To an extent not usual in most businesses, beverage alcohol retailers are frequently hemmed in by forces outside their control concerning how they can market, merchandise and sell their wares. The size of the store, the specific neighborhood, the spending power of their clientele, the changing competitive landscape, the shifting tastes and habits of their customers, and, of course, the shifting state and local restrictions on how and when they operate, all make even the idea of tweaking their approach to the marketplace seem overwhelming.
But conversations with several leading beverage alcohol retailers reveal that continuing to do business the same way today as yesterday may soon leave a retailer at a competitive disadvantage, whatever the type of store and customer base. The stuttering economy, the digital revolution, the growing interest among consumers for more information about wine and spirits ‘ all these offer opportunities to make change work to your benefit.
Thus the Beverage Dynamics five tips to increasing sales, in which we tap the knowledge and ideas of savvy retailers to help you make a mark and build a broader and deeper customer base.
Know Your Business
It’s tempting, given the exuberant sales of, say, moscato wines or flavored vodkas, to go whole hog and buy pallets worth of whatever is surging in the overall U.S. marketplace. But according to smart retailers, it may be better to turn away potential business than to change your store’s direction and philosophy based on a sudden updraft in sales of a particular item. At Hi-Time Wine Cellars in Costa Mesa, CA, for instance, when taking on spirit brands to discount, liquor specialist Forrest Cokely prefers to focus only on quality brands that for some reason or another may be available, rather than a general approach to deep discounting that wouldn’t provide items making a good fit with his regular customers.
As the wine and spirit industry continues to divide into segments ‘ Big Box, wine specialist, etc. ‘ maintaining connection with your core customers is essential. But there may be more than one type of customer at that core, and so crafting a selection that suits each group is essential. PJ Wine in New York City maintains its position as a store with one of the best Spanish wine portfolios in the country, a selection that brings in retail and on-line buyers from all over the region. But the neighborhood Hispanic shopper often has other items in mind, and so PJ’s stocks a broad range of large format handles of Scotches and Cognacs as well as high-end brands of whiskey popular with that demographic that are hard to find at retail. PJ’s business is not only regional, in other words, it’s hyper-local as well. Adjusting that mix due to overall marketplace trends only makes sense when the trends are also something your established customers want.
Know What Your Customer Needs
The late Steve Jobs of Apple was famous for saying that his task wasn’t giving his customers what they needed but creating something for them they didn’t know they wanted. Most retailers do a fine job of keeping tabs on their leading items and categories as well as those that lose popularity or never gain a foothold with their customers, a process that informs and guides future orders. But this method doesn’t account for the items your customers would buy, or the way they would use your store, if only they had been given the opportunity.
For example, the 130 unit, California-based BevMo chain last Christmas established gifting centers designed to make it easier for customers to make holiday purchases for family and friends. ‘The idea was to make shopping at this stressed time of year fun and easy,’ says Francesca Schuler, BevMo’s chief marketing officer. ‘It’s part of what we’re doing to evolve and refresh the in-store experience.’ Gathering gift cards, gifting bags, cocktail books and other items that might appeal as a special present for harried shoppers allowed BevMo to engage customers once they were in the store and to attract new or infrequent customers who need assistance when selecting beer, wine and spirits gifts.
This method might be limited to stores with the right kind of space, location and staff ‘ BevMo units typically run 10,000 square feet, in well-trafficked retail areas in major metropolitan markets throughout California, Arizona and Washington ‘ but even a modest-sized shop can do better in providing solutions for their customers. And something similar can be managed at other times of the year. Picnic or barbecue centers in the summer, for example, where beers, wines and spirits meant for warm weather entertaining are gathered along with fruit, mixers, ice and other entertaining gear and suggestions. State restrictions may not allow that, but creating a smaller high-end spirit section complete with packaging solutions for Father’s Day could work in many outlets, regardless of size.
BevMo has taken on another, more elaborate example of a service that can pay both immediate and long-term dividends ‘ a wedding program with its own dedicated website (bevmoweddings.com). Couples can register at the site and order ‘His and Hers’ cocktails designed for the wedding reception or pre-parties, select discounted wines, gather advice on choosing a selection of beverages for any wedding related event, even get hints on cigars for the bachelor party ‘ a service geared to taking the stress out of at least one aspect of wedding reception planning. Private tastings before purchase can be arranged as well, all presumably leading to a large sale and a strong relationship with a newly married couple.
Much is made of the education Americans need from their retailers, but providing buying solutions ‘ ways for them to speed decisions and feel confident that they’ve bought smartly ‘ might be the best lesson a retailer can provide.
Facebook, Twitter and the entire world of social media offers applications for retailers that are limited only by the imagination. There is a cost, of course, usually to pay a dedicated employee or to account for the time staff members are required to commit to the task, but many retailers are finding social media a great way to build new connections and business.
Michael Cimini owns two stores in central Massachusetts (Austin Liquors in Wooster and Shrewsbury) and a Sav-Rite Liquors in North Haven, CT, and he says that his use of social media has allowed the stores to build a regular out-of-store connection with a small group of customers who fit exactly into the consumer purchasing demographic he’s been seeking. Using social media to generate more excitement about the brands the stores carry, to promote tastings and other events, and to build buzz for give-away contests, the stores have created a dialogue on Facebook and Twitter that has helped drive sales in select categories. ‘The great thing about Facebook and Twitter is that you can see the amount of people who respond, and who they are. With a couple of dozen consumers deeply engaged and about 500 or so who we can touch on a regular basis, that’s a great way to communicate to your target consumer,’ he says.
Cimini runs events off-site as well and finds that regular participants in a local bourbon tasting series often bring friends to the events, making his frequently participating social media customers in essence his store ambassadors.
Loyalty cards that reward frequent shoppers are a less digital form of socializing with your customers, as is establishing a computer record of every wine or spirit any single customer has purchased in the past. The benefit? It will make sense the first time a forgetful customer asks a staff member not especially schooled in wine if your store still stocks that fabulous garnacha she bought last month. A quick check on her purchasing history, and the customer-store bond is strengthened.
Forms of social media, whether reviews on Yelp, promotions on Facebook or Groupon, or sales alerts sent out to followers on Twitter, allow retailers to share crucial information about their stores, their discounts, rare or unusual vintages or bottles, give-aways, events and tastings in a way newspapers and flyers never could. At Hi-Times, communicating through social media about the arrival of those items generates enthusiasm and store loyalty, says Cokely. A social media presence requires some planning, time commitment, a sales strategy and monitoring to see what sort of activity works, but given how much retailers once spent on advertising in newspapers and other forms of media outreach that tried to connect with customers, the price is right.
Make It Easy
Since the mid 1990s when Joshua Wesson co-founded the Best Cellars chain, crafting a wine and spirits shop to be easy to navigate has become a retail craze. Many entrepreneurs have opened stores that stick to a certain segment of the market or with a narrow selection of products making the buying experience a relief rather than an intimidating chore. Best Cellars started out by organizing wines in eight style categories: fizzy, fresh, soft, luscious, juicy, smooth, big and sweet. With a goal of making shopping for wine as much fun as drinking it, the store style helped change wine and spirits merchandising.
Bottlerocket Wine & Spirits in New York took a different tack, organizing the wines sold in two ways: alphabetically by country and also grouped around kiosks by theme – wine for seafood, or suitable for gifting, or by flavor profile. Other stores have opted for the so-called progressive list used in restaurants, in which wines are gathered by color, body, density and potency at a range of price points, from lighter intensity, sweet and slightly sweet off wines at a range of price points, to off-dry and delicate wines and whites with more intensity, and then gradually increasing in intensity and fullness to wines with big structure and intensity, such as Cabernet Sauvignon and Syrah, regardless of origin.
Organizing your wines and spirits in a way that makes them convenient to buy rather than by any default convention seems a no-brainer, but the changeover can be time-consuming. There are other ways to make shopping easier and to build loyalty with customers. One is to respond to their choices by expanding sections. Most stores keep adding vodka brands and flavors, hoping a new one will catch fire and planning to discount the rest. In New Jersey at Bayway World of Liquor in Elizabeth, the local customer base a few years ago started to buy tequila at a rapidly growing rate. Spirit buyer Pat McCarthy notes that the store continued to add shelf space and increase tequila skus until the category is now three to four times larger, with a focus on newer and newly popular tequila brands, and keeps them organized by brands rather than sub-category, to make it easier for tequila buyers to move within the category, discover new brands, and trade up and down in price and quality depending on the occasion. All this made it easier for Bayway to expand its tequila base because shoppers still learning about the spirit could discover it at their own pace.
Be Something Special
The explosion of craft beers has shown many retailers the way to go; at Cimini’s New England stores, he’s added a beer-focused sales person and brought in any saleable craft beer he can find to respond to customer interest. In the wine-focused stores, he’s added wine savvy salespeople to the floor at the right selling time.
Other stores have expanded their position in craft spirits in anticipation of growth in that category. Some stores opt instead to differentiate themselves by crafting a smaller selection of wines, beers and spirits that they actively promote. Others have taken on the growler trend and focused on developing that niche of the beer business. Some stores, like the Moore Brothers Wine Company in New York, New Jersey and Delaware, source their wines directly from winemakers and keep their stores at a low temperature to maintain quality. There are an endless number of routes to take on the path to stand out from the crowd and attract new customers: staking out the service of selling wines to be paired with foods, or becoming a center for home cocktail enthusiasts, or a regional home for beer enthusiasts. These can be treated as businesses within the overarching store model, but whatever the method, 21st century retailing requires that somehow, someway, your customer thinks of you as a special place and not a way station selling a commodity. As new retail formats arrive to chip away at pieces of your business, it’s important for wine and spirits retailers to pick their own niche, because if not, your competition might do it for you.