Buying StrategiesFresh Ideas to Boost Your Bottom Line
Managers need to be diligent in driving change within their retail stores to stay competitive in a demanding market. Creating and implementing new buying strategies is a mandatory and ongoing commitment to see positive change. However, developing fresh ideas can be difficult for some people. Often managers feel they have exhausted all avenues, and struggle to find new and creative ideas to implement. Well, look no further! Below are a few proven tips and tricks regarding buying strategies that most retailers already know about. Why are we writing this article then you ask? Well, we have expanded on these already implemented ideas to show you examples of ways you can enhance your bottom line by making small changes. Heck! Don’t drive yourself crazy by always looking for brand new ideas, expand and adapt what you already know.
Continually strive to be one of the first retailers to carry the latest and greatest SKU.
Retailers have seen great long-term success after implementing simple ideas that will drive costs down and revenues up. Alberta is an extremely competitive market when compared to other provinces, so owners must continually find fresh, innovative ideas to enhance their business.
While cultivating business relationships is a very old way of doing business, it’s still very much a “must do”. Continue to create and build on partnerships with vendors. They have a unique perspective on your business model. They are not on-site every day, but they understand your consumer. They are also a fantastic resource when you’re in need of new and fresh ideas. Liquor vendors have access to detailed industry trend information including new and innovative store display ideas for retailing liquor products. They can tell you what’s hot in their category and what’s coming to market. Take advantage of this information and adapt it to your needs.
Focus on liquor trends. Continually strive to be one of the first retailers to carry the latest and greatest SKU. You will not only see your revenue go up, you will see new customer traffic in the store over time as clients learn about your ever-changing and trending product mix. According to the 2018 Winter issue of Liquor Retailer, 63% of Albertans decide to shop in a store based on its selection/variety. If you have the space, create a designated area for trending SKUs.
Review your contracts and service providers annually. Often owners forget about their mobility accounts, Internet, WiFi usage, even credit card transaction fees. I had one owner pay for a dedicated fax line for 5 years after he had switched to online ordering! I guess you set them up and forget about them right? Wrong! Technology changes quickly and so do those rates.
It never hurts to shop around annually to ensure you are getting the most bang for your buck. A simple phone call to your provider usually works. Just ask, “Can you help me save on my monthly bill?” More often, than not, the answer is yes. The odds are you have been a loyal customer and they are willing to offer some great ideas and incentives to retain your business. Don’t leave money on the table just because you didn’t ask.
Buying on LTO’s
For some of you, the idea of buying on LTOs could go into the bulk buying category; however, there is a new, innovative way some retailers have taken advantage of up-and-coming price changes. POS terminals are so powerful now that POS providers are integrated with Liquor Connect to track what price changes are upcoming and receive real time information. This helps purchasers decide on SKU top-ups and non-orders.
As a simplified example, let’s say that a liquor store sells one case of a certain vodka a week. Par levels are kept at two facings to reduce out-of-stock possibilities. The store’s POS terminal advises the purchaser to wait a week to reorder because that same vodka is going on sale at $2 off per bottle. They can defer their purchase by one week, dip into their par levels and capture additional profit when they replenish. Some purchasers may decide to buy even more, based on forecast sales (bridge buying) or commit to buying large quantities, which leads us directly into bulk buying. This innovative ordering has created a micro bridge-buy directly contributing to the bottom line.
Track what price changes are upcoming and receive real time information.
Be forewarned that LTOs are first-come-first-served at Liquor Connect, so make sure your POS has the capability of tracking the real time inventory with Connect to avoid out-of-stocks.
Bulk buying is purchasing larger quantities than usual, for a lower than usual unit price. This pretty much sums it up. Most retailers have a very solid understanding of this when working with their agents who allocate product to them based on quantity commitments.
The new innovative approach is to apply this model of purchasing to other circumstances outside of liquor purchases. It can even be taken a step further to combine purchasing power amongst competitors! Consider your synergies or partnership between your business and other store owners. Often one-off or small business owners have very good relationships with other liquor retailers. Even though they are competitors, a joint bulk purchase of dry goods (e.g. bags, 6-pack crates, plastics, etc.) can really save some money. Retailers looking to make a large bulk purchase can source items locally or from overseas. When partnered with additional locations, shipping costs and large volume purchases can be made to bring costs down dramatically.
Not looking to bulk purchase on bags? Go green! Stop using bags all together and encourage consumers to bring their own. Apply some dollars to marketing your green initiative so your green commitment is well communicated and apply a slight upcharge for those who still need a bag. Offer free boxes to guests with multi-bottle purchases—this will reduce the recycling that goes out the back door. Win-win!
You will see your supplies/paper expenses dramatically decline. To take it a step farther, could your location consider going paperless? Could receipts be emailed rather than printed? An easy first step to implementation is to ask the consumer if they require a receipt prior to printing.
There are so many ways to expand or revise your current in-house strategies. Create a dialogue within your team and implement a few simple buying strategies that will significantly impact your store and your bottom line.