5. Reaching the end consumer within a free market - Retail sector Flashcards
What advantages (3) are there for producers selling to supers?
1) An opportunity to sell a large volume of wine.
2) High levels of market exposure often in multiple regions and countries.
3) May benefit from the super’s employment of winemakers or viticulturists.
Provide an example of a supermarket own brand label.
Sainsburys - Taste the Difference.
What is a private label wine in the context of supermarkets?
A wine bottled under a label exclusively for the super with often only a small mention of the super on the label but only available at said super.
What is an advantages of an own label wine to the supermarket?
The can promote customer loyalty to the super.
What is a requirement of the producer when selling wine to a supermarket for a private label?
Must be available in large quantities so come from large producers.
Supers often buy directly from suppliers, which means what?
No intermediary costs.
What risks (5) are there to producers in supplying to supers?
1) Might receive lower profit margins due to competition for shelf space, which gives supers negotiating power.
2) May need to pay a fee to the super to be stocked.
3) Need to cover the cost of promotional offers and prime product placement.
4) If the producer cannot meet the super’s volume, QC, or delivery demands they may lose the contract.
5) If the product doesn’t meet the super’s sales expectations the product may be delisted resulting in large volumes of unsold wine.
How might a deep discounter’s costs be kept low (7)?
1) Lower profit margin relying on sales volumes.
2) Basic shop layout with lower rent due to less prime retail locations.
3) Streamlined product range i.e. one brand per product.
4) Rarely stock major brands, working instead with smaller or cheaper producers with lower overheads.
5) Tend not to charge for stocking products.
6) No limited-limited promotions.
7) Often buy direct thereby cutting intermediary costs.
How do convenience retailers differ from supers and DD (4)?
1) Located closer to where people live.
2) Sometimes open 24 hours depending on local laws.
3) They employ a higher proportion of staff relative to their size compared with supers.
4) Stock recognised brands popular with customers.
Why might convenience retailers be more expensive that supers (4)?
1) Rents in residential areas are often proportionately higher given the shop size.
2) The premises were often designed for other purposes making them inefficient.
3) If franchised, the operator must may a franchisee fee.
4) Higher proportion of staff relative to their size.
What are the two main advantages to producers of selling to specialist wine retailers?
1) They tend to focus on wines from smaller regions and producers
2) Producers may receive higher margins as they’re not competing on price like in supers.
What are three key features of a specialist wine retailer that may appeal to consumers?
1) Knowledgeable staff
2) Try before you buy events, tasting, education
3) A range of wine from smaller producers or regions
Name two specialist retailers of premium and super-premium wines.
1) Hedonism
2) BBR
If a producer is selling to multiple specialist wine retailers what might they require?
A specialist distributor with knowledge of the retailers and market(s).
What disadvantage is there to an online delivery model?
Wine is heavy and fragile and so costs a lot relative to its size to deliver.
