5 Ways Retailers Can Diversify and Grow Revenue
From introducing loyalty programs to offering on-demand delivery, retailers share their strategies
In an unprecedented time when business as we know it has changed dramatically, alcohol retailers and others are adjusting to a new paradigm. To remain competitive, they must look to the future, take into account its many unknowns, and strategize ways to diversify their offerings and increase revenue.
It’s not just a matter of keeping a finger on the pulse of the market, but paying close attention to clientele. “As a retailer, you have to constantly be listening to the customers,” says Blaine Grinna, the director of retailer development at Drizly. “That means meeting them with what they want, where they want it.”
While there are many ways to grow a retail business, BevAlc Insights reached out to retailers in Boston and Los Angeles to discuss the most strategic options, from implementing online ordering and delivery and diversifying inventory to adding complementary revenue streams. Here are five of the top ways alcohol retailers can set their business up for success in the coming year.
1. Online Alcohol Delivery: A Key Strategy
Selling alcohol online has been a major boon for retailers during the Covid-19 pandemic. Online delivery, in particular, has proven to be one of the most effective tactics for boosting alcohol retailers’ top line. But the segment was showing promise well before that. The value of beverage alcohol e-commerce was up 37.5 percent in the U.S. in 2019 from 2018, according to the IWSR. Drizly projects that online sales of alcohol could end up representing 8 to 10 percent of all sales in the U.S. in 2020. “The interest and demand for delivery in this category was already on a significant growth trajectory, and it increased meaningfully over the course of the last few months,” says Grinna. “We expect that demand to continue as awareness and trial increases.”
For retailers aiming to boost overall revenue through online alcohol delivery, it’s critical to think about optimization. “You have to invest in it,” says Grinna. “E-commerce is not something you turn on and get rich overnight with.” As an extension of your current business, you need to find ways to take your in-store experience and bring it to the customer’s door. This includes staying on top of inventory management and making customer service a top priority.
Choosing the Right Online Alcohol Delivery Platform
“Drizly is uniquely focused on helping to support and connect the three tiers as e-commerce becomes more widely available,” says Grinna, adding that the company was specifically designed to bring retailers’ shelves online. It operates in more than 1,200 cities across 28 states in the U.S. and one Canadian province. It also has the widest footprint in North America for on-demand alcohol e-commerce.
“Technology is what sets Drizly apart,” says Nada Rizkallah of Arsenal Wines, located just outside of Boston. “The app and the technology behind it make it so easy to use and navigate — for both the consumer and the retailer.” Rizkallah adds that Drizly enables Arsenal to have a broader footprint and to reach customers who live in towns that wouldn’t have shopped at its store if it weren’t for the platform. Drizly sales account for about 15 percent of Arsenal’s total annual revenue, says Rizkallah.
Nick Durghalli of Liquor Time Liquor in Los Angeles, says that partnering with Drizly has nearly doubled his store’s business, adding that the online delivery platform gives Liquor Time Liquor a presence it never had before. “Drizly allows us to reach customers on many different platforms,” says Durghalli. “It expands our customer base and gives us a chance to expand our revenue streams. Online delivery allows us to test products and promotions, without risking losing in-store business.” Drizly’s Retailer Customer Service department, he adds, “is unbeatable.” And finally, he says, “Drizly has given our team many great tips on how to communicate with customers from all walks of life.”
An early adopter of Drizly, James Carney of Al’s Liquors in South Boston, points out that a major advantage of working with Drizly is the ability to “add new items to your online store almost instantaneously.” Another, he says, is being able to see products that are popular among consumers on Drizly but that you don’t yet have in your store — so you can consider adding them to your offerings. Prior to the COVID-19 pandemic, Drizly sales represented about 20 percent of annual revenue at Al’s. Over the last few months that figure rose to about 40 to 45 percent, says Carney.
When Carney first adopted Drizly, Al’s Liquor was already doing its own deliveries. In fact, the store still does delivery for customers who haven’t switched over to Drizly. One of the strategies that has helped make online alcohol delivery successful at Al’s is Carney’s decision to keep a tight rein on his delivery area. “It doesn’t make sense to have our driver get stuck in traffic for an hour and a half for a $30 delivery,” he says. “We have our area that we’re willing to deliver to and we’re not budging.” This helps ensure that Al’s drivers can deliver the orders to customers on time, which is a top priority for the store. Delivery speed is a top priority for Arsenal too. “We try to ensure that we have fast delivery times by getting the order out the door as quickly as possible,” says Rizkallah.
2. Expand Inventory and Price Competitively
“Retailers should think outside the box,” says Rizkallah. “They must consistently keep up with offering new products — and variety — in order to meet customer demands.” To accommodate its online customers, Arsenal has altered its buying practices and added a greater variety of products, which it sells at competitive prices. Another thing that helps? “Having the products that customers want at in-store prices,” says Rizkallah.
Durghalli adds that working with Drizly has enabled Liquor Time Liquor to sell a larger range of products than it used to. “We now have many products that are moving more consistently, and, quantity-wise, our orders from companies are increasing daily,” he says. “Drizly is a very competitive platform and you must constantly update prices, store hours, and delivery fees to keep a consistent customer flow.”
3. Sell Food and Wine-Adjacent Products
Some shops, like Al’s, are committed to remaining single-focused, old-school wine or liquor shops. “We are a liquor store,” says Carney. “The acronym spells it out: ALS.” But others may see an advantage in diversifying their offerings and bringing complementary food items like cheese, crackers, salumi, tinned fish, nuts, pickles, condiments, and other items, like glasses, wine openers, and books into their shops, if customer demand is there and state laws allow.
4. Introduce Additional Programs and Services
Creating a wine club or other loyalty program, or offering private cellar consulting services can help build allegiance as well as boost sales. Liquor Time Liquor is preparing to launch a loyalty program for both its online and in-store customers. “We believe that all customers should be compensated for supporting our small business, one way or another,” says Durghalli. “I do my best to make sure all transactions have been provided with some sort of extra value.” While promotions are typically done through the supplier, Rizkallah says Arsenal works “closely with the distributors to ensure that [the store] will have the product in stock prior to the promotions being rolled out.”
5. Prioritize Excellent Customer Service
“Customers want to know that they’ll be able to receive their products when ordered, and in a timely fashion,” says Durghalli. “If a customer is treated with the utmost satisfaction, they will surely return as a result of great service.” Along those lines, when a store runs out of a product, Rizkallah advises reaching out to the customer and speaking with them directly about what their substitution options are. Rizkallah also suggests checking first to see what other products are available that may be similar to what that customer has ordered in the past.
“Getting the order there on time, getting it right, pricing it right, and being friendly and polite to the customer is all very important,” says Carney. “As crazy as it sounds, sometimes delivery people are the only person that that customer speaks to all day. So, it makes a difference whether you smile, or if you tell them a joke. Be nice to the customers, you know, listen to them too if you have to. I know it works for us. We have people who call us and they tell us they love us. And you know, that matters too.”