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Will Less Buying Choices Mean More Shopping Choices at Wine Retail?

In the realm of business bon mots the Cheshire Cat quote from Alice in Wonderland is an oft cited classic noting, “If you don’t know where you are going, any road will take you there.”

That sums up the domestic wine business circa 2010–a snaked road of twists and turns near the perilous edge like a Sunday drive to parts unknown on the Pacific Coast Highway, at once beautifully majestic while being mere moments away from potentially driving off the cliff.

Perhaps that’s overly melodramatic, but not by much.

These days, for small wineries to succeed, it seems like it takes an iron will and stomach to match. 

If the old saying was, “It takes a lot of good beer to make great wine” the new saying might be, “It takes an antidepressant and Pepcid AC to make great wine.”

And, for all of the armchair quarterbacking that happens about what wineries should or shouldn’t be doing to expand their business, the reality is it’s very difficult to make strategic decisions in this business climate, for any company, in any industry.

In particular, for wineries to parse out current trends they have to sift through a morass of information at all levels of the business – production, direct-to-consumer, distribution and retail to glean a nugget of essential truth that makes sense, at least sense enough to use as a guiding light.

And, for the longest time the conversation has been focused on direct-to-consumer, distribution, and on-premise sales, but not retail, hardly ever wine retail, the domain of big brands, with some small bottle shops thrown in for good measure.

I’ve often thought that the wine business doesn’t have a distribution problem; it has a wine retail problem – as in not enough places to shop.  Simply, there aren’t enough niche wine shops.

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Some people may disagree based on their own geography and experiences, but living in the heartland, I can attest that most major metro areas in between the coasts are long on liquor stores and short on wine shops.

Big on Bud Light and vodka case stacks and light on wine.

Yet, we’re in the golden age of consumer interest in wine …

Simply, distributors are in the business of moving product from point A to point B.  If there were enough “point B’s” there would be distributors to sell to them and thus winery access problems would be solved, because at the end of the day it’s all about shelf space.

Fortunately, the expansion of shelf space may be nigh, even if it happens in an untraditional way.

Professionally, I’ve been privy to some “futures” trend analysis by a large consumer brand conglomerate (I think that’s sufficiently vague).  While the research trend data is proprietary, one of the scenarios, looking from the future backwards, like the classic business white paper, The Merlin Factor: Leadership and Strategic Intent, outlines one likely scenario that could occur over the next decade.

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The scenario outlines a future in which retailer’s value ideas from manufacturers and shoppers possess significant power and influence – i.e. “You better sell what I want to buy.”  This futures scenario could include significant retail innovation, personalized experiences, niche stores, completely new shopping formats and a dynamic in which the path to purchase is highly influenced as a counter to the weariness of the impersonal nature of online shopping.

Specifically, this future scenario could include:

Retailers innovate in order to “win” consumers by enabling them to get excited about the experience of live shopping again

Shopper-centric means more than customer service as concierge services enable an average consumer to have support at their beck and call (think Nordstrom at the small retail level)

Future shopper’s will live in an enveloping blanket of information making the physical experience of shopping an important counter to too much information

Shopping has transformed into an engaging and fun experience—one that places the interests, needs and desires of shoppers at the center of the business of retail, not selection

The takeaway from this “futures” analysis is four-fold – manufacturers and retailers innovate to serve the customer in new and dynamic ways.  “Niche and specialized” stores support general retailers in new ways, product information is omnipresent and retail service transcends satisfaction to become concierge-like.

And, while soothsayer analysis from an unnamed source is well and good, tangible evidence indicates much the same.

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A recent Marketplace report from American Public Radio notes:

Generally customers say they want more stuff to choose from, but what we know from observing how customers deal with products is that they’re actually are better off with less choices.

Better off because fewer choices mean customers spend less time searching and tend to be more satisfied with the final purchase.

The idea spread during the recession, when retailers were forced to scale back. Even mega-retailer Wal-Mart announced plans to eliminate some 15 percent of the items in its stores.

(Quoting Morgan Ward, a consumer behaviorist at the University of Texas) says the process of better understanding one’s customers pushed companies to go with their strengths, at a time when many retailers were trying to do too much.

WARD: If you’re a generalist, you really get lost in the crowd, oftentimes you’re not serving anyone that well, and so you’re not on any customers top three. So you’re K-Mart essentially, right; you didn’t figure out what your customers wanted and people slowly phased you out.

And it’s not just big-box stores who’ve gotten on board with the “less is more” idea …

So, the takeaway for me, from two seemingly disparate pieces of information is the fact that wine retail, currently undergoing a “wine bar” development phase, is due for a wine retail phase over the course of the next decade—due to the simple fact that right now the process of retail selection is broken: dominated by large retailers providing too much choice that isn’t coherently focused on the consumer, instead based on what can get to market with efficacy.

In doing so, I think it’s a very likely outcome that not only will wine retail shops develop in greater number all over the country, but they will specialize as well. 

Therefore, you may know what to shop for at your Target or the grocery store, but when you’re looking for a small production wine from Washington, or Oregon, or New York, you’ll also know where to go – a neighborhood wine shop that specializes in cool climate wines from the New World, for example.  Or, there’s just as likely to be another store that specializes in Old World wines from France and Italy which will be down the street from the store that focuses on wines from emerging regions like Argentina, Portugal, Spain and Chile. And, all of this means that small domestic wineries, who need a place to land, may also find the shelf space they are looking for, resolving the three-tier problem in the process.

Far fetched?  Maybe so, but a decade ago getting email on your phone was a novelty, too. 



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Posted in, Wine: A Business Doing Pleasure. Permalink | Comments (14) |


Comments

On 05/27, .(JavaScript must be enabled to view this email address) wrote:

Any and all of what you talk about depends on one thing: money! Specifically, money being available to open the stores you talk about; money to the brave souls willing to open a distributorship that specializes in (let’s say) Oregon and Washington wines only in its portfolio, all small producers showcasing terroir; money to pay more employees hired to replace the multitudes laid off during cutbacks in the last 3 years; and more money to open even further the channels of distribution, because the remaining Big Boy distributors can’t respond quickly enough with sufficient specialized information to feed those specialized wine stores.

On 05/28, Thomas Pellechia wrote:

Money, yes, plus it will take tearing down the regulatory walls that create corruption which spawns monopolistic-like control that works against small retailing.

On 05/28, Richard wrote:

The wine store we frequent weekly is set up like this.  Their customers tend to prefer California wines, so half of their inventory is from California.  They don’t carry a lot of lower price point bottlings ($10-$15) but what they have is really good, and doesn’t last long because people come in and buy whole cases of it.

Another store we go to often specializes in Burgundy, so if I’m wanting that, I go there.  And other specializes in Italian wines.  I think this is beginning to catch on in my market.

On 05/28, .(JavaScript must be enabled to view this email address) wrote:

That’s what the internet is for. Try wineryinsider.com. Handpicked wines available for a limited time, for at least 40% off retail. They only have a few wines available at a time, but each one is a gem.

On 05/29, 1WineDude wrote:

I second the notion about (arcane) regulation muddying this scenario…

On 06/09, Jolan Turkington wrote:

I agree that more specialized brick and mortar shops are necessary to augmenting the average consumer’s wine experiences (and thus knowledge). It’s wonderful to have the capacity to order wines off the Internet, at reduced cost, but sticky state regulations hinder much effort. Nothing can beat speaking with a helpful, knowledgeable person at a shop, whose goal is to sell, but sell through education and tastings specialized to the consumer’s general preferences. The Internet, while a good option for the wine-savvy, is a bit intimidating for those who are not well-versed in the sometimes alien adjectives used to describe wine.

On 11/01, stock update wrote:

It is important and a must that you carry out your online shopping activities using a secured computer completely protected by anti-virus software and firewall installation. Make sure that these protecting agents are up to date so as to ensure your protection from malicious programs as you carry out your transactions.

On 03/13, Steiger Huren wrote:

I like to visit specialized wine shops. I don’t like to shop online for wine. Especially because when you are shopping online you can’t taste the wine. And you can get a professional advise in the specialized wine shops.

On 03/26, Web Designer Oxford wrote:

A well designed website selling wine is all well and good, but it’s all about the taste, and although you can go on reviews, somehow I just have more faith buying via a recommendation from staff in a well respected off-license in person.

On 04/06, .(JavaScript must be enabled to view this email address) wrote:

You made various nice points there. I did a search on the matter and found nearly all persons will consent with your wrote.
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On 06/08, mkv to avi wrote:

Nice review.It’s wonderful to have the capacity to order wines off the Internet, at reduced cost, but sticky state regulations hinder much effort. Nothing can beat speaking with a helpful, knowledgeable person at a shop, whose goal is to sell, but sell through education and tastings specialized to the consumer’s general preferences.

On 07/13, okanyway.com wrote:

Very great and useful advices about shopping. I also like wine so I always interested in it and everything what is related with it. You site is really good and offers a good places for shopping. Thanks a lot for that.

On 08/22, Following Article Will Be Of Great Help how to kee wrote:

Great post! I am actually getting ready to across this information, is very helpful my friend. Also great blog here with all of the valuable information you have. Keep up the good work you are doing here.

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On 10/19, computer games wrote:

I am not sure where wine blogging is headed – over the course of the last 14-15 months social media has become so omnipresent that it at once has distracted people from blogging


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