Tag Archives: retail

But where is ‘cool’?

I feel I really ought to clarify the term ‘cool’ used in my previous post in the context of the Wine Conversation.

What I had in mind was the kind of place that a person would not only want to go to, but be seen to go to, and even then talk to others about having been there. In Hugh MacLeod‘s terms, a wine retailing Social Marker. By the shared experience of having been to the shop, individuals would be willing and able to start their own wine conversation.

I believe that the retail experience is key because it is common to each wine consumer no matter what they choose to buy. It is also important to keep in mind that this is about the kind of wine consumer who rarely spends over £5 a bottle.

Hugh himself demonstrated the effectiveness of this by engineering the interest in one retailer, Threshers, around Christmas 2006. He used a viral email campaign to get people to talk about that retailer, who then encouraged others to go there to shop and get their discount. It certainly got a lot of people talking and shopping. Where it failed (for Threshers) was that the discussion was not about them at all, but about the discount, and once that was gone, so were the vast majority of the customers.

So where do you buy your wine?

I’ve been reading a fair bit recently about the change in the fortunes and the reputation of Oddbins. It made me think about where I got started with wine.

An important question came to my mind, which I believe is very important to The Wine Conversation.

“Where is it cool to buy wine?”

Plenty of places will sell you wine, but where do people WANT to go and buy it? Once upon a time, and one of the main reasons the wine culture in the UK became ‘cool’, that place was Oddbins. They may not have been everywhere yet, but anyone interested in wine, particularly if you were younger and wanting to know more about the wine world, would know the name ODDBINS.

It was a place to hang out and find all sorts of weird and wonderful, and just affordable, wine discoveries. Australia. Chile. South Africa. California. Exotic names and brands.

Not only were the wines available, but you could be certain that the person behind the counter, and very often not behind the counter but on the shop floor ready to talk to you, would know a great deal. They would have just tasted some “amazing new listing” that they could recommend.

My wife (girlfriend at the time of course) would know that if I went in “just to browse” I would certainly come out with a bottle of something.

Where are they, and their successors today?

Majestic is certainly one of the most successful. Their ‘by the case’ formula is very good for the bottom line, and profitability and confidence help to keep that success going. But 12 bottles is too much for a student or young person just starting out with wine. I was worried about spending £7, never mind £50.

I believe that when he moved to take charge of wine (amongst other things) at Tesco, Dan Jago said that his aim, and I paraphrase slightly, was to make it the kind of place even those in the wine trade would be happy to buy their wine. He has certainly overseen an interesting expansion of their range, I can’t fault that. Unfortunately, I personally can’t see Tesco or any supermarket being a ‘cool’ place to buy your wine, however good the range (he may well disagree).

Independent Merchants, small shops run by enthusiastic individuals, are certainly out there, but the market is very fragmented and their power to reach out to new consumers is limited. Many also find them quite daunting – an unknown quantity where one’s own lack of knowledge might be sneered at.

Can anyone step in? Threshers seem more intent on becoming convenience stores. Nicolas’ exclusive focus on French wines is insanity in the current climate.

One final alternative are the mail order and internet merchants – and here I’m mainly thinking of Direct Wines / Sunday Times Wine Club / Laithwaites / Virgin. This is a growing area for selling wine, but no-one has yet become THE place to go and buy wine. However, this is something to explore further. Many are vying to be the Amazon of wine retailing.

Maybe Oddbins will finally turn it around, who knows, but it will take a great effort, but who else is there?

So, where do you buy your wine?

Alcohol Monopoly

I have been visiting Nova Scotia in Canada for a number of years (it is absolutely beautiful by the way) and usually I am critical of the concept of the Canadian state (well, the Provincial governments) having a monopoly on the sale of alcohol. You can check out the range here.

For those of us living in the UK or most of Europe, the idea that the state should control what wines or spirits should be available, where, and for how much is extraordinary (if you live or visit Sweden this is probably not such a shock for you).

[Some might argue of course that this is exactly where we are heading in the UK because of the retail strength of the supermarkets like Tesco – but even here we at least have a number of alternative ranges to choose from]

My reaction is usually – “How could one organisation tell us what wines we can drink?”, especially when the result, at least in Canada, is a pretty limited range of branded wines?

The reason for this structure is most likely still a hang-over (!) from Prohibition (yes, they had it here too), and there is a sort of puritanical streak to the management of this ‘vice’ which I personally disagree with. It also means that there is a form of “lowest common denominator” effect at work which determines that all wine have to be available in minimum quantities to supply all stores, have to be consistent and also be able to comply with the kinds of red-tape only government departments are able to create. This often results in a pretty bland range.

However, there is one small silver lining to this was pointed out to me which I had not considered. In the UK we have such a high density of population that we can pretty well guarantee access to supermarkets or shops wherever we are, with a few exceptions of course. This means that the market can operate quite freely and there will be someone who can sell you what you are looking for within a reasonable distance.

When you take a country like Canada, this is definitely not the case outside of most large cities. So much of the infrastructure here depends on government support to reach tiny communities in distant areas, that if the government did not step in, certain items (especially luxury items such as wine) would either be impossible to get, or prohibitively expensive.

OK, so wine is probably not the main justification for this type of system, and I’m sure they make a pretty penny or two in tax from selling and taxing all that alcohol, but at least they can get it. Hopefully in time, and with a little popular pressure, the range will improve further.

I’m sure the local “liquor commission” would tell you that a monopoly also means that there are clear & limited channels for reaching consumers, giving the opportunity for ‘managing’ consumer alcohol consumption. I still think that in the longer term education works better than restricting access. However, thinking positively, it does mean there are obvious places to start reaching consumers with information on wine to educate and inform them and improve their experience.

Still, I’ll take Tesco’s range over the NSLC one any day!

Cost of wine on the High Street

Once again Peter has challenged me, so here is my response on excess drinking and the cost of business. Thanks Peter!

I mentioned that I thought the Threshers “3 for 2” campaign was a good thing, to which Peter asks:

“So you don’t agree with recent claims that such offers encourage binge drinking?”

In general terms no, I don’t agree that a “3 for 2” encourages binge drinking. I am still of the opinion that all consumers (who can legally buy alcohol) should be treated as reasonable and responsible adults. I really don’t like this government’s campaign to control personal decision-making in all sorts of areas and not just alcohol.

Do you think that Majestic insisting on people buying a case of 12 is 4 times as bad as Thresher? Of course not. Binge drinking is an issue I’m sure, but restricting the sale of these products is not the answer.

So, assuming people can buy more than one bottle without drinking them all at once, why should we encourage this?

“The real problem with Threshers is that the single bottle price is so inflated. With Tesco, their instore prices are equivalent to the discounted Threshers price, and so an additional 30% is a deep discount.”

The issue is cost and convenience. Threshers operates out of small shops on high streets. They specialise in certain types of wines, those the consumer is familiar with and wants to buy fairly regularly. This means that they are not competing with independent wine specialists whose niche are small production, probably higher cost wines, but directly with the supermarkets who sell the same wines. Of course the supermarkets can afford to get prices very low because they have bulk buying power and other economies of scale.

So where does it leave Threshers? We cannot really expect them to be able to sell the exact same wine as Tesco for the same price can we? Why should they? We really ought to be prepared to pay a premium of some sort to be able to buy that single bottle of wine on our way home without having to negotiate all the aisles and checkouts of the supermarket.

They could have left it at that, and maybe survived, but the pressure would have been ongoing (arguably what is happening to Oddbins). So instead, they have a contract of sorts with their customers that goes something like this:

“If you are prepared to buy in slightly greater volume (thus increasing our cash flow and turnover of bottles), we will reduce our total price to you to be in line with those places you might otherwise shop”

That is obviously too complicated a message, but anyone can understand “3 for 2” and it is therefore a good marketing concept. Do I begrudge them trying to survive? Not at all. You can still buy that single “emergency” bottle on the way to the party, or after a tough day or whatever. If you think that premium is too much, you can still go to the supermarket instead.

No-one criticises Majestic in the same way for a vaguely similar model, quite the opposite. In fact their prices are also more or less in line with other retailers but only because they demand that you buy in volume. They won’t even allow that single bottle purchase. Surely this is something we could praise Threshers for?

When Tesco, Sainsburys et al offer a further 25% or 30% discount, Threshers and other smaller retailers simply cannot compete and still make money. However, they have to find ways to stay in touch as they still need to trade. Where I have the problem, as I have raised elsewhere, is when they try to do so by ‘bamboozling’ customers by talking about percentage discounts instead. I would like to see them try and find a differentiator that was not price and discount driven instead (as discussed many moons ago here and here) – it seems a sensible suggestion for longer term differentiation.

I should state for the record that indirectly I am involved as a supplier to Threshers (as well as Tesco, Sainsburys, Majestic and many others), but that my views on this are quite definitely my own and presented in the spirit of improving wine knowledge and discussion rather than promoting or knocking any specific retailer or wine.

The Four P’s

Product, Place, Price, Promotion

They hammer that one home in Marketing 101. To market effectively you must manage all four (plus a few others they added later on) and create the right combination to match your customers’ needs.

So why is wine SO stuck on Price alone?

I know, I know. Many will say that it is all about the product, but in fact the real message about product is so often lost before it gets to the consumer, that it is ineffective. Those in the wine business will tell you stories about the apparently confident consumer asking for Red Chardonnay or what country your Rioja comes from, etc. To those with knowledge, these seems ridiculous. In practice they are often the real example of the level of Product knowledge.

So what about Place (the distribution channel). Well, 80% or so of wine is bought in supermarkets, just like all other products, and this is only going up. There are no strong competitive channels at this point. Independent merchants and online retailers are there, and getting better, but where is the concerted campaign to get consumers to switch?

Finally Promotion. “If only we had [product x]’s budget” is the usual refrain, and I have used it regularly myself. But in truth we lack ideas for this rather than the money.

Look at Magners. They are probably London’s biggest marketers for ice. Cider didn’t sell, so they switched their four P’s around, rethought their product, invested heavily (and I mean heavily) in distribution (place) and promotion. Did anyone ask the price? I doubt it. It took guts, but it paid off.

So when Threshers (40% off), Sainsburys (25% off) and Tesco (a belated match of the 25% off deal), et al start talking about discounts AGAIN, I find it somewhat depressing. It only feeds the obsession and depletes whatever coffers there might have existed with producers, agencies and retailers for investing in talking about anything else.