Posted on | September 22, 2014
Written by | Brian D. Rosen
Potential threat of grocery stores presents incentive & opportunity for independent package stores to raise their game.
Look! Over your shoulder! It’s our nemesis, the Chain and Independent Grocery Store. This frightening villain takes many names and has many advantages that retail off-premise wine and liquor stores do not have. Grocers have deep pockets. They have coolers that can run the full length of the walls. They have tons of labor. And let’s not forget: they have feet in the door and high transaction count. Grocers seem like an unbeatable foe!
Don’t believe it. Right now, while the threat is still removed from reality, take the steps to outperform the hypothetical Grocery wine department in ways they can never compete.
Beat Them At Our Game
Grocers are very beatable in the sense the beverages are not their main line business; food is, so that is where the focus is. When we at Rosen Retail look at the grocery channel we see reluctant retailers in our space. Consider the grocery channel as a whole—there are so many better ways for the grocer to spend their inventory dollars. Meat, produce, even flowers all turn faster and more profitably than liquor.
Grocers feel as though they need to have the beverage alcohol departments to capture the entire wallet of the consumer. Studies show that the average ring at grocery for liquor is under $20.00 and averages only two items. Grocers are institutionally redisposed to underperform in our specialty. On top of that, grocers generally do not add a labor head to the beverage alcohol department. That aisle is staffed the same as the aisle that has foil and paper towels.
Therein lies our opportunity. Being a reluctant retailer is worse than being a bad retailer. We can very successfully compete in service, selection, product knowledge and merchandising.
Merchandising. An unwritten rule in chain grocery is to favor light or limited floor stacking and display. We know from data that creating a floor stacking or display can yield a double-digit lift in product sales. Often grocery beverage alcohol departments do not purchase multiple case deals, so you can compete on both price and merchandising. This is a double win!
Product Knowledge. As discussed earlier, the Grocer would be unlikely to put a labor body in this aisle. We also know that much of the wine world is a “hand sell.” Using those two facts you can deduce that hand-selling wine will increase the cart, create a great customer experience and often increase gross margin, much more than the cost of the labor head.
Selection. Stores like Costco typically carry 200 wine SKUs. Other grocers or general merchandise stores also carry limited SKUs because, as noted, they are not truly wine retailers. Customers do not go to Walgreen’s to find new release wines. Your opportunity is to keep selection fresh, current and stress new release wines. Make your store a destination as well as convenience stop for your consumer.
Service. This tip should be self-explanatory. Wine aisle help is something that most grocers will not supply, yet as wine and liquor retailers we have help a-plenty. This is your strength; use your superior customer service to accentuate the weakness of the grocer competitor. Take price out of the equation.
Certain fundamental differences will always exist between true wine merchants and Chain/Grocery departments. Those differences represent our opportunity. The category that is our whole raison d’être is, to the Grocer, merely as an add-on to the food basket. We sell goods that need education, that deserve true sales support and touch on topics that stretch from maps to cuisine. By delivering a broader, deeper, smarter shopping environment for wine and spirits consumers, independent retailers can thrive.
Rosen Retail for Alcohol Beverage offers support to retailers and suppliers alike, having created Supplier Boot Camp and Retailer Boot Camp and other awardwinning programs that increase gross margin for retailers and cases sold for suppliers. Brian Rosen can be reached at email@example.com.