In the third quarter of 2018, confidence in the micro market segment is at an all-time high. Operators are so optimistic about micro market sales, they called the outlook “Excellent,” rating it a 5 out of 5 in the operator confidence index, a quarterly measure of the strength of the segment.
There are two factors bolstering the confidence in the micro market segment, the economy as well as more operators experimenting with mini micro market placements and mobile-only markets. These less expensive options allow operators to fill in existing micro market routes to create a more profitable route and overall business as well as serve locations with smaller staffs.
The economy is closely tied to this industry. If consumers feel secure in their jobs and income, they will spend more outside the home, including buying from the workplace micro market. The economy also impacts businesses, who are the customer of micro market operators. Businesses are trying to entice employees and offer refreshment benefits that enhance the corporate culture, something restrict during periods of economic contraction.
In the third quarter of 2018, the economy is showing positive signs. Unemployment was down to 3.9 percent in August, and hourly wages and productivity both increased from Q1 to Q2, according to the Bureau of Labor Statistics. The national economic growth is also being felt locally.
“Constant improvement of the economy has been reflected in our continued growth pattern,” said a full-line micro market operator in Michigan.
A full-line operator in Oregon said, “With Oregon's bright economic outlook and the record low jobless rate, Royal Vending is experiencing a surge in new micro market installations and experiencing over 20 percent growth in same store sales from the previous year.”
These sentiments were echoed across the country. Operators reported that micro markets were the main growth opportunity for their businesses, more so than vending or office coffee service.
It is not just the economy that is creating excitement around micro market installations, but also how the technology is evolving. There has been an increase in the number of operators utilizing small, countertop self-checkout systems or even mobile apps for checkout, according the manufacturers and suppliers of these systems.
A full-line operator in Tennessee uses them to fill in existing micro markets routes. “It makes sense to go after those [smaller locations that drivers are passing each day while servicing routes] now because the investment is very low,” he said about the mobile app powered micro markets. If drivers can spend less than 15 minutes to service the account, it can be lucrative and affordable thanks to eliminating the kiosk.
The flexibility of going small is helping operators meet the demand of smaller offices as well, some with 50 to 100 people. “I think that’s the future of vending,” said a North Carolina-based office coffee service operator with several micro markets. “We aren’t going to have to pay for kiosks, or hardware eventually, but use nanomarkets and beacon micro markets.”
Micro markets continue to be a positive story for many operators. It’s driving revenue and growth opportunity. New versions being launched allow even more flexibility for operators, something that will be needed as micro markets slowly become the norm in work place break rooms.
About the OCI
The Operator Confidence Index is a quarterly measurement of the micro market segment's outlook, managed by VendingMarketWatch.com and reported in the Micro Market Quarterly eNewsletter. The OCI number is based on a short survey send to the 80 OCI board members, made up of both operators and manufacturer/suppliers. To sign up to receive the newsletter, visit the subscribe page. If you are interested in being on the OCI board, please email the Editor.