Your shop’s been humming along smoothly for a while now. You have good coffee and a growing customer base that keeps coming back for more. But are you taking advantage of every opportunity to increase your sales and customer loyalty?
Most retail sections in cafés are underutilised, impractical, or downright non-existent. You may well be brewing good coffee, training your staff to upsell products, and carefully putting your high-profit snacks next to the till. However, if you don’t have an engaging retail selection, you’re losing out on potential profits.
I chat with James Gray, Co-Founder and Sales Director at Barista & Co, UK-based manufacturer of coffee accessories, to find out his tips.
Lee este artículo en español Ventas al Menudeo: ¿Aumentan Las Ganancias de tu Tienda de Café?
Retail offerings on display in a coffee shop, including milk jugs and home brewing devices. Credit: Barista and Co
Why Sell Retail Products?
Rising rent, market saturation, growing competition, high operating and staff costs – it’s harder than ever to run a profitable coffee shop. Increasing average customer spend is one of the most efficient ways to increase income, and diversifying offerings is one of the easiest ways to do that.
According to Engaging Retail in Coffee and Tea Shops, a report released by Barista & Co, developing engaging retail offerings can go hand-in-hand with other profit-boosting ideas such as extending opening hours, introducing alcohol or food, and running community events like cuppings.
Bear in mind that your customers are already spending money at your specialty coffee shop. Therefore, they’re likely to also want to spend money on specialised coffee equipment. If you can serve both their home and on-the-go coffee needs, you’ll increase their loyalty.
The trick is selecting the right products, and pricing, positioning, and promoting them well.
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Retail coffee bags sit near the till in a third wave coffee shop.
Selecting Your Products
Who are your potential suppliers and what do they stock that would work for your store? It’s always worth requesting a consultation. Remember, suppliers have significant experience and want to help you profit.
Whichever products you choose, they need to make financial sense. For this, you need to ask yourself: who are your customers?
“Many specialty coffee shops buy products to retail to their customers based on their own preferences,” says James, who considers this a red flag. Simply put: you don’t want to be spending money on expensive, specialist equipment that you’ll have to price high to cover costs, only to have customers not show any interest.
It’s not just the large price tag that can put customers off. Sometimes, it’s also the mental burden of a complex mid-to-professional-level product. Make sure to offer simple, eye-catching, entry-level products (even if you do also have more complex ones on the shelves).
These entry-level ones are often cheaper and more accessible for a wider range of customers, making them potentially less costly to stock and quicker to turn over. You don’t want your equipment to sit there in the shop, gathering dust, until you’re forced to discount it.
You can also consider offering things that are either personalised with your branding, or ones that are different from those your local competitors are offering.
A range of easy-to-use retail products and marketing materials. Credit: Barista & Co
Pricing matters, both in terms of making sales and keeping yourself profitable. “[Your retail’s] got to look great, be concise, and your customer has to understand it. But what goes hand-in-hand with engaging is that it’s also got to be affordable,” says James.
A good margin to observe is anywhere between 40-50% – for example, if a product’s stock price is £5, £10-£12 is a good retail price.
However, the Barista & Co retail guide points out that customers won’t hesitate to look up a product you’re selling online. Customers may happily pay a little extra for something they can buy in store, where it’s more convenient. According to the guide, they will on average happily pay 10% more in store.
Yet if they realise they can get it for a third of the price online, it can negatively impact the trust you’ve worked to build between them. They may no longer feel that they can rely on your recommendations, which will cost you long-term.
Another thing to consider is implementing promotions. This isn’t just about giving discounts, though. You can also cross-promote products, pairing a popular coffee with a brewing device that complements its flavour profile, for example.
Retail coffee bags for sale in the coffee shop.
Placement & Design
Where you play your products will impact sales. “Eye level is buy level,” James reminds me.
Try not to place retail near the front door, in the interests of security – but don’t put it in an awkward-to-reach spot, either. You want customers to approach retail in their own comfort and time, with you (or a member of your staff) always on hand to answer their questions.
Don’t keep all of your retail boxed up. Products are more engaging when you can see and touch them. “You’ve got to have a coffee or accessories-and-tool offering that firstly is compelling and engaging, so the customer wants to pick it up and look at it, wants to touch it and feel it,” says James.
Think about what you put your products next to, as well. For example, try putting a brewing device next to a bag of coffee, or pair products by their visual appearance. By subtly linking products that are close together, you might encourage customers to purchase both of them (even without a promotional offer).
Retail coffee bags sit near the till.
Would you buy a product if staff members couldn’t confidently answer your questions about it?
Whether customers are coffee enthusiasts or amateurs, they’ll likely have plenty of questions about your retail offerings.
“You need to ensure that a member of your team understands those products,” stresses James.
The better your team knows the products you stock, the more effortlessly and naturally they will be able to sell them.
Sales techniques such as upselling, cross-product promotions, and intentionally striking up conversations at the retail section also go a long way. Make sure your staff are trained on customer service skills and sales techniques, as well as the specific items on offer, if you want to see a good product turnover.
A staff member answers a customer’s questions about the café’s retail offerings.
A compelling retail offering can be an excellent way to diversify your offerings and increase your profits. However, get your offerings wrong and it can be a costly mistake, as profit margins fall and cash flow gets tied up in expensive coffee accessories that customers aren’t buying.
So, consider your customers’ wants. Price your products well. Consider placement and think carefully about promotions. And, on top of that, train your staff well. The effort will pay off.
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