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WSET Diploma 4 D2 > Reaching the End Consumer Within a Free Market - Retail Sector > Flashcards

Reaching the End Consumer Within a Free Market - Retail Sector Flashcards

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1
Q

What % of sales in the UK are to the retail sector?

A

80%

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2
Q

List the 8 operators within the retail sector

A
  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
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3
Q

Supermarkets

What are the 4 advantages to producers of working with supermarkets?

A
  1. High-volume
  2. High market exposure (sometimes in multiple countries)
  3. May be direct purchase (fewer intermediary costs)
  4. Improved quality (e.g. if supermarket provides winemaker to work with them)
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4
Q

Supermarkets

What are the disadvantages to producers of working with supermarkets?

A
  1. Excess of supply over demand > negotiating power for supermarkets
  2. May need to pay fees
  3. Strict contractual requirements
  4. Risk of delisting if doesn’t meet volume or margins
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5
Q

Supermarkets: Disadvantages: Fees

What fees might a producer need to pay to a supermarket?

A
  1. Stocking
  2. Promotion (e.g. placement, appearance in mag)
  3. Price promotion (producer pays for reduction in profit)
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6
Q

Supermarkets: Disadvantages: Strict contractual requirement

What contractual requirements might producers have if they work with supermarkets?

A
  1. Quality control
  2. Time and manner of delivery
  3. Packaging and labeling
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7
Q

Suoermarkets

Why do supermarkets sell private label wines?

A
  1. So consumers can’t easily compare prices (even if available elsewhere under different label)
  2. Can promote customer loyalty to the supermarket
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8
Q

Supermarkets

Describe the 2 types of private-label wines

A
  1. Supermarket name does not appear prominently - e.g. M&S
  2. Own-brand (clerly displays name and branding on label) - e.g. Sainsbury Taste the Difference
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9
Q

Supermarkets

Outline 3 key features of premium supermarket chains

A
  1. Buy wines from artisan producers under their label - useful route into market
  2. Small quantities
  3. Appeal to consumers with strong interest in wine
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10
Q

Supermarkets

What are 4 features of wine typically stocked by supermarkets?

A
  1. Wines from well known regions / varieties
  2. Appeal to wide-range of consumers - many have little knowledge
  3. Well-known brands
  4. Local wines (if from wine-producing country)
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11
Q

Deep discounter

Outline 2 features of the deep-discounter model

A
  1. Permanently low prices
  2. Rarely any time-limited price promotion
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12
Q

Deep discounter

Give 6 ways deep discounters keep prices permanently low

A
  1. Take lower profit margin
  2. Basic shops
  3. Away from prime-retail locations
  4. limited product ranges (one brand per product & many private labels)
  5. Rarely stock major brands (cheaper due to less marketing budget)
  6. Buy direct from producers
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13
Q

Deep discounter

What are the advantages to producers of working with deep discounters?

A
  1. Can be useful if have surplus of wine to sell (Deep discounters happy to purchase until sold out)
  2. Don’t have to pay for promotions (greater profits than supermarkets)
  3. Opportunity to develop private label brands
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14
Q

Deep discounters

When might a deep discounter stock a more expensive wine? What has been the result?

A
  1. To stock in more affluent areas
  2. Times of increased spending (e.g. Xmas)

Attract consumer with more interest in wine > also buy less expensive wines while in shop then go back to buy more

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15
Q

Deep discounters

How has the % of people who’ve bought wine from deep discounter in the uk changed in recent years?

A

2012 - 23% > 2018 - 37%

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16
Q

Convenience retailers

Why do convenience retailers tend to be more expensive than supermarkets?

A
  1. Higher rents
  2. Less efficient
  3. More staff
  4. Franchise fees
17
Q

Convenience retailers

What type of wines do convenience retailers stock?

A
  1. Wines popular with local customers (similar to supermarket but smaller range)
  2. Major brands or exclusive brands
18
Q

Specialist Wine Retailers

What are the advantages of specialist wine retailers for producers?

A
  1. Attractive for smaller producers or those from less well known wine regions, producing from less common varieties
  2. Average price of wine higher > make a better margin (although usually have to pay distributor)
  3. Customers willing to spend more
19
Q

Specialist wine retailers

List 3 types of specialist wine retailers

A
  1. Large chains (e.g. Oddbins)
  2. Independently owned or part of small chain
  3. Fine wine retailers
20
Q

Specialist wine retailers

What are some advantages of specialist wine retailers for consumers?

A
  1. Get personal service (e.g. suggesting wines based on preferences)
  2. Learn from well-trained staff about story of wine, info about lesser regions / varieties, food pairings
  3. Be invited to special events / wine education classes
21
Q

Hybrids

Define a hybrid

What are 2 advantages and 2 disadvantages for the retailer?

A

Specialist wine retailer with a bar area - may offer snacks and wines by the glass

  1. Try before buy encourages consumers to buy wines they may not have bought
  2. Can showcase new wines and less well-known wines
  3. Need to stay open later and have more staff
  4. Beuracracy of hosting eating and drinking
22
Q

Online Retailers

What % of wine sales are online in a) China and b) The USA?

A

20% / 2%

23
Q

Online Retailers

What are the advantages for online retailers?

A
  1. Connect with customers from anywhere
  2. No need for expensive retail shops
  3. Can stock larger and more varied range of wines - opportunity for smaller, niche producers
24
Q

Online Retailers

What are the disadvantages for online retailers?

A
  1. Still need staff to deal with queries, logistics etc
  2. Expense of delivery
  3. Risk of wine being lost or damaged in transit
  4. Expectation of very quick delivery
  5. Have to maintain website / apps / shop-in-shop
25
Q

Online retailing

What kind of content / support needs to be enabled for websites?

A
  1. Description of wine
  2. Food & wine pairing suggestions
  3. Scores
  4. Suggestions based on previously bought
  5. Ability to leave own reviews of wine
  6. Technical support in case of error
26
Q

Global travel retail

In what 2 locations are shops located? What is the advantage of each?

A
  1. Departure area - has time before flight
  2. Arrivals area - don’t have to carry hand luggage
27
Q

Global travel retail

How has global travel retail evolved in recent years?

A

Evolving from “duty-free” to a place to look for high-quality / high-priced goods can’t find in own market

28
Q

Global travel retail

What is the primary disadvantage of global travel retail?

A

Cost of retail space

Cost passed on to suppliers leaving lower profit margins

29
Q

Wine investment companies

List 5 business models involved in wine investment

A
  1. Specialist wine retailers who buy then sell on
  2. Brokers
  3. Companies that manage portfolios (e.g. Cult wines)
  4. Managed wine investment funds (e.g. Sommelier capital advisors)
  5. Auction houses
30
Q

Wine investment companies

What are 2 problems (and solutions) of wines sold at auction?

A
  1. Provenance > Houses carry out detailed investigations
  2. Fraud > Anti-counterfeiting techniques by producers

WSET Diploma 4 D2 (11 decks)

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