Many independent beverage alcohol retailers understand (or seem to understand) the potential of data and analytics to improve decision-making and have a large positive impact on a store’s bottom line. But most aren’t sure where to start.
Changing the way you make business decisions and run your store takes time, but there are ways to start using analytics immediately to get the process started. Here are five ways you can begin running your store with analytics in the driver’s seat.
1. Correlate Merchandising
Analyzing data can show you which products are most often purchased together, helping you make informed merchandising decisions which lead to an increase in sales or profitability. In other words, when you can see which products are frequently bought together, you can arrange them next to each other in your store and on your shelves.
Looking at basket correlations uncovers patterns, like seeing that a particular wine is often bought with a top-shelf liquor. By that logic, driving sales of the wine will lead to increased sales of the liquor. With this information, you can run promotions for the lower-margin item (in this case, the wine) to help move product and bring in revenue from the higher-priced spirit.
2. Leverage Price
Data is also helpful in finding the sweet spot in product pricing. Increase the profitability of your store by tweaking product prices until you land on the most optimal one that keeps margins high without deterring sales. Try this method rather than pricing discounts based on those passed down to you from distributors and suppliers.
Look at your data and find a product that isn’t affected by a small rise in price. Usually, this is a staple, a product bought regularly by a number of people. Then, do some experimenting. Raise the price of the item to bring in more profit, and evaluate how it affects sales and revenue. Making these small adjustments helps you find the most profitable price.
It also helps you understand your merchandise differently. Items with low price sensitivity, for example, aren’t good candidates for discounts as people are buying them no matter what. Discount another product instead — perhaps something in the same category with a higher price sensitivity or cost in an effort to convert some buyers to a higher value. Data is also helpful in guiding just how much to discount a product so that you don’t run into profit losses.
3. Compare Online vs. In-Store Customers
There’s a lot of benefit to understanding your online customers and your in-store shoppers and their different behaviors. Understanding their differences can help you focus your promotions and marketing to the right place.
Things like typical basket size or price and products purchased often differ drastically from in-store to online. Use data to discover what works most effectively in each area. Some products and promotions will sell better in-store, while others — especially those that are more tailored — will perform highly online. Understanding these nuances helps you optimize your online storefront and bring in more money from digital channels.
4. Time Your Promotions
Many beverage alcohol products have peak seasons, and drinking trends develop rapidly. Data can help you run promotions on products at the times they are most profitable.
In the summer, for example, consumers opt for lighter beers and chilled wines (especially Rosé). Look through your year-over-year data to see when these shifts start and run strategic promotions to get these sunny drinkers in the door.
You can also extend this logic to in-store tastings. If you see that Scotch, for example, sells best in the evenings during the fall and winter, time your tastings to meet these buyers rather than opting for what the distributor requests. Or, when they push for a weekday tasting for a product that is hot in your store on the weekends, you can come back with dates and times that would be more effective for you. When you can back this choice up with data, they can’t refuse.
5. Personalize Engagement
Consumer personalization is key to earning loyalty and making profits. When you can better appeal to your target buyers, you increase their value and reduce churn.
Winning customers starts with a personalized experience. Give people a reason to keep coming back to your store. Online, consumer data can help you segment your e-commerce customers into different groups, which can then be targeted with different offers and promotions. In-store, you’ll want to create an atmosphere where people feel welcome and supported by your staff.
Think about the examples we spoke to earlier, like correlating merchandise and leveraging prices. Following those data-led examples will inherently personalize the experience for your customers. As you trust the insights that they give you buy shopping at your store to lead the way you run your store, customers will keep coming back.
- Figure out what you already know. Before implementing anything new, learn everything you can about your store, your products and what’s in your customers’ shopping bags.
- Start slowly. Adopt new technology in ways that are familiar to you. Take your time to adjust and bring a few tools in. Then see which ones work and tailor your experience with those tools to the way you work in your store. Don’t let the technology drive the store management choices, but let your own business instincts shift and grow over time.
- Don’t forget to act! Analytics only work when you act upon them. You can learn a lot from data, but if you don’t use what you learn, what’s the point? If you start by analyzing your store data and understanding it, then talk to your customers for a deeper dive, you will have a bigger impact on your store.
When you use analytics, the tools are in your hands. Actionable store and customer data puts you on equal footing with distributors and suppliers who traditionally set merchandising and pricing. Introduce analytics into your store to take advantage of these five considerations and to make your business more profitable.