How Micromarkets are Reinventing Convenience for the Modern Consumer

Micromarkets are a nationwide phenomenon that is reinventing our conventional models of convenience in the foodservice industry. While not radically different from previous vending models, micromarkets promise consumers more access to fresh food and beverages in workplaces and living environments, typically with limited vending options.

If you haven’t heard about micromarkets, you will soon enough, as they are expected to grow exponentially over the next decade. In this post, we’ll introduce you to this foodservice innovation by highlighting the following topics:

• What is a micromarket? 
• How fast is this market segment growing?
• What are the benefits for consumers and for vendors?
• What new opportunities does the future hold for this emerging industry segment?

What Is a Micromarket?

A micromarket is a labor-saving point-of-sale (POS) concept that updates the conventional machine-based vending model. Currently predominant in corporate environments, these small unattended facilities allow employees to access and pay for convenience items 24/7 at an intuitive self-checkout kiosk.

A distinguishing feature of some micromarkets is a refrigerated case that can house fresh foods such as salads, sandwiches, fruits, and vegetables. Micromarkets can also store frozen treats as well as specialty coffees and other beverages, along with various popular prepackaged snacks such as energy bars and chips. Essentially, the idea is to provide as many options as a typical convenience store in an even more convenient format.

Micromarkets Are Expanding

Micromarkets are the fastest-growing segment of the retail channel. In a recent Vending Operator Confidence Index, operators reported that “micromarkets continue to grow beyond expectations.” In fact, micromarkets are expanding beyond the workplace into other potentially lucrative locations, including airport frequent flyer clubs and other high-prestige venues as well as commercial sites, like casinos, where vendors can capitalize on heavy foot traffic.

According to Vending Market Watch, in 2016, micromarkets generated $949.9 million in product sales, a 41.9 percent increase over prior-year numbers. The year-end active micromarket count of 17,806 included more than 5,000 new installations. 

Current micromarket operators are enthusiastic about how much their business has grown. A Wisconsin-based operator noted that 18 percent of his total sales came from micromarkets, and he expects his total sales from micromarkets to be 22 to 25 percent of his business by the end of 2017. A Michigan-based operator expects similar end-of-year results.

Benefits for Vendors

Micromarkets give vendors more insight, control, and merchandising opportunities than ever before.

Simple Installation: Micromarkets cost little to set up. They need only a designated space, power supply, and internet connection. After the setup is complete, restocking and maintenance are administered by a local food and beverage operator.

Higher Profit per Location: Micromarkets can be custom-fit to the size and shape of any location, opening up more opportunities for business. Moreover, they offer a much larger variety of products than vending machines, and when properly targeted, can reduce product waste and sell sought-after items to affluent populations at a higher price point.

Leveraged Technology: Instead of continually retrofitting old vending machines as customers’ payment and product preferences evolve, micromarket operators can gain new branding and market opportunities from advanced features built right into their POS systems. Analytics provide micromarket operators with data, so that they know which products to stock, how much of each type to order, and how often to restock.

Benefits for Consumers

Consumers are driving the evolution of micromarket innovations. Quite simply, people want more variety, more access, more payment options and—perhaps most of all—fresh food ingredients. Micromarkets meet all of these demands.

Convenience: Micromarkets can be set up in locations where customers otherwise wouldn't be able to easily purchase perishable goods. Self-service kiosks eliminate many of the problems associated with traditional vending machines such as stuck merchandise or faulty coin/bill mechanisms. Instead, micromarkets offer secure payment options such as credit/debit cards, cash, smartphone, fingerprint reader, and even payroll deduction.

Variety: Micromarkets go beyond the vending of prepackaged foods, although they certainly can provide them. Today’s consumer, however, seeks fresh foods and beverages, which micromarkets can stock in every variety. In addition to food, they can vend sundries, small electronics, travel gear and other items typically found in convenience stores.

Novelty: Nothing sells better than “newness,” especially if the innovation also offers value. Micromarkets are currently perceived as fun. However, even once their novelty fades, the experience is so easy to navigate that consumers may return to or choose them over a more conventional means of acquiring the same goods.

Micromarket Future Trends

According to Vending Market Watch, micromarkets are predicted to add to a vending operation’s bottom line throughout 2017 and beyond. Current estimates of the number of potential micromarket locations in the U.S. range from 40,000 to 75,000.  

In a recent interview, Brad Bachtelle, President of Bachtelle and Associates, confirmed that micromarket growth to date has been dramatic and that the projected future trend is positive: “Now that micromarkets have moved beyond the concept stage, both operating companies and product manufacturers are looking at how to optimize micromarket product sales and where the concept can be extended to new and different placement locations beyond traditional work environments.”

As theft prevention tools develop, wider applications for micromarkets will open up at hotels, hospitals, clubs, schools, apartment complexes, retirement homes and transportation hubs. Micromarkets could also position vendors to break into the automated inventory control and distribution segment.

Stay tuned for Part 2 of our posts on micromarkets.

Offering consumers perishable foods (both hot and cold) gives micromarkets an edge in vending. Continuous temperature monitoring is essential for micromarkets to keep foods within a safe temperature range.

In our next post, we’ll look at some of the unique safety issues micromarkets raise, as well as potential solutions. Subscribe to our blog to get our next post straight to your inbox!