A look beyond micro markets in unattended retail| Self-Service Innovation Summit 2020 | Retail Customer Experience

(Editor’s note: An earlier version of this article ran in Vending Times, a Kiosk Marketplace sister publication.)

Micro markets, an unattended retail concept offering consumers open product shelving and automated cashless payment, have been gaining ground for the past decade, but technology and a greater consumer demand for convenience will bring even more innovative self-service concepts.

That was the consensus of experts during the recent Self-Service Innovation Virtual Summit when panelists from a range of industry backgrounds brainstormed “The Future of Unattended Retail: Any Product, in Any Location.”

While the panel took place against the background of the coronavirus pandemic, everyone agreed that winds of change preceded the pandemic which has mainly served to augment the pace of change.

Retail reacts to change

Leslie Hand, group vice president at research firm IDC Retail Insights, began the session with an overview of how retailers are reacting to a changing retail environment.

“We’ve seen significant spikes in investment around modernizing capabilities, around e-commerce, but then also around self-serve technologies,” Hand said. This includes self-checkout lanes and self-serve kiosks in addition to curbside pickup and mobile order in retail environments. And while these investments have improved sales, they have also encountered “behind the scenes” challenges in managing inventory.

As for the pandemic, Hand joined numerous speakers during the event to note that the pandemic has brought a new willingness to use contactless technology. Her research found 27% of consumers have recently tried contactless solutions for the first time.

“Adoption’s been (historically) slow because the consumer wasn’t motivated to figure out how to do it,” she said regarding contactless order and pay. In addition, 18% said they will continue to use mobile payment and do so more often. Similar numbers are reported for consumers planning to use kiosks.

Hand noted some retailers, which the government deemed “essential” during the pandemic, have actually been able to grow sales. In many such cases, self-service options have played a key role.

“This moment in time is the biggest pivot we’ve seen in retail that I’ll probably see in my entire life,” Hand said.

The pandemic’s impact

Comments from the other panelists confirmed Hand’s observations about the pandemic’s impact on retail sales, particularly the demand for food and refreshments.

After business came to a standstill in March, Nordon Inc., a foodservice equipment distributor, was deluged with requests from businesses in need of on-site food services, said panelist Joe Moffett, co-owner and vice president of the Langhorne, Pennsylvania-based company.

With restaurants closed, many businesses needed food and beverages immediately in order to open the facility and have it deemed “essential,” Moffett said. Breweries and wineries got into the food business and even delivered food to customers.

“That really gave us a big shot in the arm,” Moffett said. “People in retail got real smart real fast.”

Panel moderator Alan Munson, co-founder and CCO, Parlevel Systems, a software provider to the convenience services industry, agreed, saying: “They (businesses) don’t want their employees out shopping around when they’re trying to keep everybody from getting infected.”

In search of real solutions

Which is not to say that everything was great because of the pandemic.

Mathew Marsh, CEO of Los Angeles-based First Class Vending & Break Rooms, one of the nation’s largest convenience services operations, concurred that many businesses still wanted products, but access restrictions made it difficult to service them.

Not to mention the cost and disruption of having to remove food from thousands of vending machines and micro markets.

Like many of his colleagues, Marsh tried to diversify into personal protective equipment to offset the losses caused by business closures, but benefits from this move were short lived.

“Nobody’s buying from them,” he said of the PPE machines. “Because now everyone’s got them.”

Meanwhile, coffee service customers are requesting touchless coffee dispensers, he said, but patrons are not using them.

“I’m looking for those myths to be changed for the next year so we can get back to what we do,” he said.

New customer needs

Long-term, Marsh expects micro markets to continue to expand at the expense of vending.

One factor driving this change is requests for non-traditional items, Marsh said, such as office supplies, t-shirts and hats, that don’t always fit into a vending machine.

“I’m primarily in the food industry and now we’re stepping outside a little bit,” Marsh said. “I’m not sure if I’m comfortable yet, but we’re getting there.”

Panelist Udi Wiesner, general manager of the retail innovation division, Shekel Brainweigh Ltd., a weighing technology provider that has expanded into self-checkout technology, agreed with Marsh that there is a switch from vending to micro markets, which provide a greater variety of products.

Wiesner said machine flexibility will allow a convenience services operator to add more non-traditional products. The “hubz” smart cooler solution that his company has introduced has sensors that relay information via telemetry to allow the operator to know what is selling in the machine in a timely fashion.

New solutions emerge

“I think the next real thing out there is the ‘public micro markets,'” Wiesner said, referring to smart coolers. “They’re not perfect, but they’re getting better… It’s just a vending machine with a fancy door… It allows you (to) touch, feel, get different size items.”

Wiesner said the concept will expand to become a “micro store,” or an automated convenience store. This is not a new concept, but the technology has improved, along with customer acceptance of self-service.

Wiesner’s company has already introduced such a concept in France, an 18-square-foot automated store users can access with a credit card which one retailer, a supermarket chain, wants to use to replace supermarkets. The concept allows 24/7 availability and enables social distancing.

In addition to retailers, Wiesner said consumer product goods manufacturers have taken an interest in “micro stores” since they (the consumer goods manufacturers) are expanding their direct-to-consumer initiatives.

Hand, the researcher, concurred with this “micro store” projection, noting consumers are learning they can buy things more conveniently.

“We expect over the course of the next few years, convenience store chains opening some automated stores,” Hand said.

Which concept will win?

Veteran observers will compare this “micro store” concept to Amazon Go, introduced in 2016, but some of the newer concepts are deemed more scalable.

Hand said Amazon Go probably won’t accelerate as fast as some other self-checkout store solutions because of its cost.

“The ROI is going to be much, much better,” Wiesner said for some of the newer concepts.

Which is not to say that the newer automated stores don’t face challenges.

Moffett cited the need for additional foodservice equipment. When one brewery tapped him to introduce a 24-hour grab-and-go store in order to attain “essential” status during the pandemic, they needed to have heating equipment and coolers.

“What we see is a demand for a very specific technology that can help operators really excel on their operations,” Wiesner said.

The session was sponsored by Shekel Brainweigh Ltd.