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If you can’t beat ‘em, don’t join ‘em

Drinks Magazine Dec 08 – by Norrelle Goldring, Director, ShopAbility

Why zagging when the others zig will help you maintain traffic and profit in economic downturns

So we’re in an economic downturn, and shoppers are consolidating their shopping trips and becoming more value conscious. The good news is that alcohol purchasing remains fairly constant throughout economic peaks and troughs, so you don’t need to panic. Here are some thoughts on ways you can further minimise the impact of the current economic situation, without dropping your profit trousers.

Provide Perceptions of Good Value

‘Value conscious’ doesn’t necessarily mean shoppers change stores just to find the lowest price.  It’s unlikely you’ll be able to compete with the big guys direct on price anyway, as they have more buying power. And discounting heavily won’t necessarily bring more shoppers to your store as the number one reason people choose a specific store is convenience (location). All you’ll do is trade them down further, at a loss of margin to you.

What you need to provide shoppers with is a perception of good value, which can mean a number of things from the shopper’s perspective other than just the cheapest price:

• I got a good range of items for the total price that I paid (total basket spend)
• It’s in the price RANGE that I expect
• I got an unexpected bonus/gift/product/larger size for the same approximate spend
• It was a good use of my time (I learnt something; they treated me well; I got special service).

A number of these actually enable you to increase your average weight of purchase (AWOP), which leads me to .

Increase AWOP

Most alcohol categories have expandable consumption (that is, if they buy more, they consume more). This means that you can increase average weight of purchase without simply pulling sales forward or decreasing repeat visit frequency.

In addition, two-thirds of bottleshop ‘baskets’ are single item baskets – shoppers are leaving with the one thing they came in for, and not being suggestively sold to or buying on impulse.

There are a number of ways to increase average weight of purchase, the following is a selection:

• Multibuy and pick’n’mix type promotions
• Providing and communicating the saving when shoppers trade up to a case from a single bottle or 6 pack
• Promotions where the shopper gets more for the same (or marginally higher) dollars eg bonus packs, intermediate sizes, 20% free
• Train your staff in incremental sell, eg to ask something like ‘would you like a mineral water or a Coke with that’ (particularly with wine and dark spirits purchases respectively)
• Train staff to upsell, eg into a slightly more expensive product (particularly wine, where brands play less of a role than they do in beer) or into a bigger pack size
• Placement of sundries such as Coke and chips next to the checkout (considering you probably make more $ profit from a large bottle of Coke than you do from an on-promotion case of regular beer).
• Increasing repertoire/discovery within a price point (service)
• Accessible high end brands for gifting.

Maintain Traffic by providing reasons to visit you

As shoppers reduce their number of trip types, retailers are moving from competing for shoppers to competing for shopping trips. You need to understand the reasons why shoppers visit your store (what your retail point of difference is, and what occasions they are buying for) and play to those to provide reasons to visit, and repeat visit.
Get your positioning and range right
What’s your retail point of difference? What are you known for? You’re not going to be able to outgun the big guys on price so you need another differentiator.  Shoppers choose bottleshops based on convenience/location (close to work or home), good value (as discussed above), good range, and service in that order.

Whilst you may not be able to control your location, you can control what you range. Shoppers expect to be able to find what they want so ranging the biggest and best known brands is the starting point. From there you need to cover off a selected range within each category segment and across price points. But you can be known for a good range without having thousands of skus in the store (which serves to confuse rather than energise shoppers). Bear in mind that in beer around 60 skus make up 80% of the sales, in white wine it’s around 140 skus making 80% of sales and red wine it’s about 180 skus for 80%. In other words for beer and wine you can less than 400 skus in the store will be 80% of your sales.
Occasion occasion occasion
By communicating a range of occasions instore you provide shoppers with a reason to make you their one stop shop. Example occasions include ‘entertaining’ , ‘bbq’, ‘everyday quaffers’, ‘party’ , ‘dinner’ , ‘footy finals’ and ‘having friends over’. These occasions can be communicated on both point of sale and by arranging cross-category floor displays by occasion eg a BBQ Zone or a Party Zone, for instance.

Give them reasons to come back

• Do you provide reasons for shoppers to come back to visit you?
• Do you have a loyalty program? Or at least offers encouraging repeat purchase. Gloria Jeans and Baker’s Delight do this well with their cards and stamps.
• Create traffic by hold events, demonstrations, and tastings. Provide theatre and interactivity.
• Promote discovery and by providing and communicating what’s new. Could you do a ‘new releases’ area, or ‘Top 10’ at the front of the store, like music stores do?

By providing a reason to visit, a reason to come back, good range, good value and a good instore experience you will optimise your ability to weather economic storms.

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