Are you serving the right range for your customers? Peter Segal of srcg, a consultancy specialising in retail strategy, category development and training gives some advice.
For any retail business getting the right food and drinks range in place is a fundamental profit driver. In the on-trade, many pubs are actively looking to enhance their offer in line with the needs of their customers. Many are not. Tradition and ties still dictate the offer in many pubs and this leads to an inefficient range offer and reduced profitability. The "Norm factor" is rife!
"Why do you sell that product?"
"Norm comes in every Thursday and has four bottles of that. He wouldn't come in here if I didn't sell it."
As you know from previous features on thePublican.com, understanding your customers is crucial but there is clearly a balance to be struck. It is simply not possible to please all the people all the time.
By looking at sales data from EPoS, till receipts, etc a simple range analysis will highlight the best and worst performers. A useful exercise is to go through the list of products and decide what role each plays in your pub. Some poor performing lines may provide income in other areas of the business. For instance, Norm may bring the football club with him on Thursdays. It's important to have a mix of product roles. Some products will create interest, some will drive footfall while others will be seen as pure profit drivers. If a product does not play a role, maybe it shouldn't be there at all.
It's also helpful to set up some performance rules for products, particularly new introductions: to be a success in my business I need this product to sell X number of barrels a week or X number of cases. This clarity is good for you and your suppliers as it provides a call to action to do something with the product and any decisions will be based on facts and not opinions.
Suppliers will often have a degree of influence over the range and this can be extremely beneficial. They will have the market data and the experience from other similar outlets to draw upon and used in the right way this should ensure the core range of products is appropriate. Clearly the publican knows his customers best and must retain overall control. To do this ask suppliers:
- who consumes this product?
- what role do you think this product plays or (will play) in my business?
- what occasion does this product fit?
- what other products do people purchase when they buy this product?
Answers to these questions will ensure you get closer to getting the right range for your pub.
In the off-trade, retailers are moving closer to local range solutions where a national core range sits alongside a range of products that perform well locally. This way of thinking is even more important in the on-trade where regionality is more pronounced.
For multiples and independents alike, having a tight range of products that are well supported by suppliers is crucial in profitability terms. However, it may be difficult to differentiate your offer through this core range.
The local range will provide greater opportunity for creating interest. This need not be a huge part of the offer, probably 15 to 25 per cent of sales, and the performance rules should still apply. Pubs will need to communicate this range to customers (monthly features, try before you buy) as the brand may have little resonance with them.
It can be time consuming and costly to change the range, the key for me is that the range of products mustn't become stagnant. It is worth trying new things but only if you measure the impact. When measuring a new range initiative, publicans would be advised to look at the wider implications to establish its success:
- impact on the category of products eg total ale sales
- impact on competitor products ie, brand switching or extra incremental sales
- impact on the food / drink offering
- time and cost to implement
- customer reaction.
Pro-active management of the range, getting the right mix of products and utilising supplier knowledge are the key messages. Ultimately, if this means Norm is disappointed worry not, your bank manager probably won't be.
srcg is a consultancy specialising in retail strategy, catgory development and training. srcg facilitates collaborative working between retailers and manufacturers in the On-trade, Multiple Grocery and Convenience. Tel: 020 8948 4048 or visit www.srcg.com