Episode 7: In The News & Brown Baggin’s It

December 6, 2015 § Leave a comment

Episode 7 – Link to Podcast

Segment 1 ~ In the News

Strange bedfellows kissed and made up this week in the form the BCGEU & the BCPLSA (BC Public Liquor Stores Association). The two organizations announced that they believe that recreational marijuana retailing should be restricted to liquor stores, if and when it becomes legal to do so.

Segment 2 ~ Brown Baggin’ It

A fun Christmas Party idea is to do a Brown Bag event.

The host supplies brown lunch bags. As guests bring their entries they put their bottle in a bag and number it. Throughout the evening guests taste the wines and rate which is their favourites. At a specific time the wines are revealed and prices stated. Invariably there are many surprises.

I suggest that you limit the price to something like under $20. If you will have both red & white entries it is best to have two competitions, one for red and one for white.

Segment 3 ~ Recommended Wines for Brown Baggin’ It

Terre Prosecco ~ $18 and a brilliant palate cleanser and crowd pleaser. Only available in private stores. Top pick by Dork UnCorked’s Sparkling Wine Correspondent Stacey Brennan of the Hillside Liquor Store (across from Hillside Mall on North Dairy).

Surprises make this event fun so I often enter wines that very few people are aware off, but offer incredible value. Here are a few suggestions for both red and white.

Red

Masia F Vino Tinto Tempranillo (Spain) ~ $10 private stores only

Periquita (Portugal) ~ $10 both private and public stores

The Den Pinotage (South Africa) ~ $15 private stores only

White

Hester Creek Pinot Gris (BC) ~ $16 750ml $44 3L (750ml equivalent – $11)

Matua Marlborough Sauvignon Blanc (New Zealand) ~ $17 private stores only

Aveleda Vinho Verde (Portugal) ~ $15 private stores only

Segment 4 – Best Buy of the Week

This weeks Best Buy is the Francois Lurton Les Fumees Blanches. On sale at government stores in Dec. for $11.99 this is a killer white wine. Look for it in the French section.

Next Week – Grannies Shortbread

BC Liquor Updates: Wholesale Pricing & Premium Wine & Spirits

November 27, 2014 § 3 Comments

In a previous post I wrote about the change to wholesale pricing in BC as of April 1, 2015. At the time of writing that piece I was aware that the BCLDB were soon to release more details including the graduated mark-ups that will be applied to premium spirits and wine. Today they released those formulas and it seems that wines over $20 and spirits over $30 are set to jump significantly in price, whereas wines under $20 will stay roughly the same as what they are today.

To be clear I can only speculate on what the result of this pricing model will be,  however my 20+ years in the business leads me to believe that this will have the effect of penalizing mid-range and premium wines and spirits and favouring lower end items.

The fact is that consumers are value driven and understand that a tax increase does not equate an increase in value… no matter how good the retail store they are purchasing from is. I fear that the real effect will be to chase premium consumers out of premium price points, exchanging them for good values at lower prices. Note that the consumer is not likely to increase the quantity they purchase, they will simply spend less. On the supply side, small artisan producers can expect slower sales for their products making it harder to justify selling them in B.C. and will be forced to either seek other markets (Alberta, Asia, US, other Canadian Jurisdictions), business channels (divert volume from retail to restaurants or ‘cellar door’ sales), or simply close their doors.

There are those, however, that are very pleased with the new calculations. Retailers in Alberta and Washington State will be eagerly expecting windfall gains as more BC residents load up or make special trips to save hundreds of dollars on their purchases. I can tell you that this happens right now within the specialty spirits category. The most ardent Scotch collectors have long been making most of their purchase outside of BC.

Admittedly I am not privy to the discussions and calculations that saw the powers that be opt for this model vs a flat tax or less oppressive percentages. I can only speculate what their short and long term motivations are and what the results will actually be. However, although I remain hopeful that they will take another look at the numbers, I believe the smart move would be to find a model that reduces the potential of sending more money to Alberta and pushing artisan producers out of business.

Attached is the pdf as issued by the BCLDB regarding the new formulas.

Mark-Up Schedule Effective April 1 2015 (2)

As always let me know your thoughts and feedback.

May Quality Be Ever In Your Glass

The Dork Uncorked

Is Re-Stocking Eating Your Profits?

August 22, 2014 § Leave a comment

It is no secret that margins are thin. This is especially true if you operate a private retail store in BC.

It is also true that you nor your staff work in a vacuum and that all actions and efforts will have an effect on your bottom line.

Re-stocking shelves is one of the critical cost centres in your store that is often over looked. How much labour are you putting into restocking shelves? The answer is as simple as this mathematical formula and it could save you thousands of dollars per year in labour and out of stock costs.

Weekly Sales / Shelf Capacity = ReStocking required.

Cheers

The DorkUncorked

Was this helpful? Either way say so in the comments.

If I can help you determine your restocking costs and how to make your inventory work harder for you, you can reach me at rodphillips@telus.net or by phone at 250-880-0072

Using The Right Yard Stick

August 11, 2014 § Leave a comment

Are you measuring the right categories for your business?

If you are only measuring the same categories that everyone else is measuring, and not the ones that define you then you are likely not measuring your biggest asset – why customers are coming to you.

Product selection is one of the key things that distinguishes you from all of your competition including the BCLDB, yet most LRS’s have set up their POS systems to collect data on the same categories as everyone else- Beer, Wine, Spirits, Coolers & Ciders.

Ask yourself which product categories are you great at or do you love? Measure those, not to the exclusion of others but in concert with others and you will have a much better handle on how your customers are behaving in relation to your vision and where you are going.

There are literally hundreds of ways to look at a category and break it down. For instance beer maybe 50% of your business and you want to be the go to place for 15 can packs. You can measure both the beer category in general and 15 cans in specific.

Maybe you want to be the source for Single Batch Craft Beers or Russian Vodkas. In order to see if the customer sees you in this light you need to measure those categories.

If you have any questions or would like some help in getting the ‘right’ categories set up drop me a line at rodphillips@telus.net or contact me through the comments.

Cheers

The DorkUncorked

Radius & The Retailer

November 6, 2013 § Leave a comment

RadiusA retailers radius is the number of potential customers in the geographic area between yourself and your nearest competitors. Your radius changes depending on the product or proposition.

For example if you are the only one to carry a specific wine, your radius for that product is as broad as 50km, your job then is to tell the customers for that product in your radius that you have it. On the other hand if you carry the same wine at the same price as everyone else the radius for that product is at its smallest.

There are only two ways to improve your business and that is to get more customers or get more margin from the customers you have. The first is best served by finding products or programs that increase your radius. The second is all about getting a better price than your competitor.

The DorkUncorked

SAVE YOUR MONEY!

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.

Cheers

The Dork UnCorked

How To Determine The Size of Your Market

August 29, 2013 § Leave a comment

This really only pertains to liquor retailers, but might be an interesting insight for others. The title is a problem that every retailer needs an answer to.

Typically we look a geographic area and say this is our market area, which, if you lived in Victoria, where I live, would mean that if you have a store in greater Victoria your market area is about 180,000 people. Sorry but if you are basing your business plan and shareholder promises on this simple demographic, you are setting yourself up for disaster.

Here are a couple of realities that play a role and have proven true over the years no matter the structural or competitive changes in the market. In other words if you want to build a solid business that can withstand wacky rule or market changes that can come at you from left field, here is where you start.

1) The maximum distance that someone will drive to visit your store is 50km.

2) 80% of your business, and that of your competitors, is premised solely on the convenience of your location. The more convenient your location the better your business.

3) 20% of your customers are up for grabs and will move to another store for reasons of price, service, cleanliness, parking, lighting, advertising/offers, product knowledge and store environment. This also means that 20% of all your competitors customers within a 50km radius are also up for grabs.

4) The growth of your business will only come from your ability to appeal to the 20% of your competitor’s customers.

5) The average customer will shop a liquor store once per month. So what is the size of your market and your risk? Go on to FreeMapTools.com (link below) and draw a 50km radius around your store. Determine how many people of drinking age live in that circle (link to statscan.gov.ca is below). Not everybody of legal drinking age drinks. The best information I have been able to get is that about 80% of those of legal drinking age (LDA) and above, drink and are therefore potential customers. So take the total number of people of legal drinking age and multiply it by 80%, this is the total number of customers in your stores market area or (TMC).

Formula 1: LDA+ x 80% = total market of customers (TMC). i.e: 100,000 x 80% = 80,000 total market of customers.

Divide this number, for ease of calculation, by the number of stores, including yours, in that circle. This will give you your total potential customers or your baseline customers – TBC (this will become really important when we talk about how to measure the health of your business).

Formula 2: Total number of customers / number of stores within 50km radius = Total Baseline Customers (TBC) per store. i.e. 80,000/5=16,000 TBC.

The number of customers that you can count on as being yours is 80% of the TBC. As I mentioned above 80% of customers shop solely by convenience and they don’t change. I call these my SCB or solid customer base.

Formula 3: TBC x 80% = SBC. i.e. 16,000 x 80% = 12,800 SBC.

The number of customers that you stand to lose to a competitor is 20% of your total number. I call these Customers at Risk or CR. When I combine these with the CR’s of others stores I call it Customers in Play or CIP

Formula 4: TBC x 20% = CR or TBC – SBC = CR. i.e. 16,000 x 20% = 3,200 cR or 16,000 – 12,800 = 3,200 CR.

Your business will only grow by attracting new customers or by ‘up selling’ the customers you have. Likely you will have to do both. In later posts, perhaps in an e-book, I will go into greater detail on strategies for both, but for now I will just focus on determining the size of your market. I refer to the number of potential new customers for my business as Customers in Play or CIP. This number changes from year to year by people who move into the area, the number of stores operating, etc. How to calculate your CIP is pretty easy. It is 20% of the total market customers. 20% of your customers are in play for you and your competitors, and 20% of your competitors customers are in play for you and them.

Formula 4: Total Market Customers x 20% = Customers in Play (CIP) or 80,000 x 20% = 16,000.

I always breakdown the CIP into my customers at risk and my competitors customers at risk for a couple of reasons. How I approach my customers at risk is different, albeit at times slightly, than how I approach my competitors customers at risk. The other reason is cost. The cost of maintaining a customer is always lower than the cost of acquiring a customer. The cost of acquiring a customer is always cheaper than the cost of getting a former customer to come back.

If you are already operating a store you likely have the ability to track the number of transactions you have in a day, month, year. Take your annual number of transactions and divide by 12. This is you of customers you have or TBC, 20% of whom will move to a competitor if properly motivated (CR).

Anyway this should give you a pretty good idea of the size of your market, how many people you can count on and how many people you need to attract to build your business. If you have any questions or comments please don’t hesitate to ask.

Tools:

Drawing a radius around your location on a map: http://www.freemaptools.com/radius-around-point.htm

Population Stats: http://www.statcan.gc.ca/

For more detailed stats (neighbourhood density and such) you will have to approach you local municipality.

Feel free to contact me by filling out the below contact fee. I am a consultant and am happy to help you with your business.

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