Last week I was on a Caribbean cruise, visiting Belize, Honduras and Mexico (a great chance to get away from zero degree temperatures in New England). On the ship and in every port were Duty Free shops. I’d traveled internationally and visited Duty Free stores before, but this was the first time since I became editor of Beverage Dynamics, which gave me a different perspective. It got me thinking about the differences in wine and spirit pricing not just between global travel retail and normal retail, but between stores in different jurisdictions.
The patchwork of beverage alcohol pricing laws across the country creates thousands of cases where stores within miles of each other are forced into vastly different pricing strategies. Here in New England, control state stores along the New Hampshire border offer much lower prices than Massachusetts and Connecticut, which draws consumers north in search of better deals. The same happens in neighboring counties and towns, which often mandate different minimum and maximum prices for distilled spirits and wines.
As a retailer, what can you do to compete against a store with more pricing flexibility? Move away? Accept reduced traffic and profits? Of course not. You compete on selection, service, and other customer-centric parts of the operation. I’m sure many of you reading this experience the frustration of losing price-sensitive customers to another jurisdiction on a daily basis. What sorts of things have you done to improve your appeal to those customers to win them back?