StateWays is the only magazine exclusively covering the control state system within the beverage alcohol industry, with annual updates from liquor control commissions and alcohol control boards and yearly fiscal reporting from control jurisdictions
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"People ask if we aren't raising our prices by doing this, but when we begin to choose products competi- tively, suppliers go slightly deeper with their discounts," said Kegerreis, "and in the first ten weeks, our market- basket analysis showed that people are buying more than they used to." Jim Short explained, "A lot of the clutter has been removed, making it easier to shop. People can take advantage of our sales because they are better able to distinguish what the good deals are." The timing of the sales is also of surprising impor- tance. Analyzing the data from the ERP system showed Short and his staff what merchandise sold best during what time period but also what time period would be the best to put that item on sale. These two time periods are often different. "The big sales month for Irish whiskey, for instance, is March, with St. Patrick's Day," pointed out Kegerreis, "but putting it on sale then doesn't increase how much is sold, because people were going to buy it anyway. The best month for putting brown spirits on discount, we've found, is September." The timing of sales can also affect customers' per- ception of the state's prices in general – and that percep- tion can be either positive or negative. "Most suppliers want to put their deepest discounts in December, during the holiday season," said Kegerreis, "but holiday shop- ping is a time when people plan their shopping trips and what they are going to buy. If they encounter sale prices then, it will reset their perception of what the prices of those products usually are. When they come back in February or March to shop with us, they will think the regular prices they encounter are expensive." On the Virginia has had success increasing sales by offering in-store tastings in its state stores. It had 400 tastings slated for November through- out its stores. Seen here, from left, are Laura "Kate" Rogers, ABC Store Manager; Jonathan Reed, Retail Accounts Manager; Kelly Davis, Sampling Hostess; Gary Holland, director of Virginia and West Virginia for Diageo. Here's an example of how Pennsylvania has been clean- ing up and improving the look of its displays: A "Before" stackout merchandising display (left), and a classier "After" endcap presentation (right). 14 other hand, Kegerreis explained, if customers encounter a sales price when they're not expecting one, they might pick up an impulse purchase of that product – and the sales price will not reset their perception of how much that product usually costs. In fact, what will linger in their minds is that they saved money at the state store. The PLCB has reduced the number of products it has on sale in its stores at any one time by about 44%. According to Short, last September, the PLCB had 965 items on sale, while this September, it had 549. "Yet, there was a huge increase in the net discount, by almost a mil- lion dollars, that customers enjoyed," said Short. "We reduced the clutter so that they were better able to see and take advantage of the deals they were interested in." The PLCB is using another strategy to reduce the clutter in its stores even further, what it calls "Merchandising Optimization." Basically, again referencing ERP data, the PLCB has begun to decide, at headquarters, what each of its 600+ stores will have on display. While the decision is being made centrally, the decision is different for each store. "Ten or twelve years ago, we had one floor plan for all of our stores," said Short, "and we knew that was a bad idea. So we started thinking of our stores in terms of clusters – stores with similar demographics and sales. Initially, we had eight different clusters, then five. Now, we're trying to see if we can do even better, by making store-specific plans." This strategy is in its infancy. Right now, it is being tested in seven stores. But even after only two weeks, sales, both in terms of dollars and of number of items, have grown more in the test stores than in the PLCB's other stores. For instance, dollar sales are up by 73% in the test StateWays s www.stateways.com s November/December 2011