Why hasn’t the micro Market taken off?

In 2012 the forecast for micro markets was a potential $7 billion opportunity in U.S. malls (otherwise known as arcades or shopping centres). It was argued innovative vending machines, micro- markets, and virtual stores all showed great promise.

The thinking was that fundamentally, demographics, economics and technology were changing. The year 2012 saw the growth of e-commerce, mobile showrooming and the millennial generation – who crave a digital shopping experience, and they would support the growth of the micro market.

Whilst the mall is a different beast compared to the office, the principals remain the same – provide an F&B offer which encourages people to eat there and after they do, want to return. Therefore for a micro market in an office, the advantages include encouraging a culture and atmosphere within the workplace and offering healthier alterative to other ‘high-street’ offers.

It makes sense because food and beverage operators are constantly looking at how they can enhance the customer experience, reduce labour costs, deepen their brand differentiation and also justify investment in innovation. However the micro-market has not grown to the heights it was once thought it would.

What is a mirco-market?

Self-Service Retailing. Unattended stores with open shelves of products, plus vending machines, fridges and freezers, all to provide food and beverage. They are enabled by self- service cashless kiosks, product scanning, video technology and camera security.

For the employee in a workplace they offer a wider, potentially healthier variety of products without the labour needed for a canteen. The worker doesn’t need to carry money around and ideally the food is healthier and of more nutritional benefit.

The strategy for micro-markets may look at items which can be sold throughout the day and not only at meal times. As well as ‘bundled’ sales which generate a higher per purchase sale and offer convenience for the customer.

It can be argued that the micro-market could increase consumer penetration, allowing products to be sold at a higher price and include the ability to collect data for consumer insight and marketing.

However the offer may not be strong enough to exist on its own, especially as the need for ‘destination’ Food and Beverage locations is growing. No longer will an employee stay on-site simply because their company provides a break room with food offered. In the UK only 32% of employees stay on-site with some choosing high street options or in other companies, they choose to work from home.

Therefore due to this limited customer base, the micro market needs to offer quality and a variety of products because success will not come from high volumes of traffic. The offer must be of greater perceived value for the customers who in return will buy higher priced items and make more frequent visits.

Research firm Bachtelle & Associates projected in 2012 that there will be 35,000 micro markets locations by the year 2022 in the U.S. and they will generate $1.6 billion in revenue. Their research was based on 1,012 micro markets in 2011 and a 170% increase in locations by 2012. However this growth slowed and it has also struggled to make the transition to the UK.

Micro markets may be unbranded and so are competing against the high-street F&B locations. This licensing opportunity for those looking at branding is perhaps ideal for those wanting to position themselves in a public area where a large number of people will see their advertising. For example a local hotel could use screens to promote daily offers in their bar or restaurant. The worker would see a ‘happy- hour’ or similar special offer throughout the day and this could encourage them to visit in the evening. However there may be a fear of the promotion signs and other materials being vandalised.

People really do buy people

Hospitality is a people industry and this is often what can draw a consumer in and make them return. It may also reduce labour costs but sometimes a customer prefers being served or helped by a real person.

For many, service with a smile and great food will bring them back. It is one of the foundation stones of hospitality but often a forgotten trait. The world is constantly speeding up and as people become busier they overlook what really brings the customer in. Quality service must return to the surface and those who champion it will always stand tall. For people on the other side, the workers, there is also a trust factor for a micro market. A company must believe their employees are honest with what they have purchased.

Large workplaces usually have the advantage of secure locations so the risk of theft from outside is lower but for smaller businesses, safety may be an issue. Whilst food and beverage is an essential need within the workplace, the offer could be enhanced to beyond just those products. Why not also offer general merchandise, consumer electronics, remote banking, dry cleaning, pharmacy and e-commerce lockers? This may increase the likelihood of a worker choosing this offer above another. Suddenly it all looks a lot stronger. A remote concierge could become a possibility and one who can support via an interactive screen.

The micro market wasn’t the only form of innovation mentioned back in the report produced in 2012. It was suggested that virtual stories with no inventory and enabled by a collection e-commerce operator would become more of a reality. However these stores which include interactive screens have not grown either, perhaps because they do not provide immediate purchase gratification. 

It could be argued that micro markets tap into the rise of the ‘grab and go’ option. A convenient and healthy choice, located nearby and offering food all day long with technology that allows for a quick and efficient process. It is an upgrade from traditional vending and the evolution is moving, albeit slowly, in the U.S. Therefore some will argue it is only a matter of time before the food service world starts to implement the ideals in the UK. However it does go against one of the philosophies that hospitality is built on and that’s simply that people buy people.