Commentary

Micro markets tap AI, redefine, rejuvenate convenience services

Micro markets, besides improving the customer experience, give refreshment service operators a way to respond to competition from increasingly technologically savvy QSRs and convenience stores, as well as new competitors such as refreshment subscription services, restaurant delivery services, e-commerce retailers and, most recently, Amazon Go.

Mike Kiser demonstrates an unattended market powered by artificial intelligence at the Swyft Inc. booth at the NAMA show.

April 29, 2019 by Elliot Maras — Editor, Kiosk Marketplace & Vending Times

The refreshment services industry has rebounded from its once sorry state over the last decade, driven largely by micro markets powered by self-checkout kiosks. The change was more obvious than ever at last week's National Automatic Merchandising Association show in Las Vegas, which hosted a record number of exhibitors and 60 more exhibitors than last year.

Brian York demonstrates the new Express unattended market from Avanti Markets at the NAMA show.

For longtime NAMA show attendees, last week's turnout was a welcome change. The show marked the end of a declining trend for refreshment services that began prior to the Great Recession, driven by worksite downsizing and the inability of traditional vending machines to meet changing consumer tastes. It took years for refreshment service operators to recognize the importance of technologies that improve the customer experience and enable them to respond to competition from increasingly technologically savvy QSRs, convenience stores and e-commerce retailers.

Dominic Sena presents the Pharmabox automated drug store capable of speaking multiple languages.

The progress has been gradual, but the turning point has clearly arrived. Last week's NAMA show exhibit floor included micro markets, cashless readers, digital signage and telemetry-based remote machine monitoring, as well as newer technologies such as AI, smart sensor shelving, facial detection and voice technology.

Justin Horvatin presents the multi module kiosk for electronics and personal care products at the Sanden Vendo exhibit.

2006: micro markets begin

The year 2006 brought a key development with the introduction of the micro market — which Technomic, a foodservice research firm, defines as "unattended retail stores located in a secure building or workplace that offer fresh foods, snacks and beverages for purchase via a self-checkout kiosk."

Robert Aboujaoud demonstrates a self-service kiosk at the Betson booth.

For the consumer looking for a breakroom snack, the micro market gave them the ability to physically hold and examine a product before making a purchase decision, as well as more product variety without the package size restrictions imposed by vending machines. As such, the micro market gave the service provider a tool to better satisfy customers and make more revenue with a lower upfront investment than a bank of vending machines, as Kiosk Marketplace quantified in a series last year.

Alfonso Garcia demonstrates the self order kiosk with barcode scanner, RFID scanner, receipt printer and camera at the Parlevel booth, along with a KDS iPad.

Refreshment service operators gradually began replacing vending machines with micro markets, especially in highly populated breakrooms. By 2016, there were nearly 18,000 micro markets, a 42% gain over 2015, according to a 2017 Kiosk Marketplace report.

Customers embrace change

Consumers embraced the new technology. Among customers who use micro markets regularly, 82% buy from them at least once per week, according to Technomic, compared to 48% of consumers who regularly buy from vending machines. Technomic also found that micro markets have become a preferred customer alternative to fast food: If there were no micro market available, more than half (54%) said they would go to a fast food restaurant.

Steve Pixley presents the Qwixtor kiosk for on-the-go merchandise at the Auto Crib booth.

Technology continued to raise the bar. In 2016, Amazon introduced its unattended store that allows customers to scan themselves into the store with a mobile app, shop items from open shelves, place the items in a shopping bag and be charged automatically. Unlike the micro market, Amazon Go is a freestanding store — a fully automated convenience store.

Zach Beal presents a refrigerated self-service kiosk at the True Manufacturing booth.

While Amazon did not invent the unattended convenience store, its AI-powered Amazon Go offered one of the most technologically advanced such stores, at a time when the general public had become more comfortable with self-service technology.

While it remains uncertain at the present time how quickly Amazon Go will expand, the entire retail industry took note of its potential to disrupt convenience retailing. Refreshment services providers in particular viewed Amazon Go as a competitive threat.

Professor Mike Kasavana, the NAMA-endowed professor emeritus from The School of Hospitality Business at Michigan State University, noted in a 2017 blog that Amazon's innovation could impact the growth of micro markets, as Amazon Go accomplishes the same purpose of the micro market with fewer steps on the consumer's part.

Micro markets respond

During last week's NAMA show, however, it was evident that micro markets are adapting AI and are more in the game than ever.

Justin Britt presents a locker kiosk from The Vending Company.

Avanti Markets, one of the oldest and largest micro market providers, presented an unattended store that customers can enter using a smart phone app that allows them to pick products from open shelves and place them in a virtual cart. If the shopper decides to put an item back, the technology will recognize their behavior and delete it from the cart. Once they have all of their items, they can exit the market as the system processes their payment and sends a receipt to their phone. Users can also gift snacks and drinks to other users who can then can pick up in the store.

Brian Weinstein presents a retail merchandiser made by The Venders at the Fastcorp booth.

Swyft Inc., which operates Best Buy Express and other branded kiosks through its ZoomSystems subsidiary, also introduced an unattended market powered by AI technology. Shoppers access the market by swiping a credit card, select products from sensor-based cabinets and coolers, complete their purchases and have their payment account charged. The system also incorporates voice commands.

The AI and smart shelf sensor technologies that Avanti Markets and Swyft displayed also allow operators to address pilferage, the main issue refreshment service operators have cited with micro markets.

Last week's NAMA show also featured a host of new micro market players.