Vending machine micromarket hot trend: QSR branded products?

 
Jan. 21, 2013 | by Darrel Suderman

Self-Service MicroMarkets are coming to the rescue of the slumping food vending business, but does this hot trend represent an opportunity for QSR branded products? My answer is "Yes!" and "I don't know?."

First, what are vending micromarkets?

In a recent online article titled "Grab 'N' Go: Emerging Self-Checkout MicroMarkets Find Favor As Vending Machines Alternatives," (posted on www.vendingtimes.com, Vol. 51, No. 12, December 2011, Posted On: 1/4/2012), Bill Brinton, Aventi Chief, former veteran vending operator, and a past chairman of the National Automatic Merchandising Association, described MicroMarkets as a convenience store-style setup without a cashier behind the counter. "It's like an honor box on steroids," he observed. "Customers check themselves out, and have hundreds of product options to choose from." He also noted that: "Vending revenues are shrinking; sales are declining. It's hard to get manufacturers to want to give us new products. Meanwhile, clients and customers are seeking innovation," said Brinton. "And the number of large accounts that can support manual food operations is shrinking, but they don't want to step all the way down to a vending bank."

In the same article, the author described self-service micro-vending markets as a place where patrons select the items they want, from a variety of familiar racks and merchandisers, and bring them to a self-checkout touchscreen kiosk. This guides them through the checkout process; it recognizes each item, displays the prices and the total, and accepts payment. The kiosk is equipped with an optical or wireless scanner that reads UPC barcodes or RFID tags affixed to each product. Depending upon the system, patrons can pay with cash, a debit or credit card, or a prepaid stored-value card or keytag to which patrons can add value at a charging-station that accepts cash or a debit or credit card. Some systems also offer biometric technology as a payment option.

Second, how has information technology systems enabled vending micromarket growth?

Brinton explained that the micromarkets concept was developed seven years ago and launched as the Freedom Shopping system, which used RFID tags for pricing and security cameras to monitor the premises. This proved to be a workable approach, he said. The micromarkets concept got a major boost from the introduction last year of systems that use the UPC barcodes on product packages, or printed by the operator and affixed to unpackaged items, with which consumers are familiar from supermarket checkout lines. The first self-checkout stores using barcode technology were deployed in 2010, at which time the new retailing method really took hold in the vending industry.

Third, what are some other business benefits or opportunities?

  1. ACCESSIBLE PRODUCTS: Another advantage to the self-checkout stores is that customers can hold and examine a product, and read its nutritional information, before making their purchases;
  2. FLEXIBILITY: A major benefit of micromarkets is that they allow the operator to give customers the products they want without being constrained by whether or not they will fit in a vending machine
  3. PROFITABILITY: And the financials speak for themselves, according to Brinton, who said the average profit in the traditional vending model is 1.15 percent, compared with 17 percent with a micromarket.

Now back to the original question, do micromarkets offer fresh new opportunities for branded QSR products? The answer is a resounding "Yes," but risk-adverse marketing departments may never support it.

For more information on implementing a "New Product Innovation Culture in your company, Food Technical Consulting (www.foodbevbiz.com) is providing on-site hands-on corporate 2-day workshops and coaching sessions – and a yearly 3-day industry workshop in Denver on "How To Implement New Product Innovation Business Processes and Principles in Your Company," March 18 - 20. Please contact me at dsuderman@foodbevbiz.com or 303-471-1443. A course manual will be available for sale to international small business operators who cannot attend.


Darrel Suderman / Darrel Suderman, Ph.D., is president of Food Technical Consulting and founder of Food Innovation Institute. He has held senior R&D/QA leadership positions at KFC, Boston Market, Church's Chicken and Quiznos and led KFC’s development team of “Popcorn Chicken”, now a $1B international product –invented by Gene Gagliardi.
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