5.1: Reaching the End Consumer within a Free Market - Retail, Supermarkets

Question 1

What are the 8 different retail points of sale?

Answer 1

1. Supermarkets
2. Deep Discounters
3. Convenience Retailers
4. Specialist Wine Retailers
5. Hybrids
6. Online Retailing
7. Global Travel Retail
8. Wine Investment Companies

Question 2

Name 3 popular hypermarkets from different countries.

Answer 2

• Wal-Mart (USA)
• Woolworths (South Africa)
• Tesco (UK)

Question 3

In what markets do supermarkets have the largest market share when it comes to wine sales?

Answer 3

USA, UK and France

Question 4

What attracts buyers to purchasing their wine at supermarkets? Give examples.

Answer 4

Well-known brands

- Jacob’s Creek, Barefoot and Oyster Bay

Question 5

Give examples of supermarkets that favor private label wines.

Answer 5

• Costco in the USA

- Marks & Spencer in the UK

Question 6

How do supermarkets and producers interact?

Answer 6

• In many cases, supermarkets buy directly from producers (no intermediary costs)
• Many supermarkets employ winemakers who work closely with producers to supervise production and ensure quality control

Question 7

What is the risk/costs to producers?

Answer 7

• supermarkets need sufficiently varied product range giving supermarkets enormous negotiating power over price (lower price to producers)
• producers pay fees for marketing (e.g. prime placement in store, coverage in supermarket’s magazine)
• when supermarkets offer price promotions, they usually expect producers to may for reduction in profits
• competitive; can be dropped if sales goal not achieved (can be left with large volumes of unsold wine)

Question 8

What do the contracts between producers and supermarkets usually entail?

Answer 8

Very strict requirements regarding quality control, time and manner of delivery, packaging and labelling.