Merch That Works

This article was originally published in Barista Magazine December 2023 + January 2024

I grew up in Seattle in the late 90’s, so as you can imagine music played a big part in my life. I had access to legendary music venues and a constant rotation of bands coming into town. My room was full of show posters, and limited edition tees. I would always hit the merch booth at shows, because it wasn’t enough to just like a band and listen to their music, branded merchandise served as a tangible representation of my affinity for the particular band. Flashforward to now and I am driving my three kids around the suburbs with my Stumptown travel tumbler. Maybe not as cool as a concert tee but the desire to express myself through a branded item lives on!  

In today's highly competitive coffee industry, coffee shops are constantly searching for innovative ways to stand out from the crowd and increase their revenue streams.The COVID-19 era, in particular, underscored the need for diversification in revenue sources.  One such strategy is the incorporation of branded merchandise into your retail cafes, and e-commerce platforms. 

“Branded merchandise is one of those things that can fall on the back burner for a shop owner or manager,” Says Ryan Schneider, co-founder of Created Co. “but I think it’s a massive opportunity for shops to build brand awareness [and] create community, and it can be a significant revenue driver for the business.”

Incorporating branded merchandise into coffee shop operations is more than just a revenue-boosting tactic; it's a powerful tool for building brand loyalty, and fostering emotional connections with customers. Branded merchandise plays a pivotal role in strengthening a coffee shop's brand identity. It's a portable marketing tool, allowing customers to proudly showcase their association with a particular coffee shop.

DESIGN FOR SUCCESS

Incorporating a diverse range of merchandise options is important. Offering these branded items, alongside your traditional coffee-related products, ensures there is something for everyone. This approach allows customers to express their support for the brand in various contexts. 

To get started you need to pick your designs and your products to sell. I am going to break things down into two categories: Evergreen (available year round) and Seasonal (limited release). 

As Laura Beaudrow, Marketing Manager at Equator Coffee, puts it “Our evergreen core items are a representation of our core brand. They play in our primary brand colors (black, red, white, gray), and stick to core brand messages. Our seasonal items are where we get to play around a bit.” 

For evergreen merchandise, maintain consistency with our brands design and messaging. Whether it's the logo, color scheme, or tagline, reinforce the brand identity that helps customers recognize it easily.

At some point you will need to branch beyond your logo to keep people interested in buying your items. I don’t personally need the 12 travel tumblers I own but I can’t seem to resist buying another one when the design is good! 

Creating limited edition or seasonal merchandise items adds an element of urgency and exclusivity, motivating customers to make a purchase.These special items can generate significant interest and boost sales. For seasonal items collaborating with local artists, designers, or influencers to create exclusive merchandise can help coffee shops tap into new customer segments and garner attention from a broader audience.

“What I have seen work well for designs is when coffee shops partner with artists to create unique art alongside their logo mark.” Ryan goes on to share, “Partnering with local artists or an artist in general creates an opportunity for brand storytelling and is a great way to collaborate. 

PRODUCTS SELL

Vessels 

Every coffee shop should have an evergreen standard form factor coffee mug. This is a go to item for you regulars, gifting, and for tourists. Dropping a seasonal mug, that is a more unique form factor, is handmade, and/or has a creative design,  is an easy sell. 

Travel tumblers come in a lot of different sizes and styles. They are typically a higher price point due to the addition of a lid and insulation, so I would be thoughtful about how you present this item. I would go with a hybrid evergreen/seasonal approach. A special seasonal design but for a more extended time, 6 months or a full year. Dropping the new design during the holidays is a pro move. 

With cold drinks on the rise in popularity, having some vessels for cold beverages is a great year round or seasonal item for summer. “We had a surprise success when we released our first glass can a few years back. We had to place a reorder after having them on the shelf for only a couple of weeks!” Said Natalie Gates, the Art director at Temple Coffee. They also travel versions of cold cups as well. The “Cold Cup” form Created Co has “been a crowd pleaser” says Ryan.

Wearables 

Wearables can become a challenge with inventory due to sizes, and colors. To keep it simple, when you first start to dabble in wearables, try things that are one size (OS) like beanies, hats, socks, and bandanas. When you decide to jump into shirts and hoodies make sure to stagger your sizing volumes, prioritizing the more common sizes. That way you wont run out too quickly or run long on inventory. Stick to neutral or brand specific colors. 

Miscellaneous Item

Stickers, pins, patches, koozies, you name it! These little items are a great low price point item to add on to a purchase and raise your average ticket. They could also be used as giveaways, which is a good reason to increase your order quantity for a better pricing. Stick to the same theme of Evergreens with the addition seasonal drops and you’ll be golden! 

Tailoring Your Approach

While staying within the coffee adjust items theme is a safe bet, don't feel restricted. Regularly solicit feedback from your team and customers, and conduct surveys to understand their interests and needs. Be open to experimenting with new ideas and designs. Ultimately you know your customers best.

For Equator, Laura says “Not only do we keep an eye on what works well from a sales perspective, but we launch customer surveys on an annual basis to better understand our audience’s thoughts, feelings, and behaviors around Equator and coffee in general. We comb through the survey responses as well as other feedback we receive from our customers to build a clear picture of their interests and needs, and from a brand perspective where we have room to better tell our story.” Natalie shares that at Temple “We have a vast target market when it comes to demographics, so we try to create designs and choose merchandise that will satisfy our entire customer base. The most valued feedback we receive is that of our team and guests, so we regularly ask for feedback on product designs to see what they would be excited to offer, or enjoy themselves.” 

ORDERING AND INVENTORY 

Merchandise typically carries a smaller margin than that of most of your coffee shop drinks, but has a much higher price point boosting your top line revenue. Like how most ordering structures work, purchasing in larger quantities can secure better prices, improving overall margins.. The challenging part is that it also means a larger upfront cost. One option would be to buy larger qualities of evergreen items, such as a logo diner mug. Subsequently, order a smaller quality of your seasonal items. This ensures you sell out of your seasonal items (jump in on that scarcity mindset) plus you can generally price those limited edition items higher so you might end up getting your designed margin anyway. Stagger ordering so you don’t burn out your cash flow.

Stay connected to your sales, and your inventory. This will help you to be ahead of ordering, to adjust your offerings based on sales, and change your volumes for sizing colors and so on. 

“When deciding on new merchandise we reference analytics for similar items, which helps in our decision making and order quantities.” Says Natalie, “We learned how important it is to stay ahead of trends and keep a close eye on sales within the first two weeks to determine a reorder.” She goes on to add “We monitor our retail sales closely and analyze why a certain item might not be selling as well as expected and what we might do differently in the future, if we are thinking about releasing a similar item or style. We also take feedback seriously and use that information when making future decisions on merchandise as well. “

Along with seasonality don’t forget about lead times. The holidays are generally the busiest time for merchandise sales. If you want new designs for the holidays then you need to start your planning in the summer. Ryan acknowledges that “October up until Black Friday, it’s extremely busy!”. 

DISPLAYING YOUR WARES

There are a few different strategies coffee shops can use to promote merchandise sales. First and foremost, you need to make sure that the merchandise in your cafe is shoppable. Having your merchandise along the customer's journey to the POS is key. It is very unlikely that your merch will gain much traction if it is not accessible until after the customer has ordered and checked out. Get the customers' attention during the purchasing process.

“We tend to put new merchandise in areas of our cafes that we like to call “hot spots.” These hot spots have the most visibility and allow our guests to touch and feel the merchandise while in line or ordering at the register.” says Natalie.

Beyond where it is in your space, you need to think about how it is displayed. Retail merchandising is a whole career after all. Here is some homework: Go visit a cute trendy home goods store, this is a great way to get ideas for your own space. What level on the shelfs are things placed? How are they folded and hung? Take notes and try things out to see what works for your space. 

Customers are more likely to buy an item if they know how much it costs so make sure to clearly label and price. Just like pastries, no one wants the last item so have at least a few of each item available for purchase. And like a grocery store, have the design facing forward. Anyone ever been to Erehwon? Maybe the most beautiful example of retail display I’ve ever seen in my life. However, unlike Erehwon, you don’t have people just standing around turning labels after a customer touches something, so make sure that attending to the merch area is added to your daily checklists so it stays stocked and orderly throughout the day.  

Displaying clothing can be hard, again, gain inspiration from others and go check out a small boutique clothing store. They will most likely have racks, which one small rack can be a great way to display your clothing items. An example of a thoughtful way to display wearables I noticed at Price Coffee in Portland. Their crew neck sweaters were rolling them up and had a paper ring around them to hold its shape. The ring has the size, price, and design printed on them. A little extra work but a clean and beautiful execution. 

HANDS-FREE MERCH

If all of the above overwhelms you there is always do Print on Demand. If you go this route it will be best promoted through your ecomm channel. In a cafe setting not having physical items to interact with can be a challenge for making sales. Your margins will not be as good but there is a much smaller upfront cost and less labor involved, so if working capital or team constraints are a factor, this might be your best option.

Imagine if branded merch became 3% of your product mix, what would that look like for your business in additional revenue? What if you could get it up to 7%? When strategically implemented, merchandise sales can become an essential component for revenue generation. Placing branded merchandise at the forefront of their business strategies, coffee shops can not only enhance their financial success but also promote long-lasting customer engagement, by offering products that align with their brand, and resonate with their target audience. 

As Natalie so aptly put it “Having branded merchandise connects us to our guests on a more personal level, and that adds great value. We strive for our guests to feel connected to our brand and are proud that they want to represent us.”