This week, we’re featuring our interview with Brendon Lawry, CEO of Liquorland, a specialist liquor retailer owned by Foodstuffs.
We speak with Lawry about how the business has evolved over the past 40 years, and why Liquorland was slower than others to join the online party.
Inside Retail New Zealand: Can you give a snapshot of the size of the business today? How many stores, how many employees, what are your annual sales, etc?
Brendon Lawry: Liquorland has over 118 stores nationwide, employs over 500 full-time staff and another 500 part-time employees over the key summer period.
IRNZ: What have been some of the key turning points in the business, since it was founded in 1981?
BL: There has been massive changes in the last 40 years, including increased competition in 1989 when supermarkets started selling wine and 10 years later started selling beer. This was initially quite a shock to the traditional liquor sector (bottle stores) as they largely had the retail sales of alcohol in New Zealand to themselves. At the same time, the licencing laws were relaxed, delivering larger numbers of bars and restaurants around New Zealand, as well as more bottle stores.
In 2009, Foodstuffs purchased Liquorland from Dominion Breweries (DB). This step changed the trajectory of Liquorland and despite the increased competition, the business has continued to grow store numbers, revenue and profitability steadily every year since. And in 2014 Liquorland purchased “the Mill” liquor stores from Independent Liquor. They were re-branded to Liquorland and added another 20 stores to the network.
Most recently we changed our operating model, introducing a profit sharing (rebate) structure to the franchisees, increasing their profitability. This now means we are the only independent, full-franchise model operating nationally in New Zealand.
The majority of our competitors are owned by, or heavily aligned to suppliers, or operate more as a buying group than a full-service franchise model with operations, analytics, marketing, merchandise, IT and finance services offered to franchisees. While it is relatively early days under our new operating model, we are seeing another step change to our sales and financial performance
IRNZ: What do you think has enabled the business to adapt and stay relevant in a changing retail landscape – internal culture, processes, something else?
BL: We are very focused on the business of thinking people first. At its core Liquorland, and I think most business (retailing and service industries in particular) are in the people game. Our customers, competitors, suppliers, staff and franchisees are all people, and the better you understand people the better you understand business.
This has meant that we everything we do is about creating an experience, providing a solution, or generating an idea for our customers. This mindset has been an important part of our journey and success.
There is no doubt that being part of the Foodstuffs business has helped Liquorland. The wider Foodstuffs business serves over 1.5 million people everyday. The information, insight and experience that comes from that sort of size and scale can simply not be copied or beaten by our competitors.
What it has meant for us is access to resources that we simply would not have access to if we operated on our own. Foodstuffs are like the ultimate big brother, they help us be better, give guidance but not instruction, they are there to help if needed, but not there unless you ask.
IRNZ: The rise of online has really changed the game for liquor retailers. What does Liquorland’s online offer look like now? What portion of sales are currently made online?
BL: There is no doubt that the online world is changing the dynamics for every retail sector, and the liquor industry is no different. We have a strong digital presence and the number of followers and responses we get to the different posts and promotions that the team put together continues to grow at incredible rates.
Currently, we have a click-and-collect service available online and the launch of a full-blown delivery option is underway. The challenge is that the current laws for online sales are actually pretty loose and we will only go ahead with specific protocols to ensure that we control every aspect of the delivery to the customer and ensure that the product is delivered to the right person with the correct age verification.
We recognise that we are pretty late to the online/delivery party, but we are very excited about what is coming and really hopeful that it will provide some exciting, limited, unique and special offers to our customers as well as the current assortment of products available in-store.
IRNZ: At the same time, e-commerce presents a challenge for franchisors – in terms of cannibalising sales from store owners. How do you handle that at Liquorland?
BL: Like every change in any business there are challenges, but cannibalisation or loss of sales is real everyday regardless of online. In the end of the day, a customer makes a choice every time they come to us, they could choose from several options in their town or city. We need to always respect the decision they have made to come to us and continue to earn their repeat business through the experience we create, the offer we provide, the expertise in-store or simple good old New Zealand service with a smile. Our online offer is no different, giving the customer the chance to select the store they want, the same way they do when they choose to drive into our carpark.
IRNZ: What are some of the key projects you’ll be working on over the next year?
BL: We have a pretty full plan for the next 12 months with the development and launch of our new online platform, we are currently at the early stages of a sector-leading analytics package that delivers a deeper understanding of our business, transactions, suppliers, category performance and customers than we have ever had. We will be continuing to develop our digital footprint, as well as our physical stores as we roll out new sites across New Zealand.
IRNZ: Are there any other topics that are top of mind in the Liquorland business today?
BL: The liquor industry and retail sector in general are pretty interesting at the moment. When you add the total Liquorland business together it is big, but when you consider the size of each franchisee individually small changes in the cost of doing business has large impacts, be it the increased cost of employing people, the cost of maintaining each liquor licence, the cost of continual improvement in store layout, website and digital communication development or just the increased cost of product.
Suppliers face the same challenges, so you have to work really hard to continue the privilege of operating a liquor licence, and continually earn the custom of each shopper and ensure that each business remains profitable.