From Vending Market Watch
Micro Markets and Vending Machines Are Apples And Oranges
BY EMILY REFERMAT ON MAY 25, 2017
I’m hearing it throughout the county: micro markets are here to stay. The concept has excited consumers who were bored or even resistant to purchasing refreshment from vending machines. Micro markets grew profits for operators at locations and offered a chance to create a cafe-style break room feel that appealed to the Millennials. However, the success of micro markets has forced a number of operators to face the truth that the segment differs greatly from vending. Embracing micro markets has meant throwing out many vending perceptions the industry has developed over the decades.
When those first innovators placed micro markets, some used the same planogram as their vending machine. There are pictures floating around of these micro markets laid out with chips in the top, candy in the middle and gum and mint on the bottom. It was not surprising, because this was the arrangement that worked so well in vending, for years. However, it is time to unlearn the placing and merchandising strategies culled from vending locations. Micro markets need to mimic convenience stores with top sellers placed high and low, leaving room for high margin or promotional products at eye level. More of a focus on grouping items together is imperative, not just spreading the colored packages around to draw the eye. Thought needs to go into day-part or the product category, such as healthy, so consumers know where to look for it. Not to mention the new impulse buy area right by the kiosk that was unheard of in a vending machine.
Managing small SKU counts
All this room for more products is directly the opposite of vending machines with a set number of spirals and many of them dedicated to the routinely top sellers. Successful vending management often meant maintaining smaller SKU numbers that maximized rebates and promotions while still offering enough new items to keep vending machines interesting. Smaller SKUs are not realistic in micro markets. Operators must now consider the need for variety consumers are looking for – the very thing that draws them to the micro market versus the vending machines. They want the different choices in flavor, size, texture, type, etc. It’s all about giving them options, which means forgetting everything you knew about eliminating SKUs and instead challenging your logistics and SKUs management skills.
In vending fresh food was known as the loss leader. It was one of the SKUs routinely eliminated. But fresh is what sells in micro markets. Our latest survey of operators shows that more than 25 percent of micro markets sales are from fresh food. Its what consumers want in refreshment options. It follows the healthy, more natural trends in food as well as provides more of that overall cafe feeling.
There are plenty more things to learn and unlearn, and many we are just starting to scratch the surface of, such as giving the consumer the ability to pay with one account at the micro market, vending machine and other retail establishments on site. As we continue to explore the differences of the micro market, we can further use them to drive a better user experience and increase revenue.