Why the post COVID-19 era will drive intelligent vending, micro markets and beyond
During the last couple of years, the vending machine market has demonstrated significant growth in general, with increasing market share of intelligent vending machines. According to research firm Technavio, the intelligent vending machine market size has the potential to grow by $11.24 billion during 2020-2024. As the maturity of connected devices and IoT sensors has been established, there is increasing demand both from customers and operators to use more intelligent machines.
In addition, the fast changing lifestyle of the population — urbanization, extensive growth of public transportation usage, development of huge office buildings and parks and the consuming habits of the younger generations, millennials and Gen-Z — led some research firms to claim an increasing market share of micro markets at the expense of slowing the growth of traditional vending machines.
Micro markets are more robust from a variety of products perspective, allow the selling of fresh foods, salads and sandwiches, and are much more relevant in office buildings' lobbies, workplaces, clubs, gyms, etc. The main challenge of micro markets is still the relatively high level of shrinkage, being open and relying on trust of the customers. That also limits their potential distribution to public areas such as railway stations.
A new solution emerges
Apparently, vending machines and micro markets leave a space for a solution that has significant potential growth: "a next generation vending machine" or "closed cabinet micro market." This type of machine will include a full micro market with a reasonably large number of SKUs functioning like a vending machine from a resilience and security point of view, while allowing a wider variety of products and price points. Several North American and European operators are offering such solutions, but until recently, it has not gained significant market share.
Micro markets are deploying a large variety of solutions, from single closed coolers or dry cabinets to combined cabinets to fully automated convenient stores equipped with several cabinets and open shelves offering an autonomous, frictionless shopping experience.
The need for additional technology
One of the main challenges in closed micro markets is the product recognition functionality. While solutions with sensors and telemetry can perform like traditional vending machines using scan-and-go or self-check-out technologies, such solutions actually downgrade the customer experience. That is why technologies such as smart weighing sensors, camera vision and in some cases even RFID will be used in micro markets.
With post COVID-19 market trends emerging, including the desire for more healthy food, sanitary and public safety, we can expect major growth in the demand for intelligent vending machines, equipped with more sensors monitoring the status of the food, and even consumers' temperatures.
The 'closed micro market'
The hotter trend appears to be the demand for closed micro markets. Closed cabinets of micro markets, or even autonomous closed micro markets, are expected to grow even faster because of their potential to better meet the customer's desires, including a full replacement for the supermarket.
Autonomous micro markets offer a variety of products, including fresh foods, available 24/7 (either at the office, on the way at the railway station or close to home in neighborhoods), while adhering to sanitary requirements, social distancing and providing a pleasant customer experience.
Application beyond traditional convenience services
Micro markets are not only for traditional vending machine operators. By the nature of operations and data management, the micro market can be an ideal solution for retailers (mainly supermarkets and pharmaceuticals) wishing to expand beyond the store and allow customers 24/7 availability of products.
Even consumer product manufacturers, some of which are looking to get direct access to the end customers, are considering their own micro market networks.
And finally, having such digitized systems, equipped with a large number of sensors and available data, will become a rich source of data to be analyzed by the various stakeholders: operators, retailers and consumer product manufacturers, to learn and better understand the needs and habits of their customers. Such technology offers operational excellence, improved sales and many insights to other fields of expertise.
