Micro market sales boost

[AngryChris]

I need to get my feet wet soon.  If you have any experience upgrading from vending machines to markets, how much was your sales boost?  What were the hurdles you faced?

[AZVendor]

Supposedly at least a 20% boost if you can keep the theft down.

[AngryChris]

2 hours ago, AZVendor said:

Supposedly at least a 20% boost if you can keep the theft down.

That sounds like what I heard historically.  I dont' know.  Everyone is calling me to see if I am interested in moving into markets.  I am, but the options are a bit overwhelming and I need experience before I jump into the deep waters.

[lacanteen]

If you adjust your pricing and add sales tax you can see up to a 60% increase. Shrink is a problem. 

[Vendo Mike]

There are way too many success stories to pretend that there is not a considerable boost if the market is done correctly and at the right location.  AZ is right about theft.  MicroMarkets are not a good fit for every account but can be a great move at the right ones.  Just remember that you're opening yourself to sale products that wouldn't necessarily fit or vend well in a standard bank of drink/snack machines.   Not unlike vending, your competition is still the cstore across the road but now you're able to level the playing field a bit by offering many of the same products but at a competitive price vs that direct competitor.  If your intent is to just sell the same bags of Famous Amos and bottles of soda but from a snack rack and cooler, then there's really no point in making the move.

You'll want a captured market like a call center or something where the employees don't leave often and the market is not open to public use. Also, you'll want a company that will back you if theft becomes an issue.  Generally the argument "if they steal from me, they will steal from you" is a logic that most will agree with.

Like anything, there's an investment in capital and time along with a learning curve but nothing worth doing is easy. 

[AZVendor]

15 hours ago, AngryChris said:

 Everyone is calling me to see if I am interested in moving into markets.  

Everyone meaning suppliers?  If it's customers then you should get serious about it, especially if it's YOUR customers.  That would mean that competitors are calling on your locations and a switch is inevitable.

[AngryChris]

4 hours ago, AZVendor said:

Everyone meaning suppliers?  If it's customers then you should get serious about it, especially if it's YOUR customers.  That would mean that competitors are calling on your locations and a switch is inevitable.

Suppliers.

I've been throwing the idea out there to existing customers and they don't seem so excited but I think it's because I can't tell them what new items they'll get.  I'm so clueless on markets

[AZVendor]

Get a subscription to Automatic Merchandiser magazine and read through the archives of magazines that have had story upon story about Micro Markets for about 20 years now.  The subscription is free to operators and suppliers.

[AngryChris]

I have automatic merchandisers.  I read it often but I'm a hands-on person though.  I think my best action would be to convert a small well-loved location from vending to a small market and go from there.

[jasonkw]

Everyone likes to talk about how markets give you all sorts of sales boosts.

If you ask me, markets were pushed because suppliers made more money on it. You're converting vending machines which were bought once many lifetimes ago, into something that generates recurring revenue for the supplier in monthly fees, in payment processing, in other ancillary services (like theft monitoring).

Sure, you'll likely get a sales boost of 20%, 30% perhaps maybe in some areas. You'll also get a headache in theft, which you have to manage. And now you're paying kiosk fees of maybe 5% to a 365, payment processing to them too for another 5.95% or so (with no cash discount to recoup any of it), $100-150/month to Panoptyc to monitor your cameras, additional labor cost compared to vending.

You'll probably net out a bit more at the end of the day. Whether it's worth it depends on the client and on your operation.

[putrevus]

IMO if  you have access to good fresh food at reasonable prices then Micro market would be a great addition. Management will say all the right things about theft but not many will implement it. Having cameras covering every inch is a must. Kiosk makers are very greedy , you need to be very careful in negotiating their fees so shop around for Kiosks.

[Vendo Mike]

On 6/3/2023 at 12:18 AM, jasonkw said:

If you ask me, markets were pushed because suppliers made more money on it.

I can't speak for every supplier but equipment mfgs like ourselves respond to the market changes as quickly as possible to meet the "voice of the customer".  Not the other way around.  As new equipment like kiosks came into the market, suppliers scrambled to keep up with customer requests which is why NAMA was/is more mirco-market fixtures, kiosks, card readers and products that will not fit in vending equipment than snack and drink machines. 

Like anything, you can spend as much or as little as you'd like on your vending equipment, market fixtures,  products or the truck you move it all around in.  The fact that you can sell products that will not vend from a standard vending machine is the key point here and where the boost comes from.  The 7Eleven around the corner us still your direct competitor and has the upper hand as long as you're only selling cans of Dew and small bags of Cheetos.  Once the location is approached by someone willing to offer those alternate products in a new way, you will be between a rock and a hard place in that location.

I guess the fundamental question is, should the goal be to spend as little as possible or generate as much profit as possible?  I believe AZ wrote on this forum, "you have to spend money to make money in this business" or something to that effect.  I think that holds true in every business.

[Talidus]

Wondered if you ever made the leap @AngryChris? I've been reviewing MMs as well but, lots of logistical concerns myself. Outside of the location, the major one being the planogram design and cabinetry installation. I know there's Avenue C out there but, I feel that's the most expensive option. The next being the shrinkage and manual inventory and reconciliation to tackle theft. Then you have to deal with debt collecting from the customer which, I cannot see as a positive experience - regularly creating HR headaches for them.

I feel at this point, moving from machines to markets, you are not in vending anymore. You are in retail and if you are in retail, then you may as well start looking at retail innovation since that industry is far head of the merchandising industry. An example is a near full-automation store like Amazon's Just Walk Out. I just feel the slippery slope once you consider going into owning a market. With the advancement of AI driven unattended retail - the costs will come down and competitors show up and make the technology more available. Limited access areas will be less of a problem as computer vision will be able to track customers and products and debt payment systems automatically like Amazon's solution. You wont need secure locations, you will just need the cameras and technology in place. There may be a place for Kiosks but, I do not anticipate those to be around for too long. Kind of like Apples iPod giving way to the Smart Phone. Technology like with what Yoke Payment systems is doing further reduces the hurdles and costs turn a customers cell phone into the Kiosk and far surpassing it as preferred check out system since you now "own" the customer, sending them push notifications, coupons, and marketing advertisements to drive sales.

Yes people will still need fresh food and the logistics of managing that will still be a core service I believe but, businesses might end up owning the "market" if they can install the technology and they partner with national distributors like Amazon or Vistar to manage their store's par and auto-ship. With full cashless, its almost entirely possible to automate the entire store, inventory management, and planogram.

So... yeah. For me, in short, vending machines have good longevity for the right locations and if you are getting into markets, I think its more about securing locations than turning a greater profit and keeping up with innovations in those markets to stay in business. Like all industries, they mature and if you can't keep up, the industry consolidates, merges, and fewer players are in those industries seeking to monopolize and push out other competitors and then drive profits up. A bit of a wet blanket outlook from my end but, hard to not see it.

[AngryChris]

Although I agree with much of what you said, I think you're reading way too far into the potential future.  So far, most people I have talked to about micro markets agree that it's not exactly the same as traditional vending, but it's similar enough that a vending company can handle both.

I think the big customers that want markets already have them, and they very well may be subject to non traditional future competitors like Amazon and others.  But right now, Amazon has halted much of its own mini store concepts.  The most likely reason is the same reaon wyd big vending companies are struggling - labor shortages.  They aren't going to dare try to get into something like break rooms if they can't even roll out their own mini stores.  Amazon is likely just throwing things around and seeing what sticks.  It's just too much labor, which is why existing vending operators are best suited to do markets since we are already setup for the task, at least better than any other industry is.  And break rooms, vending machines, and stores can't stock themselves currently so AI and other technology is useless if you can't get physical labor.

Micro markets are progressing, and cashless transactions are overtaking cash  transactions organically.  Micro markets technology is getting cheaper.  People are more willing to pay higher prices for the variety they want. At least that's what I'm seeing.  That's why it's open season for smaller micro markets like 2 doors worth of coolers plus snacks.  The entry costs are a bit high but it's no more than buying 3 new vending machines.  The downside is shrinkage but an upside is virtually no need for a vending repair guy and you can stock practically anything they want.  These markets will probably never fully replace vending machines in their current form but rather they will converge when the technology is widely available to track customers purchases automatically.  

So, for me, I'm focusing on using my existing vending machines and placing them at qualifying apartments, hotels, and the typical vending locations that don't have the security for markets.  I can easily build another route with the machines I have if they are solid locations and IF I can get a driver.  Otherwise, I'm going to test the waters with one location first before I start switching a few of my own and then go target locations with over 60 people.  Every company I know locally is either already part of a larger entity and short handed or they are little guys that can't convince companies to switch.  I might be the only locally owned company with more than one route that's still full of vigor.  If I had the energy and labor, I could build two full routes in one year.  Unfortunately, I do get tired and can't find the help I need.

[Talidus]

So here's the burning question I have around micro markets, what distributor are you looking at for solutions? Is it someone local or you work with a more regional or national company? I know there are a few modified coolers with cashless systems on them. How big is anyone going in their local markets? Are there solutions to install small, medium, and large markets and if so, which distributors are offering these solutions or are you having to piece them together with a mix of solutions like equipment distributors and subcontractors for installation? 

[Vendo Mike]

Any distributor for Vendo will have access to fixtures, coolers, open showcases, security systems, coffee equipment and pretty much anything else you can think to put it a MicroMarket. We’re currently releasing our second version of a self -contained Open Rrfrigerated showcase. 

The size and configuration of your market is entirely between you and the location.  I’ve seen markets that were as small as a single snack rack, a reach-in cooler and a kiosk all the way up to he size of a small cstore in a corporate office dining area.  Canteen’s HQ has a really nice one for example. 

You can ask you local distributor or factory rep for more questions.

[Fermo Vending]

Are the security measures operators can take to prevent theft other than the honor system? I understand the "if they steal from me they'll steal from you" argument, but anyone out there install their own cameras or something to that effect? 

[Fermo Vending]

And what's the average start up cost of a micro market? Any easy answer out there?

 

[AZVendor]

Theft is generally on the operator as most employers don't want to be saddled with the responsibility.  You can put up cameras and monitors and that's about it.  You want to have a single access point to the room as well.  Give them a kiosk that can handle cash as well as cards to make the likelihood of payment greater.  I do believe though that cash options are falling out of favor.  You start up cost will be all of the equipment needed and the kiosk and the inventory, all of which is variable.  Automatic Merchandiser has had tons of articles over the years so read up on all of them before you jump in.