Welcome to ‘Breakroom Market Microscope Four’ Reinvention, the penultimate installment of our five-part unattended retail feature, sponsored by Three Square Market
2019 – Is It Time To Reinvent Your Business?
Reinvention: It’s a funny feeling when it happens. You know what I mean; you’ve been banging on about something for what seems like ages and you feel as though nobody has been listening. And then, out of the blue, you discover another voice singing from the same song sheet.
So, what is it that have we been banging on about, seemingly in vain? The need to reinvent your vending business, or – at least – to be willing to reinvent it. Take up of micro-markets, or breakroom markets, has been bafflingly slow in the UK – especially when you see the successes being enjoyed by early adopters who have been at the vanguard of the sector. And yet, despite the figures that unequivocally demonstrate that these new retail channels perform better, both in terms of income and customer satisfaction, than traditional vending, nothing much is happening. And just as PV and our partners, Three Square Markets, were scratching our heads like the man whose horse, after it was led to water, refused to drink, we came across an explosive testimony from Bob Tullio.
Over the last 37 years, Bob has sold video games, cigarette machines, cranes and juke boxes to bars and amusement centres, full line vending to public locations and office environments, pay telephones to retailers, OCS to thousands of office locations and of course, micro-markets. He has a very successful track record as key strategist, sales trainer and media manager under the title, “Director of Business Development” for World Wide Vending and Gourmet Coffee Service. His story may provide you with the Eureka moment that makes you look again at your skills, your knowledge – and where they might lead you.
We are indebted to our friends at vendingmarketwatch.com for kindly allowing us to bring their excellent article to you. It’s quite a lengthy read, but it’s worth it…
2019 – Is It Time To Reinvent Your Business?
BY BOB TULLIO
Reinvention is one of my favourite topics because from a business standpoint, I have been through it more than most.
One of my partners once told me that “the ship turns slowly,” when referring to changing consumer tastes, market conditions, government intervention, increased competition and product obsolescence. That was in 1989 or so and that time, he was right. Over the past 30 years, the ship has been turning at an increasingly higher speed, so much so, that we need to look down the road to anticipate change more than ever before.
In business – reinvention is often critical. Failure to reinvent when necessary can be disastrous. Just ask Sears, Blockbuster Video, One Hour Photo, digital camera makers, the American auto (now truck and SUV) industry and the Yellow Pages.
Reasons to reinvent
As an operator, we reinvented our business multiple times in 37 years. Reinvention occurs for one of two reasons:
- To survive.
- To capitalize on opportunity.
Our reinvention history
1985 – To survive the downward trend in the game business: We sold our music and games company and purchased a cigarette, beverage and snack company.
1995 – To survive the disappearance of cigarette vending: We started a coffee service company from ground zero.
If this sounds stressful, it was.
1999 – To capitalize on opportunity: We decided to expand our offerings (significantly) to satisfy the ravenous demand of the .com explosion – ultimately followed by an implosion. This period was truly the birth of pantry service for anyone in our industry who chose to participate.
2012 – To capitalize on opportunity: We joined the micro market world and began carrying more SKU’s then we ever thought possible – with an emphasis on fresh and healthy offerings.
2013 to 2017 – To capitalize on opportunity: We accepted and embraced the reality that today’s workplace was willing to pay for anything to satisfy their employees. We expanded to fresh fruit delivery, dairy delivery, multiple Third Wave coffees and a dizzying selection of beverages, food and snacks.
Without these reinventions, some bigger than others, we would have never survived. By taking bold steps to change, we not only survived, we capitalized on opportunity and flourished.
Look down the road
December is a good time to reflect on the year and look down the road. Ask yourself this: Is it time to reinvent my company? For coffee service, vending and micro market operators, there are numerous ways to reinvent – for survival, to capitalize on opportunity, or both.
OCS reinvention – Add vending and markets
- Are you a coffee service and water operator only? No vending, no micro markets?
There are plenty of you out there. It is time to reinvent your company. The opportunity for new business is endless when your company can provide coffee service, water, vending and micro markets – a complete package. Find a small vendor who wants out and get into the vending business. Or – work with the equipment distributors. They will be happy to get you started.
What you may not have considered: Your coffee service account base is a vending and micro market opportunity (goldmine) waiting to be tapped.
What you may be afraid of:
- Cash Handling. The business has changed. Credit card transactions are way up and telemetry has increased accountability and made route service much easier than it used to be.
- Vending equipment. They are big, but other than moving, no more difficult that dealing with a coffee brewer. Plus, I have never seen a can beverage machine cause a flood.
What you need to know: Ultimately, if you are not able to provide vending/micro markets and a total office refreshment solution, it will be increasingly difficult to compete – especially for great accounts.
Vending reinvention – Add micro markets
Are you a vending company that is not in the micro market business?
On a quarterly basis, I reach out to vendors to ask questions about the micro market business, specifically market design, for the Micro Market Design Newsletter. I am repeatedly amazed by the number of vending operators who answer – “I just operate vending, no micro markets.”
Looking forward, the only future for such operators is small accounts or accounts where the decision maker is a relative or friend. Micro markets will take over in any location that can be considered worth operating. If you are willing to make a commitment to micro markets, the kiosk manufacturers will do back flips to assist your entry into the micro market business. It is time to reinvent your company.
What you may not have considered: How tough it will get down the line. How many good locations have you lost already to micro market operators? It is only going to get worse. Get into the game and convert your best locations into micro markets. The NAMA Show is a good place to start.
What you may be afraid of: Failure was always my biggest fear, but you may be concerned about having to add employees, space, inventory and equipment. What you really should be afraid of: If you don’t go into the micro market business, your best locations will vanish, one at a time.
What you need to know: If you follow the advice of people who know what they are doing (I will be happy to refer you) and operate micro markets with quality food and beverages (not just a new delivery system for vending product), you will be astonished by the revenue. A well operated micro market will significantly outperform even the best bank of vending equipment. That is why you need to be in the micro market business.
Vending reinvention – Add OCS and water
Are you a vending company that is not in the coffee service and drinking water business?
Micro markets are the future, but coffee service and drinking water is a bread and butter opportunity. Single cup brewers, especially bean to cup, create a nice opening for equipment oriented vending operators to move into the coffee service business. Operating drip brewers and point of use water machines isn’t exactly rocket science. If you are losing great accounts or opportunities because you do not offer coffee service, it is time to reinvent your company.
What you may not have considered: Your current product suppliers will guide you on the 100 or so products you will need to be serious in the OCS arena. Your single cup and brewer manufacturers will help you on the plumbing side. Filter companies will assist with point of use water systems. Again, the NAMA Show is the place to start.
What you may be afraid of: Plumbing, leaks, account receivables, emergency service calls, huge product selection, labor intensity and very discriminating clients. Sounds attractive, right? Despite the challenges, the coffee service/water attraction is driven by good margins, consistent volume and new account opportunity.
What you need to know: Being in the coffee service and drinking water business will cause your vending company to grow and will open the door to much better accounts. As difficult as it is to get people excited about vending, coffee is an emotional product that can get your company in front of more decision makers. After closing a coffee service account, vending and drinking water becomes a nice “add on” as part of a package deal. Clients love to consolidate vendors.
Three requirements for reinvention
Yes, reinvention is stressful. That is exactly why doing nothing, hoping for the best and managing the decline is so safe and popular in every industry. Three things are required to achieve success through reinvention:
- Access to capital or loans, because reinvention takes money.
- Commitment to education, because there is plenty to learn and many people out there ready and able to help
- Commitment to going “all in.” If you are just mediocre in your reinvention effort, you might hurt your core business. Be prepared to reinvent with even more drive and energy than ever before.
*We hope you found this article useful and illuminating. There’s a lot more to enjoy vendingmarketwatch.com
Read more about Breakroom Markets on PV HERE
And from the Internet…
Is Amazon Go Planning To Compete With Our Micro markets and Vending Machines? (Vending Times)
Amazon just opened its smallest cashierless store yet – and it reveals that it’s looking to take on everything from vending machines to Walmart. Could it happen here? Take a look, HERE
Grocery Store Opens Mini Version Inside A Drug Store (vendingmarketwatch.com)
A Kroger grocery store in Kentucky has opened a Kroger Express mini market inside a Walgreens. It will offer more than 2,000 products including fresh produce, meat and private label items. The store in store concept is one of many planned and the source suggests Kroger could go so far as to put Kroger Expresses inside office buildings and hospitals. Going mainstream? Find out, HERE
Gimme Launches ‘Markets’ App And AutoDrive Software (Vending Times)
is rolling out a new app for the management of micromarkets and a new inventory-automation software designed for micromarkets and traditional vending machines. The Atlanta-based tech company said the latest additions to its product suite will continue to streamline productivity and profitability for its customers. Is it a gimme? See HERE
Pardon the Disruption: Micro Markets Could Be A Huge Opportunity For Grocers (Grocery Dive)
‘As traditional store expansion becomes increasingly difficult, placing outlets inside office buildings, hospitals and even other retailers could boost companies’ sales and their brand…’ HERE
Introduction to Micro Markets (vendinghow.com)
According to the most recent NAMA tradeshow, mini retail is a 7 billion dollar opportunity, which is about 17% of the vending market in the U.S. 5.1 billion of this is in a micro market. You will soon see them in apartment complexes, retirement homes, frequent flyer clubs, and especially in the workplace. HERE
See you next time, for our final installment of Breakroom Market Microscope.