How can beverage alcohol retailers fend off Big Box competitors while thriving in the digital age?
These and other critical questions were explored during the inaugural Beverage Alcohol Retailers Conference (BARC) this week. More than 100 beverage alcohol retailers from across the country converged upon downtown Minneapolis for the new annual event launched by Beverage Dynamics.
Attendees heard from dozens of expert speakers and panelists. They had opportunity to network, converse on current topics, and interact with numerous vendors and industry associations, including the Wine & Spirit Education, which held a Level 2 wine certification class, and the National Alcohol Beverage Control Association.
BARC also handed out awards for the Beverage Dynamics Retailers of the Year (pictured atop).
Stephen Bebis, president and CEO of Liquor Stores NA, led off as keynote speaker on Day 1. Before taking his current role in 2013, Bebis served as CEO of Golf Town GP and Brookstone Company, among many other executive positions in his storied career.
At Liquor Stores NA, he initiated a sweeping initiative to retool the company’s hundreds of stores in Canada and the U.S.. “That’s one of the biggest problems I see with failing businesses,” Bebis said. “Not remodeling to improve the quality of your stores.”
This can include better organization of products, both in terms of neatness and strategic layout.
For all his years in business leadership, Bebis says firing employees remains among the most difficult of his responsibilities. In the past he would allow underperforming staff to remain on the workforce too long. “Now I give someone 60 days,” he says, “and that’s it.”
Battling Big Box Stores
Perhaps the most common theme throughout the conference was the threat posed to ‘mom and pop’ shops by Big Box competitors like Total Wine. How can retailers keep customers from abandoning them for these corporate megastores?
Tom Shay — the Day 2 keynote speaker at BARC, a lifelong small-business owner and author of 12 books on small-business management — stressed being memorable, unique, experimental, proactive and nimble.
He told the story of a local toy store that offered free year-round wrapping, always with the same paper. Every year the store-owner cringed writing the check for all that complimentary paper, and considered halting the service. But inevitably he would hear from a customer who had attended a kid’s birthday party and noticed that all the gifts there were wrapped with the store’s paper.
“And he gladly wrote that check again each year for that soft branding,” Shay recalls.
Which goes toward the need for uniqueness. Many speakers throughout BARC, including Shay, reiterated the need to stand out from corporate competitors. This may mean carrying exotic products, even if their margin is low or nil, so that customers associate your store as the place to go for these hard-to-find items.
Want some help figuring out what products to carry? Shay recommends a trip to your local Big Box competitor. Take note of what they don’t have. That’s what you need to stock.
Employee education is key to Shay’s stores. His staff is trained to be more than just helpful: they’re proactive with sales. This can be as simple as handing a customer a product as they’re providing education on it. “Once that product is in a customer’s hand, they’re 15% more likely to buy it,” Shay explains. “The idea of ownership has already begun.”
Experimentation is also important. Especially with layout. Figure out what has the highest margins and put it out front. Or in the back, if you believe your particular customers will buy more on their way through the store to the register. The only way to find out is to experiment.
Otherwise, you may develop shoppers who walk in, head directly to their usual purchase, and then leave without considering impulse purchases. “When your customer walks into a store, it should feel like a game of hide and seek,” Shay said with a laugh.
A smaller store can be a nimbler store. Shay pointed towards alcohol retailers that, after 9/11, ordered crates of American flags for sale. In the upswing of national pride, spryer businesses contributed to the spread of patriotism by being the business that sold what people suddenly wanted.
The lesson of this example is to quickly leverage market opportunities that arise. Even if they’re out of your normal inventory. How many Big Box alcohol stores can sell American flags on such short notice?
Altogether, small businesses have many tools to compete against Big Box stores.
Embracing the Digital Age
BARC also provided attendees with a glimpse at how modern retailers can operate effectively in the digital age.
Social media remains key. Larger chains can hire social-media personnel. A smaller store can get away with simply assigning the task to a Millennial staffer who may be more hip to what sites are trendy online.
“It used to be that you could get away with just a Facebook page,” said Ed Mulvihill, fourth-generation owner of Peco Liquors in Delaware. “But I recently had a young woman we employ explain to me that only old people use Facebook anymore. I told her, ‘Old people? I’m only 27!”
His humorous story was to the point: trust young staff to know what social sites are currently chic, like Instagram or Snapchat. Assign those employees social-media responsibilities, Mulvihill said, even if they’re part-time.
Customer loyalty programs are another common benefit of the digital age, typically involving email campaigns that keep people connected with the store. Shay went one further, suggesting that if you special order an item for a customer, or direct them towards a rare product, then try to acquire their email. Now you can contact them every time this hard-to-find item arrives in the store.