5. Reaching The Consumer Within A Free Market- Retail Sector

Question 1

The differences between retail/ retailer and Retail sector.

Answer 1

1. Retail/ retailers refer to the business that sells wine to the end user for consumption, whether it is Retail sector or hospitality sector. Opposite to another part of wine trade as distributor.
2. Retail sector- refer to the businesses selling wine to the end users for consumption. With the exception of wine sold to investors that may re sell the wine at later stage.

Question 2

What types of business are there in the retail sector?

Answer 2

1. Supermarket
2. Deep discounters
3. Convenience retailers
4. Specialist wine retailers
5. Hybrids
6. Online retailing.
7. Globe travel retail
8. Wine investment companies

Question 3

what are pros and cons of selling wine to supermarket and solutions can be done?

Answer 3

Pros:
1. Shop various items, groceries, wine under one roof.
2. Producer sell large volume. Reduce stock pressure.
3. Opportunity prive label.
4. No intermediaries

Cons
1. Price comparison.
2. Only famous brands, large competition.
3. Not loyal to brand.
4. Huge negotiation power.
5. Fees apply for promotion, magazine, placement and lost of profit from promotions.
6. Delist if margin not met.
7. Target wine consumers with little knowledge.

Solutions
1. Supermarket brand, no price compariso.
2. Loyalty to supermarkets brand if shown on label.
3. QC by hiring winemakers.
4. Find the premium supermarket sell smaller producer and artisan wine producers under limit stock.
5. Consumers are interested in wine knowledge.

Question 4

What is deep discounters and how important are they in terms of wine business? The pros and cons of selling wine in deep discounters.

Answer 4

Deep discounters are supermarkets that offer permanent low prices by:
1. Low margin, high volume
2. Away from primary locations, low rent.
3. Limited categories, easy to maintain.
4. Basic setup.
5.

Opportunity:
1. Selling large stock for producers while stock last. Limit supply.
2. Selling less famous wine brands.
3. Provide opportunity to develop private label.
4. No fees apply for stocking wine, promotions. Higher profit for producers.
5. No intermediaries.
6. Stock more premium wine in special occasions in more affluent areas. Attracting people buying wines from low to high.
7. Increasing market share in wine business.

Question 5

What are the pros and cons of a convenience store

Answer 5

Pros:
1. Primary location higher population area or major shopping centres.
2. Long opening hours 24H
3. Consumer expect to pay more for convenience.

Cons
1. Limit product range due to small space.
2. Major brand, less opportunity
3. Exclusive brand.
4. More staff.
5. Pay franchise owner
6. Local laws may ban the sales

Question 6

What does a specialist wine retailer means and list pros and cons.

Answer 6

Specialist wine retailer
1. Specialise wine, premium beer and spirit.
2. Specialise lesser known variety and regions.
3. Provide knowledge.
4. Provide premium service
5. Attract high involvement consumers.
6. Consumer DDT e

Pros.
1. High margin, high involvement willing to pay more.
2. Appreciate broader range
3. Offer personal service well trained
4.knowledge ,region, food pairing.
5. Willing buy unknown from staff recommendation.
6. Opportunity, story, loyalty. Brand awareness.

Cons
1. Expensive
2. Training
3. Producer pay the specialist for selling wine

Question 7

What do hybrid do?

Answer 7

1. Hybrid refers to specialist wine retailers who offer foods in their store.
2. Also sell premium beer and spirit.
3. Sell delicatessen, tapas, food pairing
4. Tasting ,
5. By bottle or glass

Pros:
1. Encourage low involvement to try.
2. By glass or bottle
3. Show case new wines from less well known.
Cons
1.staff
2. Decorating
3. Equipment
4. Location
5. Extra working hours

Question 8

List and explain the types of online retailings.

Answer 8

1. Bricks and motar- the traditional retailers such as supermarkets to specialists that set up online stores.
2. Online only retailers only sell wine online. Eg news wine club

Question 9

How do online retailers work and the pros and cons of having one.

Answer 9

1. Order through website
2. Offer suggestion, commend and critic, review.
3. Detailed information.

Pros.
1. Comfort ordering.
2. Save traffic, time, delivery.
3. Normally cheaper.
4. Lower overhead (online only), cheaper warehouse, away from primary locations. Cheaper rent.
5. Offer more product range (online only)
6. Mobile apps simplify processes
7. Large online company offer quick dispatches one hour.

Cons.
1. Website maintenance is important
2. Technician update latest news.
3. Costly bulk item, lost and damage in transit.
4. No product loyalty for producers.
5. Hiring staffs for queries, handling order and dispatches.
6. Longer delivery time than consumer needs.

Question 10

How are global retailers important and list the pros and cons.

Answer 10

1. Store is located in place where travels to another country, airport, seaport, railway.
2. Located in departure, pass custom, shopping at leisure.
3. Located in arrival, consumer shop without carrying extra luggage over entire journey.
4. Duty free.
5. Offer super premium wines that are not available in consumers’ home country
   Cons.
6. Expensive, high rent,
7. Limited spaces less product range.
8. Pass the cost to supplier. Weaken the sector due to low margin, low profits.

Question 11

Describe how wine investment companies work?

Answer 11

1. Specialising, sourcing, and selling expensive most sought-after wines.
2. Brocker finds potential buyers and sellers.
3. Normally express of interest.
4. Commission base.
5. En primeur
6. Act like stock exchange. Liv-Ex
   Risk:
7. No guarantee of profit, even the best bordeaux can fall
8. Quality concerns on auction wines
9. Fraud, fake product
10. Requires authenticity system on place.