Commentary

Micro market acquisition speaks volumes about self-service progress

The acquisition attests to the fact that the micro market improved the customer experience in the unattended break room — such as being able to touch a product prior to purchase and improved product quantity and variety — and rejuvenated the convenience services industry from its decades long slumber born of massive workplace downsizing.

An employee makes a purchase from a Canteen operated micro market. Photo courtesy of OptConnect.

October 2, 2019 by Elliot Maras — Editor, Kiosk Marketplace & Vending Times

365 Retail Markets' recent purchase of one of its largest competitors, Company Kitchen's self-service technology division, marks the first significant acquisition in the micro market industry and a milestone in one of the kiosk industry's least celebrated rising new verticals.

Micro markets are not one of the larger interactive kiosk applications, but they do demonstrate the interactive kiosk's unique ability to transform an everyday customer experience — in this case convenience purchases — for millions of consumers. 365 Retail Markets' acquisition of Company Kitchen's tech division demonstrates the degree to which interactive kiosks are contributing to the acceptance of self-service technology for daily activities.

As many Kiosk Marketplace readers already know, micro markets are unattended stores that offer consumers open product shelving and automated cashless payment, and are often found at larger workplace locations with employee populations above 125. The micro markets came on the scene in 2006, and since that time, they have rejuvenated the convenience services industry (vending, onsite foodservice, office refreshment service and pantry service) in a big way.

A kiosk vertical on the move

One of the best-read stories on Kiosk Marketplace, according to the most recent reader click count, is an article that ran in 2016, "Micro markets versus traditional vending machines" by Kisha Wilson, who at the time was the marketing manager at SlabbKiosks, the manufacturer that provides the kiosk for the Avanti Markets micro market. The high level of reader interest in this article reflects the importance that the multi-billion-dollar convenience services industry — which includes vending, contract foodservice, coffee service and pantry service — now places on micro markets.

One of the unique features of the convenience services industry is the degree to which service providers — the vending and refreshment service operators — have tapped new technology to improve their services. These operators have a long history spearheading innovation in their industry, such as adapting European espresso machines to use as high quality coffee vending machines during the specialty coffee revolution of the 1990s. But the micro market offers perhaps the best example of operator inspired innovation.

Convenience service operators typically focus on servicing their customer locations and leaving the equipment development to equipment manufacturers. But when far sighted convenience service operators in the mid-2000s saw the potential of self-service kiosks to improve their business, they didn't wait for kiosk manufacturers to adapt self-service technology to their industry. They seized the initiative themselves.

In the mid-2000s a handful of progressive vending operators were convinced the self-checkout kiosks they saw at supermarkets could be used to speed up purchases in the employee break rooms they were servicing. They put their minds and resources behind it and by 2006, micro markets came on the market.

Now, 13 years later, many of the principals of today's leading micro market providers — Avanti Markets, 365 Retail Markets, Company Kitchen, Breakroom Provisions and Three Square Market — are veteran vending operators.

Kiosks revived refreshment services

From the convenience service provider's point of view, the economics of the micro market proved superior to traditional vending. More importantly, the innovation improved the customer experience in the unattended break room — such as being able to touch a product prior to purchase and improved product quantity and variety — and rejuvenated the convenience services industry from its decades long slumber born of massive workplace downsizing.

According to a 2017 research report on micro markets by Bachtelle and Associates, there were close to 20,000 micro markets on location in the U.S. in 2016, marking a 40% one-year gain over the prior year, which is the most recent statistic available. No doubt, the number is higher today and will continue its double-digit growth for years to come.

Company Kitchen, originally known as Treat America Food Services, built its reputation as a convenience services operator on the strength of its micro market brand (Company Kitchen), changing the company name to Company Kitchen in 2016.

Brand equity rules

As for 365 Retail Markets' recent acquisition of Company Kitchen's tech division, the company plans to keep Company Kitchen as a separate micro market brand, attesting to the importance of brand equity. While 365 Retail Markets could reap big savings by folding Company Kitchen into its existing micro market brand, the company claims it will continue to support the brand of its longtime competitor.

The support for a competing brand by a major industry player demonstrates the future growth potential for micro markets as they continue to revive the convenience services industry and enhance the consumer's acceptance of self service.

Photo courtesy of OptConnect.