While 2020 started off strong for micro markets, the COVID-19 pandemic has disrupted the entire industry, resulting in reduced revenue for many operators amid a struggling economy. With businesses in various stages of reopening across the country, employers are balancing staggered scheduling, work-from-home requests and enhanced safety protocols in the workplace.
We asked industry leaders and members of the Automatic Merchandiser Editorial Advisory Board to weigh in on the biggest trends they’ve seen emerging in micro markets from this challenging time, giving operators the edge for a year of rebuilding and success in 2021.
1. Flexibility is the mother of invention
A resounding theme among the new challenges that COVID-19 presents as workplaces reopen is increased demand for flexible food and beverage solutions. The modular design of micro markets answers the call by allowing locations to start small and incrementally add fixtures and coolers as more employees return, and suppliers have added new tools and technologies to custom-tailor solutions to every need.
“As route-based businesses, operators have warehouses full of products, trucks and people who can do whatever locations need to devise the most convenient and safe solutions,” emphasized Joe Hessling, founder and CEO of Troy, Mich.-based 365 Retail Markets. “We see now, especially, that every location has a different need as they strive to safely bring their employees back. We have food, beverage and service. The question is, how do they want us to deliver it?”
365 Retail Markets’ pandemic-inspired solutions include installing several smaller micro markets throughout a facility in place of a single larger one to facilitate social distancing; replacing micro markets with its locked, payment-activated PicoCoolers; and providing touchless product selection and payment solutions at all points of sale.
“It is all about social distancing and we are seeing our operators look for ways to avoid people queuing up to pay for their items, whether that be through revamped market layouts, floor decals for distancing reminders, or additional kiosks for checkout,” said John Reilly, president of Renton, Wash.-based Avanti Markets. “These options are all about providing the needed food service without added stress or concerns for employers or market hosts.”
Kurk Johnson, vice president of sales for River Falls, Wis.-based Three Square Market (32M) said the quarantine shutdown prompted 32M’s lightning-speed development and deployment of technologies requested by its customers, including its locking Cooler Café and curbside delivery app. The company built the Cooler Café with a focus on simplicity and affordability to enable rapid deployment to meet the needs of downsized locations without breaking the bank.
“Companies are more amenable to offers to extend to their employees to encourage the return to the office, and to also encourage them to eat on premise,” added Avanti’s Reilly. That includes meal allowance options, coupons and giveaways to keep employees engaged with the micro market.
A major consequence of COVID-19 is that companies have been forced to scale back, shut down or reinvent their contract dining operations due to the lack of an adequate number of in-house employees to support them, social distancing requirements, and indoor dining restrictions in many regions. The challenge to continue to feed a downsized staff with minimal contact presents newfound opportunities for micro market operators.
365 Retail Markets’ solutions include pairing its micro market and dining technologies with its mobile app that allows employees to order from the menu. The order is then sent to the cafeteria, where one person can prepare and package the food and place it on a shelf or warmer for pickup by the employee, who is alerted when it’s ready. Additionally, 365’s locking PicoCoolers have found new demand in hospitals to replace or complement cafeterias and to provide grab-and-go dining in universities.
Avanti Markets’ Reilly said its operator customers have been rebounding from the shutdown by replacing or complementing existing on-site foodservice with its micro markets, Smart N Go controlled-access coolers, and contactless delivery solutions. Avanti is also seeing increased interest in its planogram tool because it allows for flexibility to quickly change micro market layouts and manage products.
Vending machines are also a 24/7 substitute to fill the staffed foodservice void. One novel machine that can easily be added alongside micro markets or offered in their place is Le Bread Xpress’ Bake Xpress, which delivers a menu of hot, gourmet foods including quiches, pizzas and sandwiches that are partially prepared at a traditional bakery before being freshly baked at the time of order.
The company’s first machines have been in operation in California for a year through a partnership with Compass Group and are gaining traction at retail, university and corporate locations, including at a large office park and manufacturing site and the University of California, Berkeley near its Bay Area headquarters. Le Bread Xpress is installing additional units at university sites and several machines in Dubai, with additional installations planned. The company is also custom branding machines for a bakery chain in Portland, Ore.
“It’s been a challenging year but those challenges have made automatic retailing and touchless food delivery one of the most desirable solutions for the future, and we’re seeing demand for many different uses and locations,” said Benoit Herve, CEO and founder of Le Bread Xpress.
2. Touchless and cashless are no longer optional
COVID-19 has ramped up requests for touchless solutions to minimize the spread of the virus through shared surfaces and the trend is measurable, with both 365 Retail Markets and 32M reporting that biometric purchases edged down by 10%.
“Touchless is clearly here to stay on coffee machines, kiosks and vending machines with payment by apps and cards only growing, but we need to continue to offer flexibility and options,” Hessling emphasized.
32M updated its kiosk purchase and checkout process to be 100% touch-free in response to client requests, which requires no mobile app, key fob or any other device. The company also revamped its mobile app, which allows customers to select items from their store and pay using their phones. Next up from 32M will be a touchless bean-to-cup coffee machine that integrates with its kiosks, launching by the first quarter of 2021.
Another innovation 32M has brought to markets is its “COVID handle” for cooler and freezer doors, which allow employees to use their forearms to open the cooler or freezer instead of having to touch the handles.
3. Sanitization and PPE are key
“Our operators are being asked to show they can create and maintain a safe environment in the markets they place,” said Reilly. “So, there is still a huge emphasis on cleaning procedures with established protocols.”
Josh Rosenberg, former chairman and CEO of Pflugerville, Texas-based Accent Food Services, is now CEO of USA Bottling (Crystal Lake, Ill.), a manufacturer of surface and hand sanitizers and disinfectants. Its lineup includes Via Clean hand sanitizer foam that provides six-hour protection and a game-changing protectant that seals surface areas to prevent bacteria and virus growth for 90 days. It can be applied to vending and coffee machines, micro market kiosks, break room cabinets, counters and fixtures and on any other high-touch points.
“We suggest operators sell sanitization as a service,” Rosenberg emphasized. “It can be done in a break room or throughout an entire facility to provide added value for the location and create new revenue for the operator.”
He instanced a blind operator who was only able to keep his vending machines on-site at the University of Ohio amid the pandemic by using Bottling USA’s surface protector. Hand sanitizers have become a necessity at all locations across the board.
“PPE [personal protective equipment] is in vending machines and micro markets everywhere, and several suppliers sell into our space,” added 365 Retail Markets’ Hessling. “Take more solutions to your clients. They trust and know us and we’re there already. Ask them, ‘What else can we bring you to keep your employees safe and happy?’”
Working Safe America (WSA) is another new player in the PPE space, spearheaded by Greg Sidwell of G&J Marketing & Sales, based in Palm Harbor, Fla. Its PPE kits include small packs of sanitizing hand wipes and a three-ply mask that can be vended, sold in micro markets and c-stores, or given to employees and customers. Individually wrapped masks, disposable nitrile gloves and 2-oz. sanitizer bottles are also available in addition to 100-count canisters of sanitizing wipes. WSA vets all products to ensure compliance with Federal Department of Agriculture (FDA) regulations and helps guide companies to meet the Centers for Disease Control and Prevention (CDC) recommendations.
4. Make micro markets a one-stop shop
Reopening markets gives operators a prime opportunity to elevate them to the next level by merchandising home and office necessities to better serve customers and boost revenue.
“With locations that had 500 people now down to 100, operators have more space on the shelves for merchandising the top 50 household items — like laundry detergent, garbage bags, over-the-counter medications and toilet paper — to save them a trip to the store,” said 32M’s Johnson.
32M also recently launched its new “STU” line of impulse items for pop-up displays, including umbrellas and hand sanitizer to help operators add incremental sales.
Rosenberg added that with more free shelf space, there’s room for growth of strong regional and local brands, from pastries to chocolate and beverages, as distribution into convenience
services has become easier. “More brands are able to go to market and show up in our space and consumers demand these brands,” Rosenberg noted.
5. Provide food and beverage solutions desk-side, curbside and beyond
The COVID-19 quarantine forced a branch of the U.S. military to rethink how to feed its service personnel, and 32M devised a solution for curbside pickup and home delivery implemented across all of its bases. That feature is now available to convenience services operators.
“Shopping habits changed overnight,” said 32M cofounder and president Patrick McMullan. “We can be part of that monumental change in the buying curve by bringing convenience — something society is now very willing to pay for — to offices across our system. You have the delivery trucks, you have the locations — now it is time to expand your product offering to capture those convenience buys people no longer want to stop at the store for.”
That includes everything from those same top 50 household goods the company suggests for micro markets, to take-home meals and larger quantities of the products operators already carry, like family-size snacks and 12-packs of soda.
“All can be ordered on our app, a delivery schedule set based upon your route schedule, and you are now part of the retail game,” McMullan commented.
Rosenberg sees both a challenge and an opportunity for convenience services as consumers work and shop remotely, with a surge of app-based delivery and curbside pickup options at their fingertips.
“Local restaurants and c-stores are penetrating our space with multiple options for product delivered where consumers are, and when and where they want it. They have tools that existed pre-COVID, but now they are broadly used,” he pointed out. “We have to bring micro markets to the desks of consumers, since they can sit at their desk and choose what they want to eat, how they want to buy and when. It’s important for us to be part of that ecosystem.”
Hessling observed that the big winners in the COVID economy have been companies like Amazon, UPS, Target and Walmart, and that convenience services has much in common. “We are them, on a lower scale,” he declared. “We have a warehouse full of product and we take it to locations. We have to rethink ways to deliver and compete.”
Nontraditional locations hit especially hard by the pandemic are another opportunity prime for automated solutions. 32M has been installing self-checkout stores in apartment and condominium complexes. “They’re all looking for an angle to retain tenants, and it’s even more relevant now to have food, beverages and essentials on-site,” Johnson stated.
The company’s also gaining a foothold in airports and has had continued growth in select shopping malls.
“If you walk through an airport, you’ll see closed stores and food courts with many restaurants closed or shortened hours, with travel down so significantly,” Johnson pointed out. “Picture cashless and touchless Hudson stores and food options; you will see all newly branded 32Go stores live in several major airports by year-end.”
In conclusion
The consensus among Automatic Merchandiser’s expert advisors is that micro markets are beginning to see a slow recovery, and operators are adapting to accelerate it.
“Generally, we are seeing a recovery in the southern states ahead of the northern states and in blue-collar, industrial, manufacturing, and distribution faster than tech, white-collar, and general office complexes,” Avanti’s Reilly observed. “White-collar workers may be staying home longer, but many blue-collar manufacturing and distribution areas are experiencing high demand. There should be opportunity in that sector, albeit it with a lot of competition to get in, so more creative solutions, functionality, and consumer engagement will help.”
From the vantage point of the nation’s largest convenience services provider, Carl Moser, Canteen district manager for Rock Hill, S.C., is optimistic as the industry realigns to the post-pandemic workplace.
“The pandemic has impacted us in regard to employees working from home and many not coming back until the first of the year,” Moser commented. “We have really had to stay ahead of the curve by adjusting market schedules and the amount delivered to these accounts. When the employees do come back it might be at 50% capacity until we have a vaccine. I am very optimistic for the first of the year as sales continue to grow and we also pick up new business.”
