Self checkout markets raise the bar: Key things for operators to consider

The 2012 National Automatic Merchandising Association (NAMA) OneShow marks the second year self checkout micro market companies will be on the exhibit floor. The growth and importance of the micro market channel is further confirmed by the presence on the NAMA OneShow program of a panel, “Customers Love Self Checkout — How to Capitalize on This New Trend,” to be chaired by Terry Touchton, vice president of sales and marketing at Vistar Corp. Panel participants will include the four exhibiting micro market companies — 365 Retail Markets, Avanti Markets, Breakroom Provisions and Microtronic US — and operators who have installed their micro markets.

With an estimated 2,000 micro markets now on location, major questions remain about the business model that will make the markets profitable for the operator. Given that virtually all the current micro market operators are vending operators, the initial response is to follow the vending business model, whereby product manufacturers subsidize the micro market equipment, similar to how beverage companies provide vending machines and provide rebates based on products purchased.

However, the vending model, when applied to micro markets, is severely limited because it does not address the major opportunity afforded by the micro markets: the ability to identify and then satisfy individual consumer tastes and to thereby increase sales.

Why data analysis?

Instead, product manufacturers, micro market providers and micro market operators should concentrate their resources on consumer data analysis to develop product promotions to increase sales and profits. They can do this by:

• Encouraging non-users at the location to become micro market consumers;
• Increasing the units and dollars per transaction and transaction frequency by the current micro market consumers; and
• Converting debit/debit card consumers to use the micro market stored value account card to make purchases.

In a previous article, I noted that vending operators need to act more like traditional retailers to optimize micro market benefits. One example is the use of social media. Micro market operators will have to use social media and mobile marketing to engage the consumer on an individual basis.

To engage the consumer in a meaningful way, micro market operators need data about the consumer’s buying habits. Fortunately, the equipment manufacturers have software that gathers this data. The question is to what extent they will share it with operators to allow operators to maximize sales.

The data file, “Market Report,” shown on this page should be familiar to all micro market operators. The market report has the basic information needed to analyze the micro market consumer, specifically:

• Consumer ID from the stored value card;
• Product purchased and category;
• Price; and
• Date and time purchased.

The report above includes sales from stored value cards and from credit/debit cards. The bottom three line items in the above report that have no consumer number are for credit/debit card purchases.

From this data, one can observe that Consumer 11036737 (ignoring the first four digits) purchased two items, Seagram’s 20-ounce Seltzer and Pyramid Humus with Pita Chips totaling $3.84 on July 11, 2011 at 12:21 p.m. On July 13 at 11:08 a.m., the consumer purchased only the Seagram’s.

Analyzing this data over a longer period, the objective would be to increase both the consumer’s frequency of sales and the number of items purchased at each transaction.

Each consumer is unique. Look at consumer’s 11039462 purchases of Toggi Chocolate Wafers on July 13 and 14. Should a “reward” program, once a month, be offered to consumers who purchase the same products on a regular basis, such as a “buy two and get one free” offered by many CVS pharmacies?

Convert to stored value card