Troy Geis, the co-founder of Fixturelite, the industry’s leading supplier of micro market retail displays, equipment and design tools, explores how much money operators are losing by offering markets that are nothing more than “vending on a shelf.”
From our observation traveling the country, in an industry that is still relatively young, about 50% of the micro markets being operated are little more than “vending on a shelf,” a costly direction for operators. Who is operating these types of markets?
- Newcomers to the micro market business who are getting their feet wet and minimizing their up-front costs in the process. Remarkably, for the time being anyway, they’re getting by, but not seeing the growth they had anticipated.
- Veterans of the business – the “we’ve always done it this way, so we’ll always do it this way” approach – a client who apparently does not notice or care – all leading to the perception by the operator that there is no reason to reinvest.
- Operators who are dedicated to frugality. It’s an old-time vending mentality: “Why buy a newer snack machine for this location when I can get by with an old, much cheaper one?” Limit the cash outlay and try to be debt free.
To some extent, I can understand the thought process behind this type of thinking. It’s an old school, highly conservative approach. Unfortunately, in any of these “vending on a shelf” style markets, sales are being lost in a big way.
What is contributing to the revenue loss?
Lack of a retail mindset – Estimated loss: 15%
Let’s start with the basic concept that there is a science to retail and that holds true for unattended retail as well. Product placement, visual merchandising, the impact of effective lighting and a thoughtful traffic flow. In the absence of those critical elements, the operator is losing about 15% of sales. Based on conversations with operators who have converted their micro markets from vending on a shelf to a thoughtful, well-designed micro market, that 15% number is probably low.
Lack of being a desired destination – Estimated loss: 15%
We have talked to many successful operators who have detailed the positive economic impact of turning a market into a comfortable space in the workplace – a space that employees want to spend time in. When a micro market becomes a place to gather for both meetings and downtime, when it becomes a place to both collaborate and refresh – your customers will be spending much more time in the space. The result – increased revenue, and again, that 15% number could be conservative.
Lack of special design features – Estimated loss: 10%
To maximize sales, it helps to understand the specific needs to the client beyond just “needing a micro market.” That process starts by using the Fixturelite Design Tool. With this interactive process, an operator can identify what is needed to create the ideal micro market and breakroom experience. Difference makers include USB ports, comfortable furniture and any of the proven items from our “Off the Wall” Collection. The Sled and the Flex Cabinet in the Off the Wall Collection allow micro markets to take on a spacious feeling by bringing key fixtures into the center of the room. It gets the crowding away from the snack racks and moves that traffic out into the room. Instead of having so many people standing side by side, crowding in to grab something, we can split them up and offer shopping on two sides of the retail component, in the middle of the room. This is a proven strategy that generates sales.
Eventually – some lessons learned create positive change
How do we know so much about those “vending on a shelf” micro markets? We work with operators who easily replace those deficient markets. Typically, after losing a few good locations, we will hear from an operator who wants help – especially when they learn that their former location is up 40% under the guidance of the new operator. Sometimes, the increase in sales is even higher.
An actual and painful scenario: Let’s say that a location generates $4,000 as a “vending on a shelf” market.
- The operator makes a minimal investment – mismatched shelving or displays that are poorly merchandised and aren’t intended for retail sales – coolers of various sizes or condition that are borrowed.
- With this approach, the operator will miss out on 40% of sales – about $1,600 a month.
- The operator keeps the location for 36 months and misses out on $57,000 in sales.
Clearly, it makes no sense to operate a “vending on a shelf” market.
If your micro markets are stuck in the “vending on a shelf” rut, let’s have a conversation. Fixturelite offers design support and affordable solutions for markets large and small that help ensure long term client relationships, client referrals and maximized sales.
Are you operating “vending on a shelf” markets? Fixturelite can help you strengthen your business. Learn more at www.fixturelite.com.