How to Start a Liquor Store Business
Liquor Industry overview, challenges, and opportunities
Starting a liquor store could be a challenging business idea. It doesn’t matter if you belong to the beer, spirits, or wine sector. As time goes, tons of new developments are being introduced, and they all come with their challenges.
In this article, we will discuss the seven challenges that the liquor industry will have to tackle if they are going to be successful.
- Establish an Efficient Online Presence
Tradition is at the heart of how the production and marketing of beer, wine, and spirits. While many companies are successful in addressing larger audiences online, the liquor industry is still struggling to carve out an exceptional presence. Although some liquor brands have built a robust online presence on their own, some are involved in establishing strategic partnerships.
When compared with other global rivals, online efforts in the US are inferior. US businesses must include a sense of luxury and convenience in their online marketing strategies if they intend to stay competitive.
The US isn’t the only one affected by the significant changes occurring. The challenges are also prevalent in every part of the world.
In essence, there is a good measure of the impact of the European liquor industry and the populace’s attitude towards the consumption of alcoholic drinks, which will affect how business is conducted in the US.
Furthermore, legislators are creating new laws every day that suppliers and distillers are obliged to comply with to reach their customers.
Read Also: 8 Reasons Why Small Business Need a Website for Your Business
- Consumers in search of ethical brands
Supposing a consumer is 21years of age or older, the individual transcends the gender and age lines. This means that they are permitted to take alcohol regardless of gender.
Although consumers seem to be more cautious when consuming liquor, which is sold as gender-neutral.
In several other business world sectors, this same trend has always taken place. Johnny Walker has been staying a step way ahead of the liquor market trend by introducing a revamped logo depicting a female.
The truth of the matter is that liquor consumption is no longer a male-oriented market. If you’d like to stay relevant and expand your business, it’s time to implement more inclusive and equitable promotional campaigns. It will enhance your demographic appeal and will open up your brand to new markets.
- There is intense competition every day.
A new law is being formed throughout the United States that makes it lawful to buy and use cannabis. Cannabis’ growing popularity has severely affected the progress of the liquor beverage industry.
Nevertheless, it is essential to note that women (who make up a large percentage of US liquor drinkers) do not lead the transition to cannabis. Females still prefer wine and spirits.
Throughout this era of cannabis popularity, liquor drink companies would need to concentrate on gaining as many female customers as possible to stay essential and successful. Of course, the male market won’t vanish, but the female market is where you’ll get the most progress.
- Trying to adhere to the rules and regulations.
If you’re trying to do business within the United States, the liquor industry’s most significant challenge has to deal with rules and regulations.
Beyond stacks on stacks of federal laws, you do have to adhere to local and state laws to market your goods. Despite that, excessive payments of taxes will destroy a market model that is snowballing.
Those rules vary from state to state. Take your business activities to a state with less restrictive policies towards liquor whenever possible.
- Smaller portions and moderation
With the ultimate increase in cannabis consumption and the competition that it involves, the liquor industry needs to address how it packages its product to consumers and do it in a considerate manner.
Cannabis is considered a healthier alternative to liquor. They would need to implement evaluated measures to sell smaller packaging sizes and serving alternatives for the beverage industry to succeed.
The industry is facing a movement of moderation, too. By providing lesser serving alternatives, you can balance consumer’s desire for moderate amounts for both the new and mature drinkers.
Read Also: Facts to Know About Entrepreneurship
- The period of selling directly to customers
The liquor that is sold in stores has relied mainly on the three-tier distribution system. That means a liquor manufacturer must sell its goods to distributors who will then sell it to retailers. Only leading brands have been given a chance to be distributed globally because of this system.
It entailed that selling directly to customers, wine, and other drinks that are lesser in alcohol content can get around this process. Numerous winemakers have indeed achieved this through subscription to wine clubs on a global scale.
The challenge for liquor brands that are direct-to-consumer is to get customers to buy a brand of drink online when they have never tasted it. Direct-to-consumer style and advertising can help in overcoming this challenge.
When the brand house decided to launch an online campaign lately, they were specifically targeting their branding and marketing strategies towards the more wealthy millennial consumers. As a branding partner, they decided to hire direct-to-consumer agency Gin Lane to sell their liquor at $35 per bottle.
The brand is now craftily positioned as a health-conscious, digital, hard liquor substitute.
- Ways of adding to your customer’s experience
Promoting your brand of the liquor does not necessarily imply that you start from scratch. The best course of action is to always start from where individuals already enjoy liquor products.
Countless liquor brands find completely receptive customers at concerts, festivals, sporting events, and significant seasonal social events. By adding to the audience member’s pleasant experience, these brands know how to ensure their place in the memory of their users. It makes a lasting impression.
Significant brands of liquor are widely known for adopting this technique. Bud Light, for instance –, regularly hosts city parades that celebrate sports championships. As fans enjoy the day, they also appreciate Budweiser’s exclusive offering.
Other liquor brands have already gotten wind of this practice and are striving to create more awareness.
Just as the liquor industry is continually changing, take heed of seven main challenges faced by the liquor industry.
Liquor Store Inventory Management
Liquor stores are usually in the retail group. Nevertheless, liquor stores have specific peculiar challenges that are not always prevalent in several other retail sectors. The sufficient inventory of liquor stores is the origin of most of the challenges. And many of the problems below can be resolved with a dependable liquor store POS solution. This is far more efficient than a run-of-the-mill cash register for a liquor store.
There are particular main features to the point of sale of a liquor store.
- How to Track Liquor Inventory
Keeping a record of countless different products with various flavors and sizes of bottles is a difficult task. Not every retail company has to cope with such a wide variety of items. As a result of this, many other typical retail points of sales systems were not initially designed for this project. Regrettably, so many liquor store owners have just affirmed that smart inventory tracking is too expensive and complicated. Nonetheless, here are a few easy techniques to track your inventory management effectively:
- Use assortment management features
If you can allocate your products to assortments, you can distinguish unique products from general products. Your collection of products will be much more organized when you can quickly filter out products that are no longer important.
- Update the incorrect numbers often.
Immediately you notice incorrect numbers like negative inventory counts or on-hand items that people no longer request to ensure you correct your inventory and find the reason for the differences.
KORONA has an automatic function for this, but it also requires ABC analysis software for every customer. This program allows liquor store owners to place, price, and request every one of their items.
- How do I count the liquor inventory?
Understand that perpetual counts with smaller product list rather than doing complete store counts way more effective. Inventory counting should be a part of the routine instead of a big hassle once a year. KORONA also creates short count lists for you, which are easy to handle on even a daily and weekly basis. This reduces the chances of getting your store shut down for a huge inventory count and keeps critical mistakes to a minimal level.
- Liquor Store Employee Theft
Employee theft is a significant worry for most retailers. Most liquor stores are severely affected. Sadly, many owners and managers are not aware of the problem.
This is mostly attributable to the lack of efficient inventory tracking. If you don’t aren’t aware of what you’re expected to have, you don’t have a way of knowing for sure when something is missing.
It is also easy for employees to sell and immediately remove items from the transaction if the customer pays in cash, enabling them to steal the money. We advise that you use the below security measures for your POS:
- Don’t permit cashiers to delete any product from the transactions.
- Don’t permit cashiers to use the POS while the cash register is still open.
- Implement cash balances for each cashier
- Employ individually tailored sales reports for every cashier to define any trends that may be relevant.
- Inadequate documentation of Liquor Store Inventory Management
With massive product catalogs, it can be hard to know which products generally make your business profitable and take up lots of space. To determine which products you should advertise and which should be excluded from your inventory, we propose the following guiding principles:
- Start comparing profits rather than just the quantity of income.
- Evaluate additional goods and alter prices to reflect.
- Start Comparing sell-through rates and inventory turns to help avoid excessive stocking or poorly stocking.
Promotional Ideas to increase your liquor business profit
Becoming the owner of a liquor store carries with it several responsibilities. Within these responsibilities, you will have to discover what to do to promote your shop within the liquor store’s limits. However, there are many things you could do in your store to lure potential and returning consumers. Providing a fun experience and appreciating your customers could go a long way.
We have outlined five promotional ideas that will enable you to create a lasting impression on your customers.
- Tastings:
Giving your customers a sample of the product you are trying to promote can be a great way of boosting the purchases of that product. You could even go one step further to provide a variety of cocktails with the same spirit. By possessing a range of options, your customer will be able to see how flexible it is.
Just make sure you keep the measurements small so nobody gets intoxicated and do the samples on your busy days to obtain the best opportunity to sell the product. (Based on your shop’s location, be sure if tastings are permitted based on your state laws and procure a state permit if deemed necessary).
- Promotions for Product
Give discounts to your customers when they buy a particular product. These can be in the form of buying your 6-pack, purchase two get one free, buy 3 get two bucks off, buy two of these products for half the price, and many more.
Pick the right promotion for your brand and your market share. Promotions may also be aligned with tastings or wine clubs using promotions on a particular day and time.
- Promotional Products
By giving a promotional product to your shoppers, you are reminding them of you. Give your name, address, and telephone number no your Koozies. Leave your logo on the cash register with your pens. To go a step further, keep more substantial promotional material by your side, such as t-shirts, beer mugs or wine glasses, and give them to everyone who spent a certain amount of money in the store or purchased a particular item.
- Program of Loyalty Rewards
Hold a loyalty reward program in your store. Offer rewards in points or money to encourage customers to return.
By giving consumer benefits, you are increasing the probability of attracting repeat customers and making them spend more than their budgeted amount to obtain the ultimate reward.
- Social Media Programs
Social media can become a crucial part of your store’s marketing campaigns. Advertise goods or events on social media.
Convince them to get feedback on Google, Facebook, or other social media sites. Moreover, social media sites can promote things that you encourage, future donations, or sponsorships.
Most importantly, don’t fail to be genuine. Let your customers know you and establish a relationship with you and the store. This win repeats customers, but it expands your store through the recommendations they give their families and friends.
Eight no brainer tips to keep your liquor store up and running
- Ensure that any license you may need is correct and current
Though licensing criteria and consequences for trading without a license differ by state, you potentially risk losing your business might have to pay a fine if you are found operating unlawfully.
You will also have to ensure that you are registered and pay any tax you are liable for. The rate of tax you are supposed to pay varies depending on where you are trading. If you are confused or uncertain about your responsibility, notify your State Department of Revenue.
- Verify if you have the least wholesale prices offered to you
You can be able to significantly increase the profits by purchasing from an alternative supplier in higher quantities. It could be worthwhile renting some storage space if you can raise money to invest in a massive amount of stock.
Wholesalers will often offer a significant discount on bulk purchases.
- Ensure you amend your purchasing habits.
Analyze your receipts and figure out what you’re selling the most. If you discover that you’ve been selling a lot of Brandy and hardly any gin, increase your brandy collection and make special offers to have your stock moving much faster.
- Give discounts on bulk orders.
You can do so by introducing a series of “Buy a pack get one free” offers, or by providing higher percentage discounts for consumers purchasing liquor for special events and functions.
- Check your operating costs.
Do ensure that you pay as little as necessary for your services and communications. You can also make extra cash by taking a look at the level of your employees. You may discover that you can make additional savings by allowing an employee to go and placing a few extra hours behind the till yourself.
- Advertise your store
If you can’t afford to purchase advertising space in local media, print fliers and posters and get them distributed and displayed in other local stores.
You may also employ a web designer to create a website for your company and establish social media accounts to advertise your store.
- Increase your opening hours
If your store isn’t open all the hours, perhaps it’s because you planned your schedule, then you should know that may be missing out on extra sales. Try opening for a few more hours each day. If you don’t have the staff potential to do so, aim to adjust your trading hours and keep a close watch on your sales.
- Sell at a lower price than your competitors.
It might decrease your profits, but a rapid increase in sales would compensate for it. You can also get the edge over your competitors by providing more personalized service. Know more about the liquor you’re selling, and be on hand to give your buyers recommendations on their purchases.
Pros of starting a Liquor Store
Be your boss
Far and near, revenue and expenses stop with you, the owner of the store. As the liquor store owner, you get to set the rules, hire the employees, and eventually make the profits. When you’re the kind of person who has his ideas on how to do things, and you’re sure that you can do it effectively, being in control is a perfect match. This business is ideally suited to a person who enjoys the slight changes between drinks.
Helping people in your community
As the liquor store owner, you get to support customers in a right, tangible way. Perhaps you’re just providing liquor or other services; you can make a difference in your customers’ lives. You should provide jobs and help others achieve their dreams in their lives. You should become part of your local community’s fabric to enhance broader visions within the civic sector, and you can serve as a mentor to your employees.
Cons of Starting a Liquor Store
Cost of Inventory
In this business, stocking up on inventories requires a significant upfront investment. This is one of the facets of liquor store ownership that sometimes sweeps new owners off the field. Some liquor stores usually involve inventory in the sale price — but that is not always a good thing. Always make sure you check out the inventory age to see if there’s a reason it’s still on the shelves and if you’re having trouble selling it yourself once you take over.
Management Stress
Realize that the front-end operations of a liquor store — human contact, establishing supplier relationships, setting up wine displays, etc.—are also enticing items that draw customers to this company. It’s essential to keep in mind that a lot is needed on the back-end to keep your operation running smoothly.
There seems to be little ability to negotiate pricing with distributors, as they have a monopoly on their alcohol brand. This makes it difficult for retailers to price competitively and results in a relatively low-profit margin. Making investments in the procurement of large bulk orders, which poses its own set of problems, is the only way to achieve substantial price changes. It needs deeper pockets and additional storage space.
Read Also: Checklist for Starting a Company
Conclusion
Finally, a liquor store is a cash-intensive business. Before you do it, ensure you’re equipped with adequate resources in advance and show commitment knowing that you’re probably going to put a massive amount of money in to get something out of it. However, if you can handle these entrepreneurial challenges, have given them a strategic thought, and concluded that you still desire to open a liquor store.
Go ahead, start your own business, understand the process, be diligent, be calm, patient, and succeed.