Reimagining the Liquor Store: Adapting to a Changing Market

Liquor stores are facing an existential challenge. Shifting consumer habits, economic pressures, and increased competition are forcing owners to rethink their strategies. Younger generations are drinking less, cannabis is becoming more accessible, and big-box retailers are undercutting prices. To survive—and even thrive—liquor stores are evolving.

This article explores the challenges they face and offers practical strategies for adaptation.

What's changed in the liquor landscape?

We're hearing these from liquor merchants all the time — so you'll be more than familiar with at least a few of these.

1. Declining Alcohol Consumption

One of the most significant challenges is the decline in alcohol consumption, particularly among younger generations. Gen Z, often described as the "sober generation," is drinking less due to health concerns, financial constraints, and shifting social norms. Millennials, too, are cutting back, opting for moderation or abstaining altogether. This trend is compounded by the growing popularity of cannabis, which has become a legal and socially acceptable alternative in many regions.

2. Competition from Big Retailers

Large retailers like Total Wine and supermarkets have disrupted the market by offering lower prices and greater convenience. In states where alcohol sales are permitted in grocery stores, independent liquor stores struggle to compete. These big-box retailers benefit from economies of scale, allowing them to sell products at prices smaller stores cannot match.

3. Economic Pressures

Inflation and rising costs are squeezing both consumers and businesses. Many customers are trading down to cheaper products, such as boxed wine or value-priced spirits, while others are cutting back on discretionary spending altogether. For liquor store owners, this means thinner margins and the need to find new ways to attract and retain customers.

4. Changing Consumer Preferences

Consumer tastes are evolving. Craft beer and fine wine, once growth drivers for many stores, are seeing declining sales. Meanwhile, demand for non-alcoholic (NA) beverages, mocktails, and THC or CBD-infused drinks is on the rise.

How liquor stores can adapt

1. Expand Non-Alcoholic Offerings

The rise of the "sober curious" movement presents an opportunity for liquor stores to diversify their product lines. Non-alcoholic beers, wines, and spirits are no longer niche products; they are becoming mainstream. Brands like Athletic Brewing and Seedlip are leading the charge, offering high-quality alternatives that appeal to health-conscious consumers.

To capitalize on this trend, liquor stores could:

• Stock a wide variety of NA beverages, including craft options.
• Educate customers about the quality and craftsmanship behind these products.
• Create curated bundles or tasting kits to introduce customers to NA options.

Source: The best non-alcoholic drinks tested and reviewed by Forbes

2. Embrace E-Commerce and Delivery

The pandemic accelerated the shift to online shopping, and this trend shows no signs of slowing. Liquor stores that fail to establish an online presence risk losing customers to more tech-savvy competitors.

Key steps include:

• Partnering with delivery platforms like DoorDash, Uber Eats, or Drizly.
• Offering curbside pickup for online orders.
• Developing a user-friendly website with detailed product descriptions and recommendations.

3. Diversify Product Offerings

To remain competitive, liquor stores must broaden their appeal. This could mean expanding beyond alcohol to include related products or exploring new categories altogether.

Potential strategies include:

• Selling THC-infused beverages in states where cannabis is legal.
• Offering locally produced wines, spirits, and beers to attract customers seeking unique, regional products.
• Stocking non-alcoholic accessories like glassware, cocktail kits, and gourmet snacks.

Source: Little Rick UK is an example of hemp-based drinks

4. Focus on Experiential Retail

In an age of online shopping, brick-and-mortar stores must offer something that cannot be replicated digitally: a memorable experience. By creating a welcoming and engaging environment, liquor stores can build customer loyalty and differentiate themselves from competitors.

Ideas to consider:

• Hosting in-store or virtual tastings for NA beverages, craft beers, or premium spirits.
• Offering mixology classes or workshops to teach customers how to make cocktails at home.
• Collaborating with local restaurants, chefs, or influencers to create unique events or product bundles.

5. Look What's Around You

One often-overlooked strategy is to leverage the surrounding environment and nearby businesses. By understanding the local ecosystem, liquor stores can create tailored offerings that complement the needs and preferences of their neighbors.

For example:

• If your store is near an Indian takeaway, create a section of wines that pair well with menu items, complete with signs like "Pairs perfectly with korma!" or "Ideal for tikka masala." If you're across from a pizza place, highlight beers and wines that go well with pizza, using signage such as "Perfect matches for pepperoni" or "Great with margherita."
• Collaborate with nearby restaurants to offer discounts or promotions that encourage customers to visit both establishments.

6. Compete on Value with a Loyalty Program

While independent stores may struggle to match the prices of big-box retailers, they can still compete by offering value via integrated loyalty and rewards programs.

By implementing a loyalty program:

• Reward repeat customers to incentivize regular shopping and encourage a larger average order size. (People will throw in that extra bag of spiced nuts at POS to meet the points threshold).
• With an omnichannel loyalty program, like Marsello, you’ll collect data and insights across all your sales channels. Use these insights to run promotions to new and existing audiences.
• Segment your database based on their regular purchases to tailor your marketing and communications.

7. Build Community Engagement

Liquor stores are often deeply rooted in their communities, and this can be a significant advantage. By fostering strong relationships with customers, stores can build brand loyalty and create a sense of belonging.

Ways to engage the community:

• Using social media to showcase new arrivals, share cocktail recipes, and interact with customers.
• Sponsoring local events, sports teams, or fundraisers to increase visibility and goodwill.
• Conducting regular customer surveys to gather feedback and adapt offerings accordingly.

8. Adapt to Health and Wellness Trends

As more consumers prioritize health and wellness, liquor stores must adapt their messaging and product offerings to align with these values.

Possible approaches:

• Highlighting the health benefits of non-alcoholic beverages and promoting mindful drinking.
• Stocking functional beverages with added health benefits, such as adaptogens or probiotics.
• Educating customers about the importance of moderation and offering products that support this lifestyle.

Source: The Nutrition Insider

9. Explore New Revenue Streams

To stay competitive, liquor stores must think beyond traditional alcohol sales. This could involve creating private-label brands, expanding into new product categories, or even diversifying into entirely new lines of business.

Ideas to explore:

• Developing a private-label brand of spirits, wines, or NA beverages to differentiate the store and increase margins.
• Selling groceries, snacks, or other convenience items to attract a broader customer base.

10. Focus on a Specific Segment

Not every generation or demographic will be a perfect fit for your business, and that’s okay. Instead of trying to appeal to everyone, focus on the segments that already consume your products and align with your offerings. For example, if Gen Z is drinking less, don’t stress about winning them over—double down on the customers who are already loyal to your store.

Start by conducting market research to identify your core customer base. Who are they? What do they value? What are their purchasing habits? Once you have a clear picture, tailor your inventory, marketing, and in-store experience to meet their needs.

For instance:

• If your primary customers are middle-aged wine enthusiasts, expand your selection of premium wines and host wine-tasting events.
• If your store attracts craft beer lovers, focus on stocking rare or local brews and creating a loyalty program for repeat buyers.
• If your audience values convenience, emphasize quick pickup options, delivery services, and curated bundles.

By concentrating on the segments that already support your business, you can deepen customer loyalty, increase repeat visits, and maximize profitability. You don’t have to be everything to every generation—focus on being the best for the customers who matter most to your store.

New Zealand non-alcoholic beverage brand Free AF partnered with The New Bar to cater to Gen Z's drinking preferences at Coachella 2025. Source.

Real world examples

The challenges facing liquor stores are not insurmountable. Many owners are already finding creative ways to adapt and thrive. For example:

• We’ve seen a store have success by redefining their wine section to focus on bottles under $10, appealing to budget-conscious customers.
• Another owner increased community engagement by hosting bourbon tastings and fundraisers, which helped drive traffic and build loyalty.
• Some stores are exploring the sale of THC beverages and other non-traditional products to stay competitive in a changing market.

The path forward for liquor stores

The liquor store of the future will look very different from the one of the past. To survive in a challenging market, owners must be willing to embrace change, experiment with new ideas, and listen to their customers. By expanding offerings, understanding their customer base with loyalty data, and creating memorable in-store experiences, liquor stores can innovate for an evolving market.

Want to talk about your specific business challenges? Book in some time — we'd love to hear from you.