- Created: Monday, 20 February 2012 08:51
- Published: Monday, 20 February 2012 08:51
- Written by David DeCiero
Lately, there have been a few notable cases in my area regarding new liquor stores opening. These applications have gone to the local licensing board of the town and have been met with resistance. The objections are mainly coming out of a fear of competition and nothing more. Competition is natural and there is never going to be less of it, so here are some ways to meet the challenge.
Competition can come in many forms. From the cases I spoke of earlier, this was from traditional retail locations. The current liquor stores were worried that the new entrant was too close to an existing store (usually theirs) and that it would cannibalize profits. Let us take a look at this statement and some of the assumptions built into it. First, this assumes that alcohol is a commodity and that consumers cannot tell the difference. Second, it assumes that people will buy their alcohol from any place, and it makes no difference. Both statements are false assumptions. The former assumes that every liquor store carries the same stock. Although most carry the big name beer and alcohol brands, there is room to stand out. Some stores carry extensive selections of single malt scotch, whereas others focus on a particular country’s wines. The latter statement is untrue since we all know that service ina liquor store makes a big difference. Quality service and expert recommendations go a long way towards a profitable liquor business. The statements also do not take into account how well your business is run. A well managed liquor store will embrace the competition because they know they can beat it.
The business term used to indicate a crowded market is a “red ocean.” This is a space that has been turned bloody by the sharks (competitors). There are definite strategies to work within red oceans. The traditional liquor store model is definitely in a red ocean. This is why there is such a fierce desire on the part of some participants to limit new entrants. This does not always work, however. Therefore, it is important to understand how to deal with these new entrants and thrive in spite of them.