Value added...

Many months ago I received some criticism for sharing in social networks a picture with which I expressed my joy for having found a five-pack Chimay Bleue with its respective gift chalice, at a price that seemed to amply repay my investment in money. The complaint was motivated by the fact that I made the purchase in a supermarket, causing therefore a disservice to small businesses, according to the offended parties.

I did not want to create controversy, I don't like yellow blogging, so the matter was settled quickly. Personally, while I feel more aligned with the need and the important social role of small local shops, I think that personal circumstances must not be ignored before making any judgment. Let's not forget that this is a perfectly respectable consumption decision.

"Beer retailers should play the role of curators: create a differential offer according to their judgement of what's best for their customers"

But let's take a closer look at my case. I live in a small town, far enough from the metropolitan area of ​​Barcelona. Consequently, despite my sympathy with local commerce, I could not even consider rejecting the good deal I'd found. Furthermore, we are talking about one of my favourite beers, accompanied by a more than useful glass for Belgian beer.

In short, what the offended parties expected of me is summarised in the following simplified scheme:
  • The round trip from my home to the nearest shop where I can find Chimay Bleue means around 2 hours by car.
  • This implies, in monetary terms, that I'd spend about 12€ on fuel, regardless of the proportional vehicle maintenance price that I should apply to the trip.
  • Let's also suppose that for every hour spent working, I am able to earn 10€. In economic theory, the opportunity cost of investing an hour of my time in an alternative activity should reward those 10€ per hour, for it to be profitable for me.
  • Moreover, say that I spent 10€ to buy the pack of beer. Since I acquired during the weekly shopping for home, travel costs and time spent would be practically null, taking advantage of the important positive synergies that shopping centres offer to its customers.
  • It might be very optimistic, as long as it is difficult for a small specialist shops to offer the same prices, but let's stay with the idea that the store has the same pack of beer, at the same price that offer commercial centre. Accordingly, in my case:

The main conclusion of this is that one should always try to assess all the factors involved. I guess nobody who retains some sanity and objectivity would expect me spend more than three times to acquire the same single product, according to the above diagram... Unless we consider a new variable: the value added that can provide small businesses with my purchase.

"The only way I can justify the extra cost is by the value added to my purchase"

The beer retailers must understand that one can not live on solidarity and empathy that might raise from their closeness and locality. They should play the important role of curators: not by the mere fact of offering a niche product, but also to select those items who they firmly believe are better for their customers. It is not enough to be the retail point of one or more distributors: the thing is about attracting consumers with a differential offer, created in accordance with the presumably experienced judgement of the people running the business.

I don't think this Drink Store in Dublin would have appealed to me from its looks. But their product is curated to appeal
the preferences of local customers, while they also refrigerate beer for a better conservation. That's value added. 

In the end, we are talking about that additional value I was talking about, which can be complemented with a more or less exquisite manner, with accessories like beer glassware, solid accompaniments, an online store, or a beautiful decoration. Or a thousand other things, among which I would also highlight the conservation of the beer. This is IMHO one of the great differences that small businesses can presently offer in contrast to supermarkets.

The way for me to convince my wife that I paid more money for a pack of Chimay Bleue is all this parallel offer, that would complement my purchase by giving me an additional value for my money.

"And you, have you ever wondered what's the value added you offer to your customers?"

Then there's bars, of course. Is beer cheap or expensive? It obviously depends on this parallel offer we have been talking about. The value added to the people who decide to spend a long afternoon in a pub.

Among the characteristics of each bar, it is relevant to consider how beer is served: format, glass, temperature, etc; how important is the recurrence or rotation of references to the clientele, or the amount and exoticism of the references; the level of information provided, both visually (menus, whiteboards, etc.) and orally (knowledgeable staff). Then there's the prevailing environment: a sports pub, or a more familiar one, with The Beatles as background, or blaring techno music; lunch and/or snacks might or not be served, while they could be matched with beer references. Or maybe focus should be removed from beer; it is just one more product! A lot of aspects build a local supply, and may justify -or not- a higher end in beer prices.

Let's look at three recent examples of premises I've visited in which I do not know what the price of beer is. In Cara B, the range of beer in keg and bottle plus the musical offer and weekly gigs leave me satisfied enough not to care about the price of beer. In Chivuo's I find top quality burgers that is difficult to match, along with good beer on tap; once again, I do not know whether or not the beers are expensive, because I happily pay for it. Finally, Lambicus is the store with the wider range of Belgian beer in Barcelona, where I can have interesting chats about beer at the bar while also find beers like Horal 2015 soon after coming out in Belgium. Again, it is fair for me to pay the price of beer I drink there.

As in any market, you buy when the perception of value meets the price to pay. Picture by Richard Banks.

In my opinion, it is crystal-clear: other than appealing to feelings, one must provide value. As it is already happening with our local microbreweries, to hide behind the authenticity, originality or folklore it is not a sensible long-term strategy. If there is no solid real value in which to base the relationship with the customer, the foundation fades away until the card castle falls hopelessly.

And you, have you ever wondered what's the differential offer and value added you bring to your customers?

Salut i birra!


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