5. Reaching the End Consumer - Retail Sector Flashcards
What are supermarkets and some examples? Why do they appeal to high volume producers?
Outlets for groceries and household goods, allowing a one-stop-shop, ie. Walmart, Woolworths (SA), Carrefour, Tesco. Often multinational.
They have largest market share of wine sales in USA, UK & France and many countries
What types of wines do supermarkets stock?
- Producers or regions that have recognition or reputation (well known producers do not foster loyalty)
- Popular varieties and approachable styles
- Local wines may dominate in wine-producing regions
- Private labels with or without the retailer name (foster loyalty)
- Some premium ones (ie. Whole Foods) will buy smaller volumes of artisan wines
What is an example of a supermarket private label? How are they usually acquired? How are they improved?
- Sainsbury’s Taste the Difference (own-brand label)
- Usually purchased direct from large producer
- employ winemakers for QC and to improve quality
What are 5 disadvantages for a producer selling in a supermarket?
- Buying power means lower margin
- Added fees for placement, flyers
- Footing discounts
- Contracts with strict QC, delivery, pkging, labelling requirements
- Brands can be dropped if volume or profit is not achieved
What is a deep discounter, and what are some examples?
Offers permanently low prices, rarely offering time-limited promotions. Sells similar items to a supermarket.
Aldi, Lidl, Netto (DK), Trader Joe’s
How do deep discounters lower prices? (7 ways)
- Lower margins than supermarkets
- Basic merchandising (ie. on pallets)
- Not in prime retail locations, lowering rent
- Limited product range (streamlines)
- Mostly private labels
- Rarely stock major brands
- Often buy direct, avoiding intermediary costs
What are 5 advantages of selling to a deep discounter?
- Greater margin than supermarkets since there are no promotional costs and no intermediaries
- Appealing to producers with a surplus
- Consider wines with a quantity limit, that can sell out w/o commitments
- Might purchase small amounts of premium wines at peak times to draw high involvement customers
- Growing segment
What is a convenience retailer?
An independently or franchise-owned shop that is operated closer to residential areas and open longer than a supermarket (alc sales may be limited)
What type of wines are usually in convenience retailers?
Similar to supermarkets, but smaller. Some chains may have private labels
What is the pricing approach of a convenience retailer?
- More expensive due to higher cost of rent and labour, and/or franchise fees
What is a specialist wine retailer?
A retailer that also sells premium spirits, beers or artisan delicatessen foods. Most are independent, or part of small chain, with some exceptions (ie. Oddbins).
What might a specialist wine retailer specialize further in?
A country
A style
Organic/biodynamic or natural (ie. Les Caves de Pyrene in UK)
En Primeur (as well as other wines)
Advantages of selling to a specialist wine retailer?
- Focus on small producers, lesser known regions and varieties
- Sell at a higher price point to high involvement consumers who are less price sensitive, by providing more guidance, info and service, range
- Higher margin
- Staff are well-trained and hand sell, increasing loyalty to producer
- Events and tastings increase loyalty
Downsides of selling to a specialist wine retailer?
- Do not have same volume opportunity as supermarkets/deep discounter
- To make a profit producer likely needs to be involved with a large number of outlets
- Labour is more costly for the shop, inflating prices
What is a hybrid retailer?
Specialist retailer with bars for drinking wine, often serving food.
