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.
We're hearing these from liquor merchants all the time — so you'll be more than familiar with at least a few of these.
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.
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.
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.
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.
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:
Source: The best non-alcoholic drinks tested and reviewed by Forbes
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:
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:
Source: Little Rick UK is an example of hemp-based drinks
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:
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:
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:
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:
As more consumers prioritize health and wellness, liquor stores must adapt their messaging and product offerings to align with these values.
Possible approaches:
Source: The Nutrition Insider
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:
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:
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.
The challenges facing liquor stores are not insurmountable. Many owners are already finding creative ways to adapt and thrive. For example:
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.
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