Top 10 border store insights for spirits

It’s a travel retail channel growing in importance for spirits brands, but what makes spirit consumers tick when they shop at North American border stores?

m1nd-set’s Peter Mohn shares his insights into shoppers at North American border stores

The border store channel is well distinct from airport retail, a travel retail sector often given a much higher profile. But border stores around the world sell significant spirits volumes, with the North American market particularly keen to shop the category.

Following SB‘s market report in the March edition, Peter Mohn, owner and CEO at industry analyst m1nd-set, has shared his insights into what makes spirits purchasers tick in the channel. To inform his study, the m1nd-set team conducted interviews in the second quarter of 2015 at three key locations: Washington/British Colombia (Location 1), Michigan/Ontatio (Location 2) and New York/Ontario (Location 3). 500 respondents, all international customers aged over 21 years were questioned in face-to-face interviews at or after the cashier desk.

The findings make cheering reading for spirits brands considering entry into the channel.

Click through the following pages to discover what makes spirits consumers buy at the North American borders…

Heading to IAADFS Duty Free Show of the Americas? Mohn will present further shopper insights for the region during an education session.

Alcohol was the top category for shopping, and where respondents made the most purchases.

A significant 65% of duty free shoppers bought alcohol, with the highest proportion recorded in Location 2, where 71% of respondents made an alcohol purchase.

Vodka topped the category rankings, followed by beer, wine, and Canadian whisky, with blended Scotch and rum making an appearance at Location 1.

Alcohol shoppers at border stores know what they want to buy.

m1nd-set data found that when purchasing alcohol, travellers go to duty free border stores with very specific purchasing intentions. 92% of shoppers planned their purchase in advance, and out of these, 60% knew the exact brand they would buy. 34% said they had a general intention to buy alcohol.

Impulse can still come into play – at Location 3, 22% of respondents said they had made a spontaneous alcohol purchase.

Shoppers at border stores shop frequently.

The majority of survey respondents purchase something at a border store every time they cross the frontier. Location 1 had the highest proportion of ‘every trip’ shoppers at 56%. Most cheeringly, only 1% of shoppers across all three locations said they never make a purchase at the border store.

Alcohol shoppers at border stores are happy (comparatively) to splash out – if they see value.

The alcohol category was exceeded only by perfumes and cosmetics and tobacco in terms of total spend per trip. On average alcohol shoppers across the three locations spend US$53, compared to US$86 for the beauty category and US$64 for tobacco.

But alcohol buyers are particularly price conscious. Across the three locations, 97% of respondents said they compared prices at border shops with similar products available in regular stores. But border store retailers can take heart – 96% of those compared said that border shop prices were lower than at home.

Border store purchasers see shopping as part of travel.

A notable 63% of respondents either fully agree or agree that border shopping is part of the travel experience, and 64% said they “love” purchasing at the border. With a good core already enjoying the experience, the challenge is converting the remaining 36%.

Alcohol shoppers at border stores think the product selection is “reasonable”.

Image: Decatur Wine & Spirits

Alcohol border store shoppers certainly seem to be a contented bunch. Across all three locations, 75% of respondents deemed the product selection “reasonable” – and 59% felt the price range was right. Interestingly, Location 1 saw the happiest shoppers when it came to amount of product, yet only 44% were satisfied by the price range.

Alcohol shoppers at border stores like to stock up.

Forget the booze cruisers, it’s the border store shoppers who really know how to buy in bulk. With value perceptions running extremely high it makes sense that the primary reason for buying alcohol on the border across all three occasions was to stock up. Saving money universally ranked second, with immediate usage ranking third across the board. Party, anyone?

Customs allowances are still an issue for alcohol shoppers at border stores.

Reasons for not buying always make for interesting reading, and even for such a buoyant category/channel dynamic there’s always room for improvement. At North America’s border stores, customs allowances are the major fly in the ointment. “I was afraid that products bought wouldn’t be allowed at customs,” cried 24% of respondents. Greater education and allowances awareness is crucial. Other reasons for not buying included a desire to buy elsewhere on the trip (38%), a lack of promotions (19%) and the lack of a frequently shopped for product (14%).

Don’t promote at your peril – alcohol shoppers at border stores crave a bargain.

As if the value message wasn’t underscored enough, the most popular incentives to buy paint a clear picture. Buy Two Get One Free ranked as the most favourable message, followed by discounts on a single item, Buy Two Save 15%/20%, and a dedicated display of promotional offers. Offering a gift with purchase only ranked fifth.

m1nd-set recommendations

After studying the data, m1nd-set recommendations that the industry include recruiting skilled and experienced sales advisors, providing more information on customs allowances and restrictions, maintaining a large product range and offering an array of in-store promotions at border stores. This, says the team, “would guarantee a good conversion rate and high customer satisfaction”.