NEW YORK, NY / ACCESSWIRE / January 12, 2021 / The difference between small and large wine or liquor stores is not about the square footage of the store, but rather the sheer volume of inventory within it. If you are a wine or liquor store owner trying to grow your business, especially during COVID restrictions in your area, you probably understand just how difficult it is to purchase all your inventory at a discount or the best 'top deal' available. If you want to stay competitive and have the best prices for your local store or online customers, it is essential.
Wine and liquor store online sales and deliveries have been booming since the COVID pandemic started. Image Credit: 123rf.com / Natdanai Pankong, Roma Studio / Pike's Wine & Liquor.
'Right now in my store, we have a little bit less than $1 million in inventory. It's nowhere near enough. I think we need double the amount that we have now to stay competitive with our local and online competition,' said Alex Flasinski, Founder and Owner of Pike's Wine and Liquor in Elmont, NY.
How Do You Grow a Retail Store Right? Where Do You Begin?
Flasinski says that inventory is always going to fluctuate depending on the time of year and that there really is no secret formula. After holding steady at $150,000 in annual sales for 10+ years, he said it took Pike's about five years to reach $1 million in annual sales. Increasing inventory can only be done on a year-by-year basis, and Flasinski mentioned that Pike's Wine & Liquor is open to looking for outside investment capital in order to double the store's inventory to about $2 million. He also says securing the right deals from liquor and wine distributors is going to be key.
The Benefit of Securing the 'Top Deal' for Pricing
As a store owner, it is incredibly important to secure the right liquor / wine brand product at the 'top deal' from your distributor. In other words, the best price possible, for you to sell at a healthy profit margin.
'Every new rum, every new whiskey, every new wine you bring in that isn't top deal, there's a risk that you're not going to be able to sell it within 30 days or one year because it might be a dud. And so, what are you going to do other than drink it?' Flasinski said.
Rule of Thumb to Maximize Profit
If you are dealing with an alcohol distributor who requires a 50-case purchase to get a top deal, then it's safe to assume that it will generally sell itself at the right price. Whether that's popular brands like Tito's vodka, Apothic Red wine, or Wray and Nephew rum, once you have the right product and you've purchased it at the right price, Flasinski believes it's the liquor store's responsibility to price it low and create repeat customers through trust.
Additionally, if you are purchasing from a larger distributor, owners should request some swag and merchandise from their sales reps, such as hats, t-shirts and window displays, to help promote that particular wine or liquor brand in your store.
Expand New Store Inventory with Profits, not Revenue
When purchasing new inventory, it is important to use profits instead of revenue. For example, Flasinski noted that when he bought 20 cases of Foursquare whiskey to increase his Japanese whiskey section and offer more variety, the $2,000 came straight from his profit he reinvested into inventory.
'We've probably sold only three or four bottles in the past year. It's not selling well, but without it, we wouldn't have that larger Japanese section. We probably wouldn't sell as much of the other Japanese product that we do. But that $2,000 came straight from store profits, not from revenue,' Flasinski stresses.
A better example is the renowned American vodka brand Tito's.
'Let's say you're buying 30 cases of Tito's and selling 30 cases of Tito's. But now, you want to buy the new Tito's XXL. You must reach into your pocket and buy that. And that is how you increase your inventory, step-by-step, without really thinking about it. Every time you're buying that new product in your store, every time you're expanding your selection, you have to put your profit into your inventory,' said Flasinski.
Anticipate New Wine and Liquor Store Trends in 2021 and Beyond
Learning from his own experience with his own store at Pike's, and growing it to over $1 million per year in sales, Flasinski believes it is critical for store owners and managers to anticipate new trends and expand their inventory accordingly. For nearly a decade, Pike's had a steady $150,000 inventory that did not budge much because they were not buying many new products.
It is exceedingly difficult to increase inventory without making it your number one business priority. It must take precedent before paying yourself, buying a new house, or new car. Investing in more inventory, should be one of store owners' main priorities.
'You're probably going to plan on selling the liquor or wine business at some point, cashing out or walking away from it in some manner, and your inventory is an asset is there to sell, or made part of your market valuation of your business. So hopefully you do not buy too many of the wrong products that don't sell quickly,' concluded Flasinski.
The full news story appeared in Liquor Profits - Store Revenue Optimization, Issue #21. Image Credit: Liquor Store Profits Magazine.
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