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A Focused Approach for Tough Economic Times
As the recession continues to loom overhead, and even progress further down, it has probably become obvious to many that the sale of higher priced ticket items are on the decline as more people try to economize by sticking with the less-expensive brewed options.
While this may seem on the surface to be a negative hit to retailers, it does not have to be so.
When recessions hit, the smart investors start buying up stock, taking over other companies, and the likes as have been seen recently, as well as what happened in the Great Depression of the 30′s. SOMEONE stands to profit from it. The trick is learning how to work it to your advantage as well.
In the world of coffee retail, many many people have worked their tails off trying to educate their customers, trying to get them to try new coffees, trying to push the COFFEE, rather than the ‘recipe’. Consider the retail phenomenon we’re seeing as a golden ticket of opportunity. If you show your customers that your shop is trustworthy, and is looking out for their best interests, you can survive, and even thrive.
Roasting companies are doing pretty well in these times. That’s been the word from the roasters I have asked about it, and I’m assuming that goes for most others as well, assuming they are doing a decent job with their coffees.
How can a retailer profit from this? Sell more whole-bean coffees, offer different brew methods, hold free classes for consumers, and offer affordable brew-at-home equipment in your stores.
Brewing up batches of coffee is awfully convenient, but when the rush slows in the late morning and into the afternoon, how much of it gets thrown out? If the answer is “none”, is it because it’s not being refreshed with fresh brews, or is it because it’s being sold? If the answer sounds something like the first of those two, then it’s time to change something.
If you have been reading Texas Coffee People for awhile, you may remember our piece about Bottomless Coffee, and why it may not be such a great idea afterall. If you have read that piece, then what you’ve just read may sound like a repeat of information. It is.
I am reminded of one famous roaster/retailer’s Black Week, in which no milk-based beverages were served. The customer response? POSITIVE. Here’s a question: Are we selling coffee, or are we selling “concoctions”? If you are spending what seems like a lot of cash for your wholesale coffee, then the odds are good that you are trying to sell coffee. (and that’s as it should be in any “Coffee retailer”)
If you are confident that the coffee you are serving is of excellent quality, I feel safe in assuming that you have more than just a couple of coffees on hand. Every coffee has its own unique flavor profile, and every roaster has their own unique expression of that flavor profile. The phrase “taste the world” has been used over and over again to refer to the array of specialty coffee origins, but the fact of the matter is that it’s still true. Except that most people are now more aware of the fact that there is substantially more to it than “what country it comes from”.
Customers will return to a company they feel they can trust as the experts in their field. You and your staff should be those experts. Anyone who has ever gone through any amount of Starbucks training has probably been told that the customers expect the barista to be their go-to advisor for all things coffee (in regards to consumption, anyway). The independents don’t have the Starbucks image to fall back on, and it seems that’s a very good thing.
Hold customer education events:
Give a class on cupping, on brewing at home, on proper coffee storage, on the differences between origins, on anything and everything that you think your customer base might find interesting. If you are effective, they will come back to you for advice (and coffee).
Embrace “cup at a time” brew methods:
Sample coffees to customers before they decide on a whole bean to buy. Does this cost extra? Sure.. but less than throwing out half of an airpot in the afternoon, and it’s good customer service. Include proper instructions for brewing, and carry a Bodum C-Mill, at the very least, so your customers can afford to grind fresh, even if they can’t afford a proper burr grinder. And while you’re at it, you might consider retailing French Presses as well as Melitta Pourovers and Chemex brewers. Learn how to use them well, and teach your customers. Check with your roaster to see if they offer any of these. It’s better than the extra profit would go to a link in your chain, rather than merely to the parent company alone. If you’d like to carry an electric grinder, I hear from several sources that Baratza is very easy to deal with for retailers to become distributors(not to mention, their products aren’t bad either).
Sell whole bean coffee:
It’s cheaper for the customer, and it’s easy marketing for you. Just because people are not eating out as much doesn’t mean they’re not getting together. Wouldn’t you like the coffee being served to come from your store, with the answer to “ooo, where did you get this coffee?” be your company name? The ecoomy is going to rebound eventually, and just like buying up stocks on the market while they’re cheap in hopes that they will yield a return, this is the time to buy stock in your customers in the prospect of future sales. If you are like me, you get excited about new coffees, new flavors, and new brew technique discoveries or revelations. Share this! Wear your passion for coffee on your sleeve, ans share it with your customers. (read: do not force it down their throats, but make it known and available for them to tap into)
Market events around the coffee:
Just like Tim Wendelboe held a Black Week, you too can hold a special event that focuses on a specific coffee, a specific region, or a specific brew method. Keep it tight and focused. Don’t wear out your arsenal of information on just one event. Spread it out. Spread the word. This can breathe new life into your business, and spark new inerest in your customers. Hold education classes, seminars, anything and everything to do with the coffee.
Do NOT try giveaway promotions:
Many people may be tempted to try to boost traffic by offering deals. Like “buy 9, get the 10th free”, or the like. This devalues the coffee, but more salient to retailers, it doesn’t do a thing for sales! If it hasn’t become obvious by now, the key is to earn the business of your customers. Not with freebies, but by honest customer service and education. It’s simple. If you invest in them, they will invest in you. Win-Win. Both parties are happy, and no-one is taking the hit. The best marketing tool you have is Word Of Mouth. This is how that investment in your customers pays off.
Invest in your business:
I have seen more than a handful of retailers eventually fail because they were not willing to give their business the extra financial push it needed in order to break through the line between “afloat” and profitable. It’s scary, but so is entrepreneurship on the whole. They don’t call them “risk takers” for no reason, but in a situation like this, it shouldn’t be too difficult to calculate the risk. If you have a hard time stepping outside of the box when it comes to your own business, consider hiring a consultant to analyze the situation for you. One of the surest ways to kill a business is to underfund it. If new equipment is what you need in order to compete, then by golly, you should bite the bullet and take the debt to do what you need to do in order to stay afloat. (a word of caution: tx-coffee.com, nor the author, can be held responsible for a lack of research or common sense or the results of taking advice from this, or any other article on the part of the reader) As much as I hate the notion that “tools are to blame”, the fact of the matter is that in a business like this, you simply cannot perform without the right tools. Whether what is needed is training, equipment(scroll down), more staff, or any combination thereof.. any educator will tell you that the smartest investment is an investment in yourself. Well, I’d venture to say that the smartest investment your business can make is an investment in itself.
Know When to Cut Your losses:
Some businesses are too far gone to continue, and while a failure plan should have been built into the Business Plan, this is not always the case. This is the time to go back through the books, and start documenting if you have not done so already. As much as we don’t want to see any business fail, the fact of the matter is that some do, and it’s better to guide it down before the fuel tank is all the way empty than to keep fighting until the engines die and it crashes. This is about the financial benefactor of the business, and their financial health, and not so much about the business itself. Without financial backing, no retailer could get off the ground in the first place.
Hold on Tight:
Watch the market, but don’t listen to the pundits. Their opinions are.. well.. opinions. The newspaper doesn’t know which way the economy will swing any more than you do.. becuase they are written by other people. Sure, there are “experts”, and many “experts” have been wrong. Use your own sound judgement. It’s the American way. (at least, it used to be) It may be a bumpy ride, but hold on if you can! We here at TX-Coffee.com hope this has given at least some insite or inspiration for ingenuity in surviving the economic recession as a retailer. We’ve got more articles on the way. Thanks for reading.
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- Is Bottomless Coffee Really a Good Idea?
- Wisdom for home enthusiasts: Grinder first.
- Crema – A perk, or a necessary evil?
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Everyone in specialty coffee knows the basics. What everyone is not doing is stepping outside the industry to look at what is playing positive in retail.
“Everyone knows your name” cafes. Sound familiar, think the TV series “Cheers”. In a recession, people are looking for comfort, release of stress, friendship, security. Your employees should know your customers by name. Along with great coffee, this will keep your customers coming back.
We’re outside of a major urban center and outside of tourist season, traffic in the shop can be problematic.
What David said about knowing customers is bang on.
We’ve recently tried live music as well (granted we have a large adjoining space) and it has brought people in (we had our best day to date in January in Canada!), we make a little on the music, and generate revenue through the traffic and alot of goodwill from the artists and neighborhood.
We’ve also noticed that; while people are tightening belts, there specialty coffee is considered an ‘affordable luxury’.
Finally…don’t offer the same crap that they tend to sell in the chains. Find something unique and local (cups, artwork, tables, etc…). In difficult times, communities tend to look inward.