A lucrative business

A lucrative business

Despite dwindling demand and stagnating prices, beer is a profitable business for resellers. This is because people who buy beer tend to spend more than the average customer per purchase. The average bill for customers who buy at least one beer product is approximately €27 – which means they spend almost €5 more on everyday products than shoppers who do not purchase beer. Why? “If you’re buying crates of beer, it’s easiest to take the car to the shops. Then other items quickly end up in the shopping trolley,” explains Angela Pilkmann. Typical additional purchases are soft drinks, savoury snacks and – especially in summer – items for barbecues. “People who buy beer are valuable customers for retailers and special attention should be paid to them as regards their contribution to the company’s overall profits,” Angela Pilkmann adds. “In other words, it’s not just a question of supply and demand.” Focusing too strongly on demand from customers would fail to cater for the potential presented by certain groups of shoppers, such as beer drinkers.

Beer is also a good example of the way in which the sector meets the above-mentioned challenges. One of the first limiting factors faced by stationary sales outlets in particular is the amount of selling space available. Take METRO Cash & Carry Germany, for example: although the company stocks one of the largest selections of beverages, it can only offer its customers 2.5 per cent of the local beer available. “On average, 125 beer brands are stocked in 150 square metres of store space, meaning that 60 per cent of the drinks department and 2 per cent of the total store space is reserved for beer,” explains Category Manager Reiner Schmitz.

A study conducted by the “Institut für Handelsforschung” (Institute of Retail Research) in Cologne shows just how important it is for resellers to stock the right product. The survey found that around one third of customers change which store they shop at if they can’t find their favourite product. There is a good reason why product range optimisation is one of the retail and wholesale industry’s core competencies. With reference to the so-called 80/20 rule of reselling – 20 per cent of the products generate 80 per cent of the sales volume – Angela Pilkmann from Real argues that less is more: “Adjusting the product range to customers’ needs often makes more sense than adding extra articles.” Her theory is backed by the retail experts from the management consultancy A.T. Kearney, who have found out that customers actually like it when a store’s range is reduced as it makes choosing products easier.