Make It POP!
Point-of-Purchase Is Here To Stay
By Monique Balas • Illustration by Chad Crowe

These days, many coffeehouse owners can't always live by beans alone. Or rather, some are discovering they live better by offering customers more than just a good cup of joe. As the world of specialty coffee becomes increasingly competitive, some owners are turning to point-of-purchase (P.O.P.) items to help supplement their revenues.
   Some have found that this strategy increases profits, while others find it a simple, easy way to get their brand out and expand their customer base. Whatever the motivation and the expectation, there are many angles to consider before sacrificing precious counter space to just any old trinket.

Buying On Impulse
What is P.O.P., and when did it start? "Point of purchase has been around for as long as shops have been in business," says Greg Hogan of Albany, Ore.-based Allann Brothers Coffee Co.
   Not to be confused with point-of-sale (P.O.S.), the cash register software and hardware many retailers have incorporated into their operations, P.O.P. includes items at the register that customers may purchase on impulse.
   Step into your local grocery store check-out aisle, and you'll see a wide variety of P.O.P. merchandise: packs of gum, candy, magazines, disposable batteries, razor blades, lighters and the like. For some time now, larger coffeehouse chains have been selling not only coffee but also stuffed animals, CDs, mugs, travel games, and countless other items to distract and tempt you while you stand in line or wait for your coffee order to be filled.
   "Specialty coffee and specialty coffeehouses are evolving at lightning speed," says longtime industry consultant Bruce Milletto, president of Eugene, Ore.-based Bellissimo Coffee InfoGroup. "As people realize the potential of the café as a retail space, P.O.P. is something you're seeing more and more of," says Milletto, whose book, Essential and Effective Marketing for the Specialty Coffee Retailer, is due out in September 2004. "In most cases, it's an absolute advantage if you have the space and if you have the market."
   The promise of specialty coffee has certainly not been lost on P.O.P. marketers.
   "I think there's just a huge boom in new coffeehouses," observes Scott Clark, president of CoffeeHouseMusic.com, which sells CDs by independent artists to restaurants, cafés, hotels and gift stores. "A lot of people we deal with are just opening up a coffeehouse, so we know they are looking for as many revenue streams as possible."

Making Cents
Walter Pierce, owner of Big Cup Coffee and Gifts in Oak Harbor, Wash., says the locally made jewelry, cards, art glass and children's books he sells have boosted his sales figures between 10 and 20 percent. "For me, it was more an added income that wouldn't [otherwise] be there," says Pierce. "That 10 to 20 percent is significant in terms of our daily goal."
   Plus, he says, it's a way to earn money without paying for additional staff.
   Other owners get into the P.O.P. game because they feel they can't afford not to.
   Mike Vanderbeck, owner of Slowdown Café in Hightstown, N.J., says the revenue he brings in from truffles and biscotti is insignificant by itself--less than one percent of his total sales revenue. But the menu seems to require them, for the sake of completeness.
   Vanderbeck thinks it's important to offer his customers a small snack that's less substantial than the ice cream or panini sandwiches his store also offers.
   After seeing so many P.O.P. marketers at trade shows, Vanderbeck is convinced the trend is big enough that customers now expect to have a palette of goodies to look at when they order their drinks.
   The items can be a marketing technique in themselves, says Sherri Johns, president of Portland, Ore.-based WholeCup Coffee Consulting.
   "It's an opportunity to offer something that's novel or unique, something that maybe the customer hasn't seen anywhere else," says Johns. "That doesn't mean the customer isn't going to buy that double-tall latte when they come in. You don't trade sales, you're just enhancing the sales."
   This has been the case for Jason Schneider, owner of EmmaJoe's Coffee House in Marquette, Mich.
   "Because our point-of-purchase items are odd or rare, they bring people in to look at them, and therefore bring new customers. They'll come in to look at knitting or pottery, and then they'll find they like the place," he says.

Counter Intelligence
Deborah Chapman, owner of The Tin Woodsman Pewter Company in Eugene, Ore., typically sells her pewter coffee canisters, scoops, magnets, and other gift items, to Made-in-America gift stores. She is very enthusiastic about exploring the specialty coffee industry, which she sees as a largely untapped market for P.O.P. entrepreneurs.
   "The hardest part is getting the customer through the door," she observes. "Once they're there, they should think of your shop as a place to buy gifts as well as coffee, especially during the holiday season."
   Of course, since few things in life sell themselves, you still have to put some effort into moving these products. Here, a little forethought can save you a lot of money on products that would otherwise collect dust.
   To get the most out of a point-of-purchase program, Johns says it's important to keep three goals in mind: increased sales, increased brand recognition and setting yourself apart.
   She stresses the importance of keeping items well-displayed and clean, with prices clearly marked.
   "It has to be a reasonable price point within the area, but it also has to be kind of good-to-go, right at the outset," she says. "And always keep your customer in mind." "It's really important to know who your market is," Milletto agrees. "Are 80 percent of your customers women between the ages of 22 and 45? That's a great demographic to sell gift items to. If most of your customers are blue-collar workers, it's probably not a good idea to sell gifts."
   But while you're considering your clientele, make sure the products you're considering will fit well within your store. Pierce decided to sell gifts as part of his original business plan when he started his shop nearly two years ago. And he had certain products in mind that melded with his shop's persona.
   "We tried to pick things that complemented the coffeehouse environment," he says. Cards seemed like a good idea: they're an impulse purchase, and yet can inspire customers to linger over coffee and write to a friend.

Round 'Em Up And Brand 'Em
Getting your shop's name on your item could be well worth its weight in coffeehouse profits. Branding is the latest trend--some say necessity--to hit specialty coffee. The idea is that your shop is more than a shop, it's an identity, and that identity can become a profit center in itself.
   At Java Joe's Coffee House in Biloxi Miss., co-owner Sherry O'Murray says her customers get a steal on the stainless steel travel mugs the coffeehouse sells. Even so, she estimates P.O.P. items bring in about 20 percent of Java Joe's total revenue. "We make around two dollars on each," she says. "It's not a lot, but we figured it was more important to get our name out there and to try to get repeat customers rather than make a killing on the mugs," O'Murray says. "At least your name is out there and makes you think of it. If a coffee mug is sitting on your desk, you think, well, 'I could just go to Java Joe's.' It brings you in and keeps you on peoples' minds."
   O'Murray has the right idea, according to Bruce Milletto.
   "Branding is really important, because if you can order in quantity, there are lots of companies out there that are really catering to the smaller retailer," he says. Anything from prepackaged pecan pie to breath mints can carry your logo on them, which means free advertising.
   Smart packaging and sales can really help, too. If you decide to sell more expensive P.O.P. items, like French presses, you can combine them with whole-bean coffee and give, for example, a 25-percent discount on the presses when they are sold with your whole beans. That way, Milletto suggests, you're moving your French presses and the people are probably going to come back for your quality coffee.
   The added advantage is that while customers could go to the department store across the street and purchase a coffeemaker at a slightly lower cost, they won't be receiving the expertise provided at your store. The P.O.P. has thus enabled you to use your coffee expertise as a marketing tool to widen your customer base.
   Retail items also give you the opportunity to hold special events, says Milletto. A free Saturday morning class on home brewing equipment, for example, would give customers the chance to learn the tricks of your trade or learn unique facts about other brewing technologies It also gives them a chance to purchase brewers.
   "The ultimate goal is to sell as much coffee as you can," Milletto says. "If you're the expert, why would they go anywhere else for coffee-related smallware or appliances?"
   Madeline Naftal, whose company, Promoconcepts, sells promotional items to corporations, agrees with that wisdom.
   "The huge chains can buy goods overseas, but the smaller ones don't have that capability, and if you can offer something for a good price and at the same time get their name on the product, it gives them positive reinforcement."
   How much income? That's hard to say. You probably know how to price your macchiato, but what should you charge for a pair of coffee-bean earrings or tea infusers made from World War II bullet casings?
   Milletto suggests doing something known in the retail industry as "keystoning," essentially taking every cost involved in putting the product on your shelves--the price of the item itself; the logo, if there is one; the shipping and handling--and doubling it.

The Counter As Battlefield
Picking out your products is only half the battle. It's important to be very careful about how you fill your precious counter.
The counter is more than a slab of granite, marble, wood, copper, or another supporting substance. It's the arena of transaction, the portal of communication, the place where you interact with your customers. It's a stage for your coffee performance. It's where cash changes hands, and where items displayed can increase the amount of that transaction.
   Naftal of Promoconcepts sees a direct correlation between counter placement and profits. "The retailers that order the most repeats have [the items] stacked on the counter."
   But if allowed to clump, accrete and otherwise morph into a geological formation, P.O.P. can detract from a café's efficiency, presentation and mood.
   "The trade-off is clean counter space as opposed to cluttered counter space," says Vanderbeck of Slowdown Café. "You see this plethora of P.O.P. that doesn't lend itself to the feel of the café. [At a cluttered café counter], I'll have a great coffee but can't even see the barista make it, because there are five different kinds of tea on the counter. I want someone to see the barista, see the machines, see the grinder. You need clean, open lines for that to happen, and if I lose a couple cents for not having cookies on the counter, I gain a lot more by having a relationship with the customer."
   P.O.P. marketers interviewed for this story say they don't try to influence product placement, other than to offer display advice or cases.
   "I offer good products at a good price. What they do with them is their business," says Promoconcepts owner Naftal, whose company sells travel mugs, regular mugs, glass mugs, hats with logos, aprons, T-shirts, coffee scoops and magnets.
   "I don't feel that we want them to pay for position," agrees Clark of CoffeeHouseMusic.com. "I want people to like music for what it is."
   His company is sensitive to the challenge of presentation, and does include "really beautiful wood displays, which encourages the store owner to put [the products] by the counter," he says.
   Milletto hasn't seen too much overt display influence in the industry and says he doesn't think the coffeehouse countertop has established the kind of expensive real estate a grocery store shelf might have, where brands might pay huge amounts of money to get their items into strategically prominent positions.
   "Retail in a coffee bar is not that sophisticated yet," he says.

Promises, Promises
For some owners, P.O.P. sales don't always keep their promise of increased profit. "With my location and with my clientele, just only selling coffee, our menu items are not quite enough to keep us going," says Schneider of EmmaJoe's. So he began selling chocolates and locally made art, pottery and jewelry. Sales of these amounted to about five percent of his total gross revenue, which was a disappointment. "After I started carrying them," he says, "I realized the coffee was going to have to keep us going."
   Once they climb aboard the P.O.P. bandwagon, retailers may find themselves dealing with telemarketers, an experience that few people relish.
   "Point of purchase at coffeehouses has become a potentially profitable industry for merchandisers, so therefore the merchandisers have become ubiquitous, so therefore they are constantly calling, trying to get you to sell their products," says Schneider.
   Then too, some items that attract attention may become unwieldy or difficult to service. Pierce of Big Cup Coffee and Gifts says some of the cards and books he sells get damaged or destroyed occasionally, making them unsellable.
   Other pitfalls could be as simple as having the wrong person pick the merchandise to buy, says Milletto. If that's the case, the shop owner could spend money on items that won't sell. The employee who signed for that shipment of a thousand Y2K Survival Kits may be better off pulling shots than perusing gift catalogs.
   But regardless of the types, placement or method of choosing P.O.P. items, one thing coffeehouse owners, consultants and marketers agree on is that the P.O.P. trend is here to stay.
   Greg Hogan of Allann Brothers says that in the eight years he's been in the industry, he estimates the demand for P.O.P. items has quadrupled.
   "You're seeing more and more involved point-of-purchase stuff, and more targeting with the P.O.P. stuff than you have in the past," he says. "A lot of it has to do with trying to keep that market share, giving people a reason to come back, with new products and new ideas. I think it's going to keep growing."
   Johns of WholeCup Coffee Consulting puts it a little more frankly.
   "I would just say that they [coffeehouse owners] would be crazy not to do it as a way to increase sales, and it doesn't make them corporate by adding something in," she says. "It's low-hanging fruit."

   Monique Balas is a freelance writer based in Portland, Ore. She can be reached at msbalas@hotmail.com.