Micro markets: are they right for you?

A mashup of the vending machine, the lunch lady, the smartphone and the corner store
Michelle Brisebois
May 11, 2015
By Michelle Brisebois
Many companies are looking at micro markets as part of their health and wellness program. Companies may choose to contribute financially to an allowance for employees to spend at the micro market.
Many companies are looking at micro markets as part of their health and wellness program. Companies may choose to contribute financially to an allowance for employees to spend at the micro market. Illustration by Alison Keba
Great ideas are born when a market gap is addressed, but sometimes those gaps appear only when other products and services disappear.

Commercial food service has traditionally consisted of a cafeteria augmented by a couple of vending machines for those working the night shifts or feeling peckish mid-afternoon. As many companies have removed their cafeterias, employees have had to forage farther for their meals. Those vending machines were always meant to provide a supplement to the cafeteria, not replace it. 

Enter micro markets. Considered by many industry-watchers to be an exciting evolution of vending; micro markets are a mashup of the vending machine, the lunch lady, the smartphone and the corner store. It’s the perfect solution for many workplace feeding dilemmas.

Micro markets give companies a new way to offer on-site food service without all of the costs associated with running a full-service cafeteria. Many companies had a contract feeder on site to offer hot meals for employees to eat in a sit-down cafeteria. Running these cafeterias was costly, and as companies looked for ways to cut costs, the on-site cafeteria was an easy target. Vending machines, designed to supplement the on-site cafeteria, didn’t offer many healthy meal options, so many employees are forced to go out, bring their lunch or skip the meal altogether. A survey conducted by management consulting company Right Management in conjunction with LinkedIn discovered that fewer than 50 per cent of employees step away from their desk to take a lunch break daily. This same survey reported that 20 per cent of respondents said if they do take a lunch they consume it at their desks. Companies realize that giving employees a fast, nutritious way to have a meal is ideal for the employee and for the business. Skipping meals isn’t healthy and leaving to buy something to bring back takes time.

Micro markets are a collection of self-serve kiosks that provide fresh foods, beverages and even groceries for employees to grab on their way home. An inexpensive alternative to the corporate cafeteria, micro markets have been around for about five years, but are growing rapidly in popularity. As of 2015, there are about 7,000 micro markets in the United States and just over 100 in Canada. The “white space” for Canadian expansion is huge.

Customers select the items they want and pay with variety of payment options. The micro market is not policed by live personnel and has been described as an “honour box on steroids.” However, they leverage security cameras to monitor potential theft.

We chatted with Eclipse Micro Markets (formerly Canada Micro Markets) and Three Square Market in the U.S. and asked them what was the largest concern or barrier to installing a micro market for most companies. The possibility of theft was cited by both companies as the most prevalent barrier. For companies considering setting up a micro market, it’s important to understand that the vast majority of people are honest. The upside of the business opportunity far outweighs any risk of slippage. “Theft is generally less than three per cent in these stores,” shares Patrick McMullan of Three Square Market. “Most people are honest and the camera system will capture any illicit activity. We generally remind companies that if an employee is prepared to steal from the micro market they may be more inclined to steal from other areas of the company too, so it’s good to know what you’re dealing with.”

Micro markets benefit both the employer and the employee. If employees must leave company premises to get something to eat, it can take more than 30 to 45 minutes. A micro market allows people to obtain healthy lunch options quickly and relax for 20 minutes while they consume the food. Micro markets are potentially a more effective way to dispense healthy food options than traditional vending machines are. “People who tend to eat healthy food items also tend to want to pick them up, turn them over and read labels,” says Ryan Wallace of Eclipse Micro Markets. “It’s just not as easy for someone to gauge the freshness of a food item if they have to view it behind glass,” he shares.

The benefit to employee well-being and satisfaction is huge. Many companies are looking at micro markets as part of their health and wellness program. Companies may choose to contribute financially to an allowance for employees to spend at the micro market. The productivity time saved by keeping more employees on site as opposed to having them leave in search of food can easily offset much of the program cost.

Point-of-sale payment can be executed in a number of ways: cash, debit, credit card, swipe card, smartphone wallet and biotechniques (fingerprinting) are all options. For those companies wishing to contribute to an employee’s micro market purchases, swipe cards loaded up each payday make distributing the benefit easy. “Offering payment by debit card typically results in a big increase in sales,” Wallace says. He also points out that by offering more flexibility in payment method the operator reduces the likelihood of theft occurring because a hungry customer simply doesn’t have any cash on them. “Psychologically, the consumer’s purchasing pattern at the micro market is closer to what they do at a convenience store than a vending machine. Therefore the average purchase tends to be larger,” he says.

Above all, micro markets are flexible. They can scale up or down to fit any space and be branded with any theme desired. “Most companies choose to go with strong product branding on the market,” Wallace says. Micro markets can also morph into convenience stores at the end of a workday. Employees can grab milk, bread or meals to go as they leave to head home. Some micro markets have partnered with local delicatessens to supply the hot meals for this service. “The products that could be made available are limited only by one’s imagination. You could sell toiletries, T-shirts, frozen and fresh foods,” Patrick McMullan says. This convenience could also ease the time crunch at the end of the day for people in need of a hot meal to bring home to their family and boost employee satisfaction.

While installing a micro market is a commitment, it’s a channel that must be respected for its unique positioning. “It’s vital that micro markets are viewed as an exercise in retailing not vending,” Wallace says. “If micro markets are approached with a vending mindset – it will end up being the same old experience,” he says, emphasizing that, traditionally, vending has involved the act of simply dispensing a product in response to a payment. Retailing implies that the exchange involves an enhanced customer experience. For an industry accustomed to simply “dispensing,” the shift could be tricky. 

However, for those who are up for the challenge, the rewards are well worth the effort. Bachtelle and Associates reports that average sales for a micro market are $48,410 US and that micro markets realize 2.3 daily visits versus 1.9 for a typical vending machine. Purchasing frequency was cited as being 0.7 daily for vending versus 1.2 for micro markets, posting a 48 per cent increase for micro markets over vending. Bachtelle’s research also shows that the most popular items purchased were cold drinks, snacks and food. The highest traffic to the micro market occurred between 10 a.m. and 2 p.m.; however, 24 per cent of the purchases took place before 10 a.m. Breakfast is the new desktop meal opportunity.

Business opportunities reside where consumer needs collide with innovative products and services. We have a void left by contract feeders and access to flexible delivery and payment systems. Succeeding, however, means combining our knowledge of the self-serve sector with strong retailing practices.

As management consultant Peter Drucker once said, “If you want something new, you have to stop doing something old.”

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