As a liquor retailer, you are always looking for ways to improve the way you run your business. While your store may bring in sustainable revenue, the industry is rapidly growing and shifting—and you must follow suit.
This growth and shift in the industry poses the most complex problems to solve. At a high level, most complications arise from innovative competition and inventory management. How can your small business compete in a digital retail revolution? What can you do to best manage inventory in an ever-expanding market of products and varieties?
The first step to answering these questions lies in how your store functions. Gaining a deep understanding of your store, from sales numbers to customer basket data, creates a pathway for predictive data that will change your operations for the better.
First, let’s look at competition.
This is a constant battle for retailers of all shapes and sizes. For years, liquor retailers have had different breeds of competition: other nearby liquor stores, bars and restaurants, membership-only and big-box stores, and in some states, grocery stores.
Now, that competition has expanded to include digital applications that deliver beer, wine and spirits on demand, local breweries and distilleries that attract a homegrown crowd, and mobile-first grocery stores, like FreshDirect and—with its sale to Amazon—Whole Foods.
The first instinct might be to try to compete one-on-one by adding integrating on-demand services to your store’s strategy. But that comes with high costs and often low conversion. Instead, retailers should uniquely elevate their store experience for customers rather than following the behemoths. Here’s how:
- Develop simple digital touchpoints. Instead of creating your own version of Amazon or Drizly that require customers to download and interact with something new, approach them where they are already spending time. Gather email addresses or phone numbers and create mailing lists. Emails and, more recently, text messages are high-traffic vehicles for modern customers, meaning they won’t miss your latest promotions. Plus, arriving in channels where customers spend time already will win you favor for simplicity.
- Invest in an above-average customer experience. Another way to separate your store from the slew of beverage apps and online grocers is injecting it with humanity. Convenience, for many customers, only goes so far. If your store is staffed with intelligent category experts who create a comfortable atmosphere for customers, they will make an effort to shop with you. The simple ways to boost a customer’s experience include highlighting “staff picks” among your stock or including informative flavor profiles near different types of wines. Adding in-store events and tastings will also help revamp your store as a go-to for local customers.
- Know your buyers better than the competition. This is the biggest bonus a retailer can take over a competitor. Those digital marketplaces use impersonal and data-heavy algorithms to recommend other products to customers. As a brick-and-mortar retailer, you can do better. Data and analytics are still important, as they’ll help you see what people are buying and what, if any, patterns arise in those purchases. You can create intuitive displays in-store or personalized referrals through emails or text messages. You’ll also be able to predict trends, market-wide or for specific customers, and cater to them more quickly than your digital and brick and mortar competition.
Next, we’ll dive into inventory management.
With the boom of craft beer and unique wine varietals predicted to grow in 2018, stores will be faced with even more brands, varieties and items to stock. Making decisions as to which things to carry, how much and at what price is a constant juggle for retailers.
Simple depletion reports aren’t enough to provide actionable insight business decisions. Retailers need to see market trends and purchasing patterns to optimize inventory. Here are a few ways to better manage your inventory:
- Keep an eye on market trends. When you’re making inventory choices, don’t buy in a silo. See what’s selling around you. Looking at local and national market data, as well as what things you’ve seen at the register, will reveal patterns in product choices. Using this to help you make informed purchases from distributors ensures that the items stocking your shelves are priced to sell while keeping your margins low and bottom line steady.
- Follow the items that build baskets. Investing in orders of products that help build bigger baskets is a smart move for inventory management. If data shows that a specific brand of vodka encourages customers to buy multiple other items, follow it. Stock your store to sell as many products together as possible.
- Turn to your customers. We highlighted customer data as important to solving problems of competition, but it is also incredibly valuable to managing your inventory. When you see what customers are buying or asking for, it helps predict what trends are growing and what you should have in stock. Following your customers helps create a personalized experience for them—your stock is dictated by their needs—which leads to loyalty. With loyal customers and analytics to help you understand them, you can have a dynamic system to manage which inventory makes it to shelves, and how it is sold.
As the independent liquor retail channel continues to change, analytics are the best solution to predict customer behavior and product trends to compete in the modern day alcohol industry.