July 16, 2016 § Leave a comment
This week saw a first from the BC Liquor Distribution Branch; an apology letter.
A letter was send to every wholesale customer of the LDB. Given that they have a monopoly on all imported product and spirits, this mean close to 12,000 businesses was saw this letter.
The letter starts with an apology for all the shorted orders and out of stocks that have recently plagued the LDB Wholesale Centre. Over the last 3 years fulfillment rates have dropped to 91% yet overall revenues have grown to over $3B. What this means is that $300M in demand has gone unfulfilled and lost to the province’s general revenue.
The letter goes on to name a few causes. Technical, which I totally understand given that they are using databases that were old in 2009 to run $2B worth of orders through, and capacity. The first of these is easily solved and they are in the process of doing so, however the second is a little harder to solve politically although dead easy operationally.
Operationally you would simply lease more warehouse space or trucks, so why is this not happening now? Who doesn’t want an extra $300M in the coffers each year?
The answer is that the government would have to take legislative action to allow non-LDB distributors to deliver directly. All of a sudden this isn’t a revenue issue, it is a political issue, specifically political capital issue, and that is why it hasn’t been solved.
It is sad and you can’t blame the people working at the Wholesale Centre, they are doing what they can. The blame rests on the shoulders of politicians who can’t seem to see the forest through the trees, no matter what side of the political fence they sit.
Solving this issue will take bi-partisan leadership which is something that BC has lived without for decades.
This is just my opinion so if you have other solutions then by all means post them here.
November 22, 2014 § Leave a comment
This weeks announced changes to the liquor industry in B.C. will go into effect on April 1, 2015, but already their impact is being felt.
Social & traditional media has been jammed with calculations, prophecies and conjecture and, full disclosure, I have been apart of it to. However, after a Facebook conversation this morning I took a step back to get a broader perspective.
We have to remember that none of these changes will change the size and value of the market. If anything all they will do is divide the ‘pie’ into more pieces and shift value around.
It is no secret that BC Liquor Stores have been losing share to private stores each year for the last 10 years. Creating a level pricing field is likely the only way that this trend could be reversed using legitimate means. I expect that BC Liquor Stores will start to act like a large grocery concern and leverage their position to either mitigate costs or corner the market on certain products. This could mean disaster for many of BC’s private liquor stores who rely on price and product agility combined with well oiled marketing machines, but it won’t mean any more money into government coffers.
The other big announcement leads to further splintering of the market. Allowing liquor in grocery stores, no matter how it is done, will not lead to any greater revenues for the province or any increased sales for suppliers. It just means that there are more places for consumers to buy booze.
I truly hope that the quality of liquor retailing in BC will improve and I hope that these changes will instill a spirit of continued improvement, however these changes will not change the fact that we pay the highest prices in the country, and it is certain, that they will only mean the pie is divided in more ways.
I would love to hear your comments and feedback so please engage.
I will also be writing a piece specific to Wholesale Pricing so look for that.
May Quality Be Ever In Your Glass
October 3, 2013 § Leave a comment
In a recent post about sampling (Save Your Money) I spoke about the value of solving the retailers problems, vs leveraging so much on sampling. Retailers problems are not solved by listing numerous features, what I call feature dumping. Retailers problems are solved by answering these questions:
Who (customer) would benefit from this product and why? Goes to is there a market for this wine.
What is it about this product the staff will love? In other words what key, simple, sticky benefits of this product will make the staff confident in selling it and feel good about themselves for selling it?
Why should the customer care about this product?
How does this product make my life easier?
How does this product please my boss/accountant/controller?
These questions can only be answered with benefits, but what is the difference between a feature and a benefit.
The definition is remarkably simple. If you can say so what? after the statement, the statement is a feature and not a benefit.
For example: This wine received a 99pt rating from Robert Parker… so what? The benefit is what does this statement mean to me the buyer. A benefit is not what is important to the marketing guy, the sales manager or rep, it is what is important to the person you are presenting to. The challenge for the sales rep, and why I don’t have much time for marketing departments, is to find out what is important to the buyer. There is not a product in the world that is important to every buyer to the same extent on the same day. A great sales rep and sales company is focussed on finding out what is important to me or solves my biggest problem.
The benefit is directly linked to the feature and usually follows a linking phrase such as “which means to you…”. So using the above example here is the example of linking a feature to a benefit.
This wine received a 99pt rating from Robert Parker which means to you the highest possible movement on a high margin product which will always please your boss and accountant.
To find the real benefit, like I said above, you need to start with finding out with what is important to the buyer and test to see if you have the deepest benefit, the benefit that will truly resonate with your buyer, apply the 5 Why test. Ask why the benefit is important 5 times, the result will be the deepest benefit that will solve the biggest problems and be most important to your buyer.
If you have any questions please let me know.
September 28, 2013 § Leave a comment
The only real competitive edge that private liquor retailers have in BC is their product selection. The absolute risky-est position to be in is having a photo-copy of a government store in terms of selection. As a private liquor retailer I have found that the only way for me to best maintain my market share, or to make it grow, is by walking the fine line between listed and spec products.
By having about 40% (and growing) of the products on our shelf that are only available at our stores or in other private retailers, allows me to 1) clearly distinguishes me from government stores, 2) have more control of my margins while maintaining price confidence with the customer, 3) Allows me to focus on customer service in the form of product knowledge, 4) means I can truly say we are professionals.
Why do you choose the lawyer, doctor, dentist, accountant, personal trainer, hair stylist, plumber, etc. that you do? Part of the answer comes in your belief that they are qualified professionals that have spent hundreds of hours being an expert at solving problems that you have in their area of expertise. Chances are you have found them by referral or by meeting them. They conveyed an air of professionalism and confidence that you have come to trust and that trust has always been vindicated. For us in private liquor retail it is no different. What kind of confidence will your customer have in you if your selection says ‘I don’t know anything about this beer/wine/spirit and I don’t care, I just want you to buy it. All I know is that someone told me it sold well”? You need to be their ‘doctor’ of wine, beer and spirits. Your selection should say “in your case I would I’m going to prescribe this wine over that one. That one will work for you to but I think that for today this is the best choice.”
Customer loyalty comes from developing personal relationships and sharing your customers day to day successes and failures, feelings of confidence and defeat, feeling great or suffering from a cold. By saying “I know just the perfect comfort food wine for you, you can’t find it everywhere, but I loved its depth of flavour and boldness of body” you are telling your customer that you care about them. The old saying “I don’t care what you know until I know that you care” is so true when comes to developing lifetime customers in our business. Your selection is your customers silent witness to how much you care about them.
There are hundreds if not thousands of items available right now that offer 40% and 50% margins, are priced for the average joe and blow the doors off the leading brands in terms of quality. It takes work and dedication to find them, but the work and time pays off 10 fold.
Someone I admire once told me to focus on the critical few and forget the trivial many. When your selection says you care, you can then spend most of your time focussed on customer service. This means staff education, product knowledge and engagement, developing better hiring practices, improving the flow of the store, keeping the store clean and having truthful and informative signs on products throughout the store. This is one of the ‘critical few’ and is perhaps the one that delivers the most tangible and intangible positive results in your business.
Start to pare down the ‘me too’ items and replace them with ‘I love this and will stand behind it’ items and your business will be far more secure and fun to operate… no matter what happens with the Liquor Review.
September 27, 2013 § Leave a comment
Dear Importers, Agents an Sales Reps;
Save your money!!!!
Most new product pitches that come across my desk are heavily leveraged against the tasting of the product. In BC this is ridiculously costly and doesn’t get nearly as many sales is it should and can.
Smart buyers understand that the taste of the product solves a couple problems, however these problems can only be solved if the business needs of the deal are met first. Tasting/Sampling only serves to provide staff education for those on the floor and to convince me, the buyer, that the product will sell more than once to a customer.
First things first is how does this product solve my business problems? Does this fill a hole in a price and margin segment? How seamless is distribution? Is it a year round proposition, seasonal or one time buy? Does it represent a category I’m lacking in? Do you have the codes necessary for our POS system to accept it?
Lastly what benefits does the consumer realize from this product/proposition. This is almost never answered and it is far more key to the success of the product than the taste.
Most pitches are laden with a long list of features. I call these meetings show up and throw up meetings. The presentation leaves it to me to assume what the benefits to me and the consumer are and this is where the presentation gets tripped up. It is better for the sales rep to answer objections to stated benefits than to argue the validity of a feature of the product.
Sampling should be treated like the subjects to buying a house. It is a condition of sale, but one of the last conditions that need to be met. Furthermore once met, the deal should be closed. So save your money and use sampling tactically.
The Dork UnCorked
August 28, 2013 § Leave a comment
I have now been in the beverage alcohol industry for 20 years. I have been a sales rep, sales manager, importer, category manager and now a retailer. The problems that retailers and suppliers ‘enjoy’ are the same now as they were 20 years ago. The fact is that no one has looked at the process and offered real solutions. It is those solutions that I have to offer after twenty years.
For suppliers – don’t guess at the market and don’t rely on ‘what the numbers say’. This is a relationship business. Test your proposition first and this means ask for real orders. A guess always leads to either out of stocks or having to reduce your price and neither improves your bottom line.
For retailers – ask yourself who is in charge. You are not in charge if all you do is give BDL (Labatts and Molsons) or the LDB your money each week. The fact is that they are in charge if this is what you do. You need, I stress need, to reduce your dependence on them in order to improve your bottom line or to maintain your current approach to business. There is more risk in ‘staying’ safe than ever before. You are guaranteed to lose by standing still and being okay with the status quo.
If you want specifics let me know ’cause I’m happy to share.
July 31, 2012 § 2 Comments
On the heels of a ton of expensive advertising the BCGEU released the results of a poll done by Angus Reid that concluded that 75% of British Columbians support the opening on all BC Liquor Stores on Sunday’s. I have to say their timing was excellent as it gives a veil of legitimacy when a credible company like Angus Reid does the poll. I doubt the conclusions were ever in question.
It seems that the BCGEU, and by abstention the BCLDB, want you to believe that BC Liquor Stores are profitable, that the revenues that they are looking to generate are incremental and are not already being collected by the Government, and lastly the only way to collect these revenues is through public stores.
I guess the saddest part about all this is that there is no effective group that is prepared to take on the Goliath that is the BCGEU, and that large news companies such as the Times-Colonist, The Province and the Vancouver Sun didn’t ask a question as to the real legitimacy of the poll before publishing it.
First, BC Liquor Stores are not profitable. They don’t generate revenue. The vast majority of them are the most inefficient tax collection operations on the globe. The minority, conceivably would be profitable under traditional measures but BC Liquor Stores are not measured traditionally or individually. BC Liquor Stores don’t pay for the product they sell. There is no public reporting for each individual store’s overhead costs including labour. If you can’t include these costs you can’t determine profitability.
It has been proven on numerous occasions that the government retains more revenue by selling product through private stores and not public ones. The best guess is that 30% of the shelf price is eaten up by operational costs of BC Liquor Stores, whereas the cost of selling to private stores is 14% less than selling through public stores.
Secondly, the revenues generated are already being generated by the private sector. Opening BC Liquor Stores on Sundays is a shell game and simply moves the revenue from one store to another.
Lastly, the fact is that neither government stores nor government distribution is needed to collect tax revenues. Every market in Europe, Asia, Australia, South America, Africa, Alberta and most of the US proves this (Pennsylvania and Utah have similar markets to BC and the rest of Canada, minus Alberta). Any cost that is not pure tax collection takes money out of health care, education and the like.
Are you ready for a twist? If BC Liquor Stores had to compete like any other retail industry, then I don’t care when they are open because I know they must be a real profit centre and that means that they deliver real dollars to government. It would mean BCGEU members in the BC Liquor system create real economic value like other retail organizations and the foundations of a real and truly awesome liquor industry will exist.
The opinions expressed above are exclusively my own and should not be attributed otherwise.