Posted on | September 4, 2014
Written by | Ian Griffith
Fine-grained data on sell-through is key to business intelligence.
From the West Coast looking east, the view is a litle murky when it comes to understanding when products are being sold to consumers. It’s a vibrant market, but wineries (and their marketers) are frustrated by the lack of insight into what is actually moving at retail.
At the recent WITS conference, a panel spoke on how they develop business intelligence on sales figure given the separation between the tiers. The majority of reporting information comes back to suppliers from distributors in the form of depletion reports. In recent years the quality of this sales reporting has improved but depends a lot on the technical capacity of the wholesaler. At a minimum, wholesalers may report unsold inventory, giving a view of turnover, but increasingly wholesalers are providing detail on sales to each retail account. Access to this level of reporting can be a deciding factor for a winery as it chooses a distributor.
A More Complete Picture
Being able to see what retailers have purchased is very helpful, but it still presents an incomplete picture for the winery. As one marketer put it, “My wine isn’t sold until a customer has opened and drunk my bottle of wine.” Marketers want to get as close as possible to knowing that a consumer has a wine in their home and is ready to pull the cork, otherwise their inventory could be sitting in a retailer’s warehouse remaining unsold. The winery has probably been paid for this product, but they can’t really count the wine as sold if it never made it to a customer.
The depletion reporting from a wholesaler might identify an account but be unspecific about exact locations where the wine has been shipped. If the winery has negotiated a wine-by-the-glass program at a steakhouse chain, the marketer needs to know if specific restaurants haven’t picked up the program.
Another insight for the marketer might be the impact of price changes on a region. Changes in the pattern of reorders will certainly indicate the effect of a price change, but this data could take months to come together. Being able to see the change in weekly retail sales might highlight regions where price is more sensitive than in others. Marketers are much happier when they can see SKU velocity at the local level and use it to identify trends.
To date, the collection of retailer sales volume has been managed largely via big box stores and chain restaurants. They share scan data about what is passing through their checkout lines and registers. Collecting sales information from independent stores and “white table” restaurants is a challenge for the data services and can be a nuisance for the retailer. In the absence of streamlined reporting tools, the sharing of data can amount to a monthly phone call where the retailer answers questions about what has sold. Aside from the potential nuisance, independent retailers have historically had concerns that sharing sales info will somehow hurt them against a competitor, or in negotiations with their wholesaler. In reality, though, their purchases are already being reported back to the data services by their distributor.
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