When done well, a thoughtfully constructed and maintained café retail section has so much potential to positively contribute to not only a café’s bottom line but it’s overall feel and image. Oftentimes though, with your understandable focus on nailing extractions, chatting with customers, running a smooth service and generally keeping things humming, the retail section doesn’t get the attention it deserves. Cue sad face 🙁
Throughout the discussions we’ve had with 10s and 10s of café owners and managers over the years, this lack of focus on retail often came simply from not knowing where to start or, in some instances, not knowing how to build and develop on an existing retail section. To help you tackle this exact challenge, we decided to put together the following article to equip you with an introductory framework on everything from placement and sizing to what you should stock, how to build sales and the cost/benefit of a retail space.
So, get yourself another coffee (always a good starting place!) and read on to level up your retail game. Jot down your ideas, get artistic with a sketch of your space and get stuck in. If you need a hand working through the details, our friendly account manager team is always happy to help out.
Why Do Retail?
In all our years of helping wholesale partners develop their retail offerings we have identified 3 major reasons for including a well stocked shelf in your café.
- Low risk, high margins. When done properly, a retail space is a low to zero risk financial investment coupled with products that sell at much higher potential profit margins than your traditional café offering. Once established, your retail coffee section can become an excellent passive income stream for your business with the bonus of low ongoing staffing requirements.
- New income. Diversifying income streams in your café can mean you will have greater ability to ride through the rough seas that café owners often navigate. Remember all the “pivoting” that went on at the beginning of a certain pandemic? Why put all your eggs in one basket?! Prepare for sudden changes in your market by creating opportunities for revenue from alternative channels that may support you in changing landscapes.
- Show your expertise. We all know “you eat with your eyes first”. This is equally true when your customers choose which café they want to frequent. Having a banging retail section is about a lot more than simply bolstering your bottom line. The way in which you stock your shelves is an impactful way of communicating to your customers without your staff having to utter a word. Shelves flush with a dynamic range of beautifully packaged coffees? Kalitas, Aeropress and handgrinders ready and waiting? These owners know what they’re doing!
Knowing you café pros, we get that you’re all good with general concepts like this, but what you really want are the nuts and bolts so you can make things more tangible. So let’s get into it – what are the key costs you should consider and what are the likely benefits from this investment. Space in any café is a scarce resource and one of the biggest questions café owners have is “will using this space for retail vs putting in another table be worth it?”. Good question! While every café is different, we’ve put some generalisations below to help you map this out:
Costs can be broken down into two categories for you to consider. The first are really tangible and easy to identify:
- Initial capital for build:
o Shelving and installation
o Dressing it up (plants, lighting etc)
- Initial cash investment for non-consumable stock such as brewing gear, home espresso equipment or ceramics.
The second and more difficult cost to quantify is when you are replacing seats with a retail section. In this situation, you’ll need to run a few numbers to understand the implications for your specific business.
- It’s important to know what the average spend per seat across your café is, as well as your final profit %. With these numbers you can compare and contrast to your projected retail income.
- Remember your staffing commitment as a % is going to be much lower for retail than traditional service.
- The consumable items on your shelves (which you also use on bar) don’t need to be considered as a ‘cost’ for the retail program as you’ll organically be using them: you’re simply displaying your stock beautifully.
Again, similar to our costs, the benefits of a cracking retail section can be both direct and indirect.
An example of direct benefits are:
- Added financial stability from a diversified income stream.
- New income generated from retail sales, with a higher potential profit margin (low labour costs involved).
Some indirect benefits will be:
- Increased staff engagement and opportunities for staff development. This can be great for staff morale and retention, both of which contribute to a healthier business.
- Greater positioning of your cafe – customers perception of your coffee expertise will improve.
- More opportunities to engage with your customers, increasing their connection, and therefore trust, with you.
Placement & Size
Two of the most important aspects to consider for a successful retail offering – whether for a new build or in an existing cafe – is how large a space you dedicate to it and where it is positioned.
To begin with, your retail section needs to be located in an area that your customers can easily access and comfortably spend time in. Behind the counter and out of reach? Not going to work. And nothing will make potential customers move on from browsing shelves more than feeling like they’re in the way of other customers and staff alike. Right next to the POS and pickup counter? Hello poor traffic flow. Remember, for most people retail is very much a tactile experience, you want to encourage them to spend time picking up items, falling in love with them and cradling them to the counter for purchase.
Quite often, the temptation can be to place a retail section where it is not going to jeopardise any current seating arrangements. Cue the retail section that, whilst it looks amazing, nobody can see because it is tucked around a corner, on the back wall or (our favourite) next to the toilet doors where choosing your latest beans to take home just gets awkward.
Don’t compromise on placement: commit to a retail section that’s front and centre.
So to figure this out, take a moment to map out how people move through your café (sketch away!). If they’re dine in, can they see your retail section? Can they easily get up and wander over to browse its shelves? If your business is heavily takeaway focussed, you likely have a very linear service style from entry to POS, through to waiting and pick up. Avoid placing your retail section where it can cramp that flow. If someone has already lined up, ordered and paid, their interest in re-joining at the back of the line to purchase retail is going to be low to non-existent, so make sure your shelves are located towards the beginning of their journey into your café.
Stocking Your Shelves
The first step in deciding what to stock should be to simply look at what you’re serving in your café and what customers are enjoying, as they can easily be steered towards stocking up for home.
Start by writing a list of the all the nicely presentable consumables you use in your coffee section. Coffee supply will be first and foremost – blends, single origins, decaf, rotating filter options – but you can add to this your drinking choc, range of teas, alternative milks and any fancy sugars you might have. That’s a pretty comprehensive retail section right there!
The beauty of filling a large portion of your offering with these products is that there is no added up-front investment needed and no risk in the stock not moving – you’re organically going to be moving through these items on bar.
To supplement these fast moving, low risk items, you can then select a range of slower moving, higher investment items that will really add to your message of coffee expertise. Now, this line-up doesn’t need to be exhaustive or with high par levels. Select a focused range of products that complement your consumable offerings and that you can genuinely talk about. Stocking bags of fresh filter coffee on the shelves? How about offering your preferred pourover device and filter papers. Want to help folks make the most of their whole beans? A nifty 1Zpresso handgrinder or Baratza Encore will hit the mark and let customers know you’re more than just a dealer in cracking flat whites.
Other options to consider:
- Café quality ceramic cups.
- Brew devices and their filter papers like Aeropress, Clever Coffee Drippers or plungers.
- Scales for brewing and espresso (Acaia are beautiful and quality)
- Small Toddy cold brew systems.
- Handgrinders (1zpresso are a great option)
- Electric grinders (Baratza all the way!)
- Gooseneck pouring kettles (hello stylish Fellow)
Now that you have a perfectly located, thoughtfully curated and well stocked retail shelf, it’s time to get the sales happening! There are two key elements to success here – your staff and visual merchandising.
Visual merchandising is the practice of optimizing the presentation of our stock to highlight their features and benefits. Our suggestion? Put yourself in the shoes of a customer browsing your shelves: who are they? What do they know or not know about coffee? Decisions made simple is the goal here. What is the product and how would it help ‘me’, the customer, take the café experience home?
- Are product names and prices clearly displayed?
- Should you display an ‘un-boxed’ version of a product to make it more engaging?
- Is it clear what different products are for? Eg. An explanation like ‘Easy and portable filter coffee device’ might be great to introduce the Aeropress while ‘For quality, fresh ground home espresso’ could be useful info alongside an espresso capable grinder.
- What does the coffee taste like? While bags generally have tasting notes on the front, utilise support material like coffee cards to help people explore their options and bring your own taste to the table with signs like ‘staff favourite!’ or ‘perfect for milk’.
Once you’ve got everything styled up on those shelves, it’s time to get your staff in on the action.
Your floor and bar team have dozens of natural moments of connection with your customers, providing opportunities to organically bring your retail offering to their attention. Now this isn’t about a hard sell – you want your staff to be advocates of your retail offering and aware of moments where helping a customer with their decision could add value and result in a sale. Sounds simple, but it’ll take time to develop an awareness, confidence, and skills to handle these interactions smoothly.
Some examples can be really helpful for staff to get started. Identify some of the most natural moments that are likely to occur where they could talk about your retail offering (ordered a single origin and paying? “If you liked that, we have fresh bags of it on our retail shelf.”) and handy phrases that will put a retail-browsing customer at ease and open the door to a conversation (“Do you make coffee at home? Espresso – well this is the blend we use here that people really love.”). Open ended, “Can I help you?” can be fine to start with but remember, if your staff can talk passionately and genuinely about from personal experience about a product, it is going to be a potent combination.
That enthusiasm comes from empowered knowledge. This is where a retail shelf can provide a positive experience of professional development, building skills and confidence when talking about what’s on offer on the shelves.
There’s a lot of resources to tap into for inhouse training on coffee for your floor and bar staff – your barista team and ourselves at Five Senses – and extending that out to run through the other products and their benefits is a simple first step. Bonus points for getting staff to taste new coffees arriving for the bar plus retail shelf (what’s their favourite?) and a small discount for kit to use at home can provide staff with valuable first hand experience of the items you’re selling.
Finally, don’t forget social media and your website. Customers will often browse online to decide where they want to go and incorporating features of your retail items into your digital channels can both help with positioning you as a knowledgeable coffee venue as well as keep the items front of mind for regulars, reminding them that they can restock on their next brunch date or pick up a great present for a coffee loving friend.
And, as you do with the rest of your business, remember to review the performance of your retail products. Is a particular item flying off the shelf and could benefit from more stock? Is something just super slow moving and needs either more staff knowledge to sell or is worth removing from the line up? Try out new products, support your staff with knowledge about them and see what works!
So, you should now have a good overview of what to consider and how to get started with your retail offering. After seeing great retail offerings in place across many different venues, we firmly believe this is a ‘must’ not a ‘optional’ in your café. It’ll take a little planning and some up front investment but if you utilise the key elements we’ve covered here – placement, size, stocking and building sales – as well as mapping out your costs and benefits, you’ll be adding valuable new elements to your business – diversity to your income stream, strengthened positioning and development opportunities for your staff. A great opportunity to pursue!
After mapping these steps out, if you’re still struggling with where to begin or feel that you need a little extra advice, we’re always more than happy to help.
Keen to chat with our wholesale team about setting up your retail shelf? We’d love to hear from you! Drop us a line here.