As the first quarter of 2019 closes, micro markets continue to be a strong industry segment if not the powerhouse of the previous year. Most operators on our Operator Confidence Index panel gave micro markets a good or better rating, resulting in an OCI number of 4.33 out of 5. While this is a drop from the previous two quarters (4.63 and 5.00 respectively), comments show the segment is still viable.
"We are not seeing any signs of slowing down. The shift of replacing all vending with markets in break rooms is a steady rise," commented a micro-market only operator based in Illinois.
"Micro markets continue to grow. More customers are asking for them," said a North Carolina operator while a micro-market only operator in New York commented, "Love them."
Micro market need expanding
As customers become more aware of micro markets and want them, it becomes both an opportunity and challenge for operators. "Markets seem to be the way of the future. Vending will never go away but I see the big providers probably being 60 to 80 percent markets in the next 5 years or so," said a full-line operator based in Tennessee. "The biggest obstacle will be locations that are public or don't have good security. As markets become more normalized, customers will be more willing to pay for theft costs."
Many operators on the panel noted a continued need to work on theft and shrinkage assessment and prevention in general. It will be even more of an issue as markets move outside traditional workplace locations. However it's something suppliers are working on and using technology to overcome with new cameras and locked cooler hybrids.
Competition tamps outlook
Finding new locations was the number one growth driver for the micro market segment, followed closely by converting vending accounts. However, as more operators add micro markets, it becomes more difficult to find viable new locations using the original micro market operating model. Operators are having to find solutions to offer markets at smaller and less traditional locations.
"We just recently started putting out mini markets which has shown growth over vending," said a full-line operator in Oregon.
A full-line operator in Washington state is taking advantage of new technologies to service a broad number of locations. "With each new innovation we're finding more and more locations that can have some type of market," he said."We're hitting record numbers every month."
Even suppliers have noticed.
"With the influx of micro markets more equipment is becoming readily available on the open market. Smaller vendors are now seeing that reward," remarked a Michigan-based supplier. "Micro markets are now expanding into other areas besides food and beverage."
Vending down but not out
A Tennessee operator noted that, "Sales are going up and we are continuing to grow. Vending is taking a hit but that is due to all the conversions we are making from our big vending accounts to market accounts."
Still vending will not go away completely. A full-line New York operator noted, "The size of micro market locations here better served by vending banks [because] more people are working from anywhere but an office." The operator compared it to what's happening with brick and mortar stores going to online sales. Certainly operators need to fully understand the operating costs and benefits of each type of service they offer in order to adjust it to the market demands and economy. Right now, the economy is strong spurring businesses to want more micro markets.
"As the economy continues to be strong, companies are willing to spend on employee perks and benefits," said an office coffee service, vending and micro markets operator in North Carolina. Because micro markets are viewed as a breakroom enhancement, businesses want to offer it to employees over vending. The desire to offer better services to employees and customers will also lead to stronger OCS and pantry services in the coming quarter as well.
