Do independent liquor stores need a rehab?
A new study finds only 42 percent of owners and managers of independent liquor stores see them as viable in the long term.
The study from Drizly, the e-commerce platform that partners with independent liquor and wine stores, was the first done with independent retailers. The respondents expressed the dour outlook even though two-thirds reported higher sales in 2018.
Reasons for the grim prediction include:
Chain competition: Competing against larger chains was seen as the biggest challenge of running an independent liquor store, cited by 42.6 percent of respondents. The next three were driving traffic/customer volumes, 15.3 percent; rising rents/overhead, 13.1 percent; and staffing, 12.6 percent. Big chain competition includes Total Wine, with 205 locations, as well as discounters, clubs and grocers. However, the study noted that regulations over the sale of alcohol have led independents to continue to play a dominant role compared to other retail channels. Online competition is a minor concern. Forty-five percent of consumers believe buying alcohol online may be illegal.
Product trends: Bourbon, IPA and rosé are expected to remain major sales drivers. Organic and natural wines are gaining traction, as well as modernized non-alcohol beverages overall. The category has recently benefited from some crazes, including spiked seltzer, wellness beer and wine in a can. Drizly’s report showed independents may be slow in reacting to today’s fast-moving trends. Owned sales data was the primary factor behind short term inventory decision making (34 percent), while trend reports rank fourth (14 percent).
Demographic trends: Drizly didn’t explore demographics, but studies have concluded that Millennials are behind slowing sales for the industry in recent years, and Gen Z are predicted to be even bigger teetotalers. Embracing healthier lifestyles, favoring marijuana and a desire for control amid social media’s glare are cited as some of the reasons behind Millennials’ alcohol moderation. Contrarians believe it’s too early to gauge Gen Z’s drinking habits, and some point to evidence that Millennials are drinking more as they have children. Drizly’s survey found 70 percent of independents citing social media as the most effective marketing tactic for making and retaining customers, ahead of in-store events (64 percent) and offering delivery (62 percent).
- First-Ever Study of Independent Alcohol Retailers by Drizly Reveals Both Glass Half Full and Glass Half Empty OutlooksFirst-Ever Study of Independent Alcohol Retailers by Drizly Reveals Both Glass Half Full and Glass Half Empty Outlooks – Drizly/Wine Industry Advisor
- Drizly Retailer Report 2019 – Drizly
- People Are Drinking Less, but Don’t Blame Millennials – Morning Consult
- People are drinking less, but don’t blame millennials – New Hope Network
- Sales of nonalcoholic booze are on the rise — and it reveals a dark truth about social-media surveillance culture – Insider
- Beer Is Unlikely Winner From Teetotal Trend – The Wall Street Journal
- Millennials are drinking more so they can deal with their kids – New York Post
DISCUSSION QUESTIONS: Do independent wine and liquor stores need to reinvent themselves for Millennials and Gen-Z? Do you see challenges in the years ahead for independents and the overall alcohol industry?