Alcohol is the fourth highest selling line in a cash and carry after soft drinks, cigarettes and confectionery with almost as many customers buying RTDs as buy bitter or ale. In addition to which, retailers say that beer is the third most profitable category to them in their stores, according to the latest cash and carry survey carried out by HIM.
The average beer customer is also a more frequent visitor to his or her cash and carry than the average cash and carry retailer and spends a lot more too ( pound;1,230 versus pound;918 – 34% more).
Alcohol is clearly an area some independent retailers see as being core to them as a third say they have given more space to BWS in their stores over the last year. However, a third of retailers say they stock up to 150 beer SKUs and this suggests the fixture will be too cluttered, hard to manage and suffer from out-of-stocks. Are independent retailers trying to cater to everyone, when a more focused approach is best?
“Retailers need to adopt a less is more attitude and concentrate on proven sellers and promoted products and make sure that they are prominently merchandised,” says Tom Fender, director of HIM.
The converse is that only 65% of independent retailers sell alcohol – when 85% of retailers classify their store as being a convenience store or off licence shop. If retailers are confused about the kind of store they have, won’t shoppers be confused about the offer?
Fender highlights the usual need for investment into chillers (HIM’s Convenience Tracking Programme highlights that most alcohol purchases in c-stores are for fairly immediate consumption) … but also asks retailers not to play the price card and only offer standard products. Growth is coming in the premium ranges. Also, don’t assume men are the only shoppers for beer in off licences – women account for about a quarter of purchases.
Suppliers and operators should consider the causes of lost or unfulfilled sales – a quarter of all cash and carry customers failed to buy an intended item at their cash and carry (out-of-stock is to blame in most cases, say retailers) with 10% of retailers failing to buy beer or lager. Retailers say cash and carries have better availability of confectionery across the industry than beer.
Only a third of beer customers say that promotions are important to them when shopping in cash and carries. Of those who bought something on promotion (less than half of all customers), only a quarter bought beer on promotion. Previous studies have highlighted that many retailers don’t even notice promotions in their cash and carry. Fender questions whether operators should try fewer but bigger promotions.
As well as missing out on sales of promoted products Fender also believes that cash and carry operators are failing to capitalise on ancillary sales. The tracking programme has shown that cigarettes, soft drinks and confectionery are the top cross purchases with beer and he suggests that sales would be increased if promotional stacks of confectionery were placed in the beer aisle. He says: “Why not take a less regimented approach to adjacencies and place products which already have cross affiliation next to each other?”
Alcohol and its retailing have been placed under the microscope in the last 12 months with the introduction of the new (and more costly) licensing agreements, intensive media coverage of the problems of binge drinking and underage sales, plus reduced margins due to highly aggressive multiple promotions. All of this has caused many retailers to think that alcohol is a difficult category to manage. Yet it remains a major sales driver and one where opportunities for greater profits and sales exist both for retailers and for those cash and carry operators who give this area sufficient quality consideration and emphasis both in the warehouse and at store level.