The Grapevine

Wine Shop Management: Are Shop Employees a Cost or a Profit Center?

January 7th, 2014

Two recent articles have had us thinking about how small retail shops can compete with ginormous online competitors. The first lends credence to the idea that shop employees and how you value them will have an outsize impact on the typical small wine shop’s profitability.

Your attitude about how they fit into your business will have a tremendous impact on their productivity and your ability to compete against larger outfits, whether they be Amazon, a chain store or simply larger version of your own shop. [level-members]

First, let’s be clear that while Amazon is hardly a household name when it comes to wine, they’re coming. And as they have in categories from electronics to music to household items to hand tools, they will disrupt the wine industry at some level.

So how can you compete as online retailers like Amazon eliminate or minimize the two biggest hurdles they face: shipping fees and a lack of immediacy? (Amazon is rolling out Sunday delivery options and Amazon Prime members already get free shipping on qualified items.) You have to do what they can’t: personalize the experience.

There are a couple of ways to do this, but for today, let’s focus on your shop staff – including yourself – and how you view them . They are your secret weapon. Their ability to deliver personal attention and the personal touch will absolutely make the difference between your shop eking out a living and thriving as a business.

So it makes sense to ensure that your employees are motivated, enthused and totally focused on making every customer as happy as possible. That might mean backing off a customer who really does want to be left alone. The trick is in having employees who can immediately sense what a customer wants and can change their approach accordingly. That’s tough to get from most high school kids willing to work for minimum wage.

Find good people, pay them well, treat them well, and invest in their success. You’ll both wind up making more money.

Think I’m kidding or just don’t know what I’m talking about? A recent study by Wharton Business School professor Marshall Fisher, a specialist in retail management studies, found that each dollar in increased wages yielded an additional $10 in revenue. That’s not a bad return on investment.

Granted, staffing up so you have 20 employees in a 1,000 square foot shop isn’t going to be the most effective way to increase your profits, but adding one additional employee and paying more to attract better talent will pay in the long run.

Next week we’ll cover other ways to hold your own against larger competitors.