Reaching the End Consumer: Retail Flashcards
What are the eight major retail outlets where wine reaches the end consumer?
- Supermarkets (usually have largest market share for wine sales);
- Deep discounters;
- Convenience retailers;
- Specialist wine retailers;
- Hybrid retailers;
- Online retailers;
- Global travel retail;
- Wine investment companies.
Give four examples of supermarkets in four different countries.
- Wal-Mart (USA)
- Woolworths (South Africa)
- Carrefour (France)
- Tesco (Britain)
What is a private-label wine?
Wine that is bottled exclusively for a distributor or retailer whose juice may or may not be the same as juice that goes into another, separate wine label that is sold elsewhere.
They are usually made by large producers and are made in large volume.
What are four risks for a producer selling in supermarket setting?
- Supermarkets dominate the negotiating power, so the producer may get a lower price for their wine than what they desired;
- Producers are typically expected to pay heavy fees to have their wine stocked by the supermarket;
- Producers may have to pay for any reduction in profits if the retail price was reduced;
- If a producer’s wine doesn’t sell well, the supermarket may discontinue it even before the supermarket takes everything they pre-ordered, leaving the producer with a lot of liability.
Give three examples of European Deep Discounters.
- Aldi (Germany);
- Lidl (Germany);
- Netto (Denmark).
Why don’t deep discounters ever offer sales or price promotions?
Because their business model is to offer permanently low prices. They do this by:
- Taking lower profit margin by relying on the volume of sales for profits;
- Maintaining low rent by being in non-prime locations;
- Relying on private labels rather than major brands;
- Buying directly from producers (no intermediary).
Select the correct answer.
Convenience stores tend to be:
- less expensive than supermarkets.
- more expensive than supermarkets.
Why?
More expensive than supermarkets
- Convenience stores’ rents tend to be proportionately higher than supermarkets’ rents;
- They typically employ a higher proportion of staff relative to their size than supermarkets;
- If the convenience store is a franchise, the operator pays a fee to the franchise owner.
Why are specialist retailers more attractive to producers as places to have their wine sold?
Specialist retailers attract more ‘high involvement’ consumers than supermarkets, deep discounters, or convenience stores which tend to attract the general public.
What is a hybrid retailer?
Specialist wine retailers that also have a bar area where guests can drink the wine they bought in the shop (at a slightly higher price than if they were taking it away).
They usually offer small plates, tapas, or cheese and charcuterie – not full dinners.
What are three advantages for online-only retailers?
- No rent for physical store;
- Wine stored in warehouses in non-prime real estate;
- Buyers can make large purchases at deep pricing, or buy smaller producers to offer a wider range for their customers.
What are four disadvantages for online-only retailers?
- Cost of deliveries;
- Customer doesn’t always have the immediate gratification as they would buying wine in a physical store;
- If website is slow or difficult to navigate, online retailer will have poor conversion rate and customers will leave the site without buying;
- Poorly maintained inventory or not having descriptions of the wine can put off customers.
Why is selling through global travel retail so expensive for the supplier?
Rents are high in airports and other travel junctions/ports of call and a percentage of that high cost of rent is passed on to the suppliers, resulting in lower profit margins.
What is a wine investment company?
A company that specializes in sourcing and selling wine for investment, usually in the fine and rare sector of highly allocated wines (e.g. Bordeaux, Burgundy, cult California and Australia).
