Why customers (and operators) prefer micro markets to vending machines

| by Elliot Maras
Why customers (and operators) prefer micro markets to vending machines

It would not be a stretch to say that micro markets, supported by automated payment kiosks, have given new life to the refreshment services industry, which has traditionally relied on vending machines.

Customers simply prefer being able to touch products and examine them before making a purchase. They prefer the open market shopping experience micro markets offer, and they like the improved product variety.

"In a micro market, you can pick up those items and look at them and review the ingredients and nutritionals," said Reed Stevens, director of vending at Bernick's, a full-service refreshment services company based in Waite Park, Minnesota. The company operates more than 70 micro markets in the Twin Cities.

Reed Stevens says that most of the growth at Bernick's
is from micro markets.

For many customers, the micro market experience is more personal, Stevens said. "It's more of a retail atmosphere as you'd see in a c-store," he said, noting that as much as 70 percent of his company's new business is from micro markets.

Customer experience is one reason why micro markets are now the fastest growing foodservice channel. Another reason is that refreshment service operators like Bernick's prefer micro markets to vending machine banks because the markets can deliver higher profits and require a lower upfront investment, as described in part one of this two-part series.

Better product variety

The open shelving format allows micro markets to offer greater product variety and higher-priced products than vending machines, which means that Bernick's can meet the needs of more customers.

Package size restrictions can limit the types of products that can go in a vending machine. Micro markets have fewer size restrictions, so they can carry larger products with higher price points.

Stevens offered a comparison of the number of products offered in a vending bank serving 500 customers to the number of products that can be offered in a micro market serving the same number of customers.

The vending bank might accommodate 532 items in each of three cold drink machines, 450 items in each of two snack machines, 100 items in each of two refrigerated food machines, and 600 servings in a hot beverage machine. This makes a total of nearly 3,300 product servings.

By comparison, a micro market will accommodate 1,380 snack items, 384 items in each of the three beverage coolers, 175 items in each of two food coolers, and 600 servings from a hot beverage machine — a total of 3,482 products.

Price sensitivity can also be less of an issue with micro markets, Stevens said.

"Consumers are willing to buy things at a higher price through a micro market versus a vending machine," he said. "In a micro market, they can pick it up and look at it and they don't have to worry about it getting hung up in a machine. They're not investing before they get the product. They're investing after they get the product."

More payment options

A micro market kiosk can also offer more payment options than most vending machines, a convenience that can lead to higher sales, Stevens said. Customers can set up a prepaid debit account as an alternative to paying with cash or a card — an option that is not possible with most vending machines.

A prepaid account eliminates the need for the customer to carry a wallet, Stevens said. "When they want to grab something, they just use a fingerprint and move on. We see a lot more cashless payments in a micro market."

Lower service costs

Micro markets can incur lower service costs than vending banks, contributing to higher profit margin for the service provider. Refilling racks and coolers in a micro market requires 20 percent less time than restocking vending machines, which can reduce labor costs, according to Stevens.

Micro market kiosks also generally require less labor for maintenance and repair than vending machines, he said.

"The number of service calls [repair technicians] receive has gone down considerably," he said. "They don't have to deal with coin jams or the coils hanging up."

The average vending account places two service calls a month, each of which costs the company $125 to $150. A compressor might go bad in a micro market cooler, but other than that, there are few occasions to place service calls.

Fewer regulatory concerns

Yet another advantage micro markets have over vending machines is that they eliminate the need to post product nutrition information at the point of sale to comply with government regulations. 

Current health regulations require operators of 20 or more vending machines to post calorie information for products whose nutrition facts label cannot be examined prior to purchase, or for which nutrition information is not otherwise visible at the point of purchase.

Granted, this is less of a concern now than in the past, since most product manufacturers today use front-of-pack labels. But even those products that do not feature front labeling are not an issue for micro markets because customers can examine the product prior to purchase.

Although theft can be a bigger worry with micro markets than with vending machines, it is not a common problem, according to Stevens. He acknowledged that some accounts veto micro markets because they don't want to have to address the potential issue of employee theft.

For Bernick's, though, the micro markets are a "win/win," given their ability to offer a better customer experience in addition to superior profitability.

Photos courtesy of Bernick's

Topics: Bill Payment Kiosks, Customer Experience, Interactive / Touchscreen, Repair / Service, Retail

Elliot Maras

Elliot Maras is the editor of KioskMarketplace.com and FoodTruckOperator.com.

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