Reaching Consumers: Retail Flashcards
In which countries do supermarkets have the largest share of wine sales?
UK, USA, France
What is the appeal for consumers in purchasing wine at the supermarmet?
- Supermarkets have everything they need under one roof
- Typically stock wines well known brands that have wide appeal
- Customers can compare prices of well known brands between retailers
What is a risk for supermarkets selling well-known brands? What’s one way they can mitigate this risk?
Consumers are aware of pricing in between retailers
Offer private label wines
What is the appeal for producers selling private label wines to supermarkets?
- Best way to sell in high volumes
- Higher levels of market exposure
- Lower intermediary costs because supermarkets often buy direct from producers
- Supermarkets sometimes hire winemakers to advise and check for quality control, which can help the producers improve wines they sell elsewhere
What are the cons of selling to supermarkets?
- More supply than demand -> buyers have lots of negotiating power in regards to pricing -> sell at lower prices than other channels
- Substantial fees to have wines stocked and promoted (either through marketing/display in store)
- Producer expected to eat cost for promotional discounts
- At risk of being delisted (Strict contractual obligations for quality and delivery, low sales) -> large volume of unsold wine
How do premium supermarket chains (eg. Whole Foods) differ in their buying strategy?
- Often work with lower volume, artisan producers
- Lower expectation of consistent supply
- Consumer base with stronger interest in wine
What is a deep discounter?
A supermarket that sells high volumes at permanently low prices
What strategies do deep discounters use to keep prices low?
- Basic stores, low maintenance
- Lower rents away from prime locations
- Little range in options
- Mostly private label, cutting out intermediary and marketing costs
- Buy surplus stocks from producers with low overhead
- Do not charge producers for stocking their products or promotional discounts
What’s one strategy that deep discounters use to attract consumers with a stronger interest in wine?
- Offer limited quantities of high quality, more expensive wine, with the hope that consumers will also try and continue to buy the lower priced wines
- Often in more affluent areas, especially around times of high spending (eg. the holidays)
- In the UK, deep discounters’ market share grew from 23% -> 37% between 2012-2018
What is the appeal of a convenience retailer for consumers?
- Similar brands to supermarkets
- Less travel than to supermarket, and usually open for longer
- Might be independently owned
Con: Typically slightly higher prices
Why are costs typically higher in convenience retailers than in supermarkets?
- Smaller spaces are generally less efficient and rent/labor are proportionally higher
- For franchises (eg. 7-Eleven), a fee is paid by the operator to the owner
What are the pro/cons for producers selling to specialist retailers?
Pro:
- More engagement and trust with “high involvement” consumers who are willing to spend more -> higher profits
- Stores often have a wider range of lesser known regions, grapes and producers
- Specialists will often host tastings/educational events for their consumers
Con:
Will most likely have to pay distributors’ fees because of the number of potential outlets
What are the pros/cons to the hybrid-retail model?
Pros:
- More accessible for consumers with less wine knowledge
- Flexibility in what wines can be showcased via BTG (and sell product that isn’t moving)
- Higher margins for
on-premise purchases
Cons:
- Additional regulations and licenses required
- Often open later
- Additional staff required
What are the pros/cons for online retailers?
Pro:
- Low overhead (warehouses in low rent areas, less staff needed)
- Larger stock variation
- Customer base not limited to local consumers
Con:
- High delivery costs (can be passed along, risking sales, or eaten, lowering profits and risking damage during delivery)
- Increasing expectations for faster delivery
- Must have constantly updated and functional website (IT costs)
- Need to ensure that information is helpful and well presented
What are the benefits for consumers in purchasing at a Global Travel Retail Shop?
- No duties charged on goods bought for personal use in another country (attractive for consumers coming from countries with high taxes on perfume, alcohol and tobacco)
- No need to carry and stow extra luggage on plane (when the store is at arriving airport before customs)
- Is a space for products not accessible in other markets (including ultra-premium and high end goods)
