Asked in Business PlansLiquorShiraz
How do you run liquor store?
February 02, 2009 3:09AM
The number of competitors in the area largely determines what type of pricing you will have. You don't want to be known as the highest price place in town but it is equally important not to be the cheapest.
Cost control is important. Beer, and to a lesser extent liquor, goes on sale periodically (also known as postoff). It is vital to try to time your purchases correctly so that you are always able to buy on sale. This means you have to carefully track sales and make accurate forecasts on how much inventory you will need. I try to aim for two months of inventory when an item is on sale, and two to three weeks if it is not.
Profit margins will depend on the competition and how well you buy. In my particular area, I aim for 25% profit margin for liquor, 20% beer, 40% on wine, soda, water, and snacks. Pick some well known items and make them cheap. People know these high profile items and will think your store is pricy or cheap based on a few items. We use Smirnoff and Jagermeister and our lower price items. On lesser known items you can get away with charging a higher price because people dont necessarily know what the item should cost.
Always try to expand your selection. If a customer ever asks for something that you dont have, write it down and tell them you'll have it next week. Have it next week. Friendliness and convenience is all that keeps people coming to you instead of the cheaper stuff at the grocery store. It's critically important to have a good computerized cash register (point of sale system). Instead of an electric cash register, a POS system will track sales, reduce inventory shrinkage and help you watch margin. They can also help you crack down on employee theft. Some even have ID scanners so you won't be fined for selling to minors. They can cost about $3000 per station but think of it as an investment.