Sylvia comes to the market every day, but she rarely did when it was a bank of vending machines. She says the quality is better now, as well as the variety. "It's been really great," she said.
Operators have seen success with micro markets by offering fresh food and providing a retail-like venue for customers to enjoy. However, going forward, operators will have to entice consumers with more than traditional products. Mark Kelley, region sales manager for General Mills, believes there are opportunities for growth with proper merchandising in both the frozen food and breakfast segments, as well as by analyzing and getting to know who the micro market customer really is by utilizing consumer insights.
Variety starts with manufacturers
“It’s no surprise fresh food is popular with micro markets,” Kelley said. “Suppliers have the opportunity to redevelop and offer new products in an effort to entice those consumers that would not purchase due to freshness concerns. Yogurt is a great example. With price points in mind, but not the driver, manufacturers can look deeper into their portfolios and be creative with what they produce and bring forward to micro markets in the future.” This will add even more variety to food options in micro markets including frozen food options.
“Frozen foods have been getting a bad rap” said Kelley. “Recent perception is that they do not deliver the same attributes as fresh food, but anyone in the business knows that’s not true. In fact, they often beat or exceed consumer expectations by over delivering the taste and quality promise.”
When selling frozen food, branding is crucial. “Consumers have a sort of relationship with some brands. They know certain brands have reputations built-on consistency and quality, but they also deliver a sense of comfort and trust and that can be a critical purchase decision driver,” explained Kelley. “I think the operator who is not putting up a really consumer-friendly and attractive freezer option is going to miss the boat at some point.” Add-on opportunities for sales exist by offering the right assortment of frozen products. Adding to that, manufacturers are going to be offering differentiated products that consumers wouldn’t typically associate with frozen food, Kelley believes.
“From an operational standpoint, a robust frozen food assortment offers the operator greater customer satisfaction,” added Kelley. “There will be times, when even with the best planning, operators will run out of fresh food. Frozen options provide a cushion during these peak periods while enhancing the food assortment overall.”
Examples of frozen items Kelley believes could be successful in micro markets include frozen entrées for lunch, dinner and breakfast segments. Items sighted include Mexican Meals, Pizza and a variety of entrees like Stouffers or those that incorporate healthier eating characteristics such as Lean Cuisine and Healthy Choice. He went on to say “but let’s not forget about the ice cream category as this is an indulgence that many consumers will purchase as the day long stressors occur and they feel they have earned or deserve a treat.”
Competing in the breakfast segment
Kelley believes micro markets are a great opportunity for operators to enter the breakfast segment in earnest. Breakfast never really had much traction in vending, due in large part to their limited availability and alternative options with a larger selection of products. However, Kelley believes micro markets will allow consumers to be confident that they will have enough product offerings to choose from in the breakfast category to preclude stopping at a convenience store, coffee shop or quick serve restaurant on their way to work. “We believe that the breakfast eating occasion is a huge opportunity for micro markets and vending as well. The key is to have a well-executed quality coffee program, [because] beverage, like in other day-part eating occasions, is often the driver,” Kelley said.
Kelley has also noticed a lot of traction in category management practices. Kelley recognizes the importance of providing operators with insights as to how to best select their assortment.
“A lot of suppliers have done a good job educating and getting operators up to speed with how category management works, and operators have done a good job applying some of the principals that have been offered to them. The operators that embrace … merchandising techniques are becoming retailers and as such, driving increased sales.”
When thinking of breakfast, operators need the basics like cereal, yogurt and more, but the breakfast segment is another way to utilize frozen food items. Pancakes, waffles and various breakfast sandwich items could be sold as frozen food items in micro markets.
Analyzing micro market customers
The next challenge for operators is identifying who the micro market customer is. Kelley says manufacturers, such as General Mills, are working to understand, and in turn provide operators with information on consumer insights, allowing them to better understand their customer types and provide more appropriate assortments in their micro markets.
“If you’ve got an office environment that is heavily female, the product selections should be different than a manufacturing facility consisting mostly of men,” Kelley said. “It’s a question of really drilling down to understand who the customer is.”
Kelley explains that providing consumer insights is a difficult task because of the variability of micro market locations. What applies to one specific location may not apply to another similar location; it all depends on the specific market demographics. “Micro market operators are going to have to decide whether to market to consumers on an individual basis, or a broad basis with the same items that are typically used in every micro market because they’re tried and true,” Kelley said. “You first have to get the core products correct, but after that it’s a matter of how far operators are willing to go, and without a doubt if there’s a location that is heavily skewed by a specific consumer type, the kind of products offered will make a difference.”
Micro markets continue to trend positively and remain a viable revenue boost for many operators. As more information comes in about who is shopping at micro markets and what kind of products they demand, operators will have the opportunity to reach new customers they’ve never had before.