OCI Deep Dive: Better Processes, Optimization Wanted By Operators

Dec. 3, 2018

Out of a possible five on the operator confidence index, the micro market segment dipped to 4.63 for the fourth quarter of 2018. Operators are still giving the service solution high marks for its sales potential and how it meets the current needs of employers, although not as high as the previous quarter. A lack of control processes and ability to optimize categories is dampening the segment’s outlook.  

Meeting a need 

Low unemployment has forced companies to look for no-cost ways to stand out to potential employees and micro markets fill this need. A Midwest micro market-only operator explained that, “Micro Markets are becoming more common place today. The way the economy is, employee retention is very important. And a micro market is a huge benefit at no cost to the company.” 

This builds on the success already experienced by operators offering the concept. “Micro Markets continue to grow as a long-term segment to our business and the future,” said a full-line Michigan operator.  

A full-line vending operator in Indiana commented about the boost and limitations of the solution. "Markets continue to be the leader in desirable placements,” he said.  

Small locations: hit or miss 

There is still great debate about the employee count that will produce a profitable micro market. Some operators are getting calls from locations that large operators are calling too small and making the 50 to 100-employee locations profitable. However, it’s not profitable for every operator. Even at larger locations, a lack of proper management procedures, frequent servicing and shrinkage can eat into profits.    

“Markets have definitely increased sales but controls on the markets are not where they need to be,” said a full-line Wisconsin operator.   

Problems merchandising or boosting sales in existing locations is also a challenge for operators, especially with a fickle consumer base who has more options than ever for snacks, drinks and food items. It can limit micro market revenues.    

“We have seen some weakness from present sales in some locations,” explained a full-line Virginia vending operator “Sales in this area are good, not great.” 

Vending machines continue to be displaced by markets and the overall business outlook is very good with steady increases anticipated despite the challenges of proper management and saturated areas. Micro market growth shows no signs of stopping.