 64% in 2022.

3. Two micro market giants merge

Self-checkout leaders 365 Retail Markets and Avanti Markets confirmed their anticipated merger this year. Simultaneously, the newly expanded micro market entity folded in Lightspeed Automation, the leading product-picking tool used in operators’ warehouses.

The 365-Avanti merger has created an unattended enterprise with a market share of more than 50% in self-checkout technology in the vending space, which mostly serves business and industry venues. The combined company employs 400 people.

4. Consolidating the refrigerated display sector

Key components to any micro market are refrigerated display cases. But the industry that manufactures cooler appliances remains fragmented, as it’s mostly comprised of 100-plus family-owned businesses. This year, New York City-based Ronin Equity Partners, an investment firm, began consolidating the commercial refrigeration equipment category with its acquisition of QBD and Minus Forty, cooler manufacturers located in the Toronto area.

The transaction reportedly has an enterprise value of $230 million. The combined company is expected to widen the use of green cooling deck designs, which will mitigate the release of greenhouse gases by coolers, and advance the application of IoT technology in the beverage and food cooler sector.

FORECAST 2022

Sustainability will be the big selling point

B2B consultant and industry reporter Bob Tullio is forewarning operators to be ready to greet new faces at offices next year. “We’ll be in for a little surprise,” he said, “because that Baby Boomer or Gen X office manager who you knew may not be there anymore. You’re going to be dealing with Millennial and Gen Z managers at your accounts. With that in mind, sustainability will become an important selling point for micro markets, vending and OCS.”

Research supports Tullio’s hypothesis. According to Pew Research Center, the number of retired Boomers is increasing more than in prior years. In the third quarter of 2020, about 28.6 million Baby Boomers, born between 1946 and 1964, reported they were out of the labor force due to retirement. This is 3.2 million more Boomers than the 25.4 million who retired in the same quarter of 2019.

In the third quarter of 2021, a more recent Pew report found that 50.3% of U.S. adults 55 and older said they were out of the labor force due to retirement.

“During this transition, operators must underscore sustainability in their product offerings and how they provide services,” advised Tullio, a former operator. “A lot of people said they were interested in sustainability and corporate responsibility, but the trend is rapidly advancing and 2022 will be a big year for the movement…not only as a social issue, but also as a business strategy.”

Would you like to learn more about this year’s micro market trends and highlights? You can find additional articles here.