In-store merchandising and the winery

Daniel Palmer, manager and wine buyer at The Wine House in West Los Angeles, calls the pre-fabricated wine merchandising tools he is offered by wineries and wholesalers "archaic." He says, "They don't fit the stores of the '90s. People want more information, not glitz and glitter."

The mis-match is not due to lack of effort or lack of caring. Vendors recognize the importance of the store. The store achieved a three-star rating (denoting "Best in Market" status) in a reader poll conducted by Wine & Spirits magazine and published in the August, 1994, issue. In 1993, the store was recognized by Market Watch magazine as a "Superstar Retailer." Sales volume is in excess of $7 million per year.

While Palmer runs one of the most influential stores in the city, he keeps his sense of humor intact. His business card carries his complete job title: Chief Cook, Bottlewasher & Handyman, (MANAGER/BUYER). This is a store that, logic would dictate, should receive the most attentive merchandising support possible from wineries and wholesalers. The fact is, according to Palmer, wineries and wholesalers do offer their best merchandising material, but it is largely irrelevant to the store's needs.

The Wine House avoids numerical ratings from sources such as Robert Parker and the Wine Spectator because management feels numbers strip the romance and personality from wine appreciation. They welcome verbal endorsements from these sources, however.

In terms of displays, Palmer wants written material that is done "in layman's terms, not technical language." He advises, "Make it exciting and fun. Use food recommendations along with the wine description."

Palmer thinks old fashioned displays are too passive. He has much more confidence in the store's tasting bar. He declares, "Tastings account for triple the sales compared to point-of-sale materials displayed on a floor stack." Palmer says, "A display just sits there." He explains that a shopper is much quicker to choose a wine after tasting it than from reading about it.

"Classes are another building block for sales," he says. The Wine House has maintained an active class schedule for years covering dozens of aspects of wine study from introductory courses to tasting of grande marque champagnes with caviar. In 1993 the store expanded the classroom and installed a tasting bar purchased several years ago from Sirus Cellars in Irvine when that store closed. The tasting bar is equipped with a television/VCR combination for educational tapes on wine themes.

A few blocks away is Wally's, an impeccable store with equally high marks in the Wine & Spirits poll. Wally's has changed its pricing strategy by adopting EDLP, every-day-low-pricing, on most items. Sales have increased 50% in eight months in a straight line with virtually no short-term spikes, according to owner Steve Wallace.

Wallace says wineries are responsive to his newsletter's merchandising needs and will provide illustration material, but he adds, "You have to call and ask for it." He also says that he has difficulty finding display materials that go beyond the style of old-school liquor displays for his front window which faces Westwood Boulevard. "We don't want a liquor window," he explains. "It is very difficult to find someone who can create a unique look. We are trying to develop a style and carry that through to the front window," he continues.

Wallace praised the Robert Mondavi winery for their creative work in his window display. "They sent out an artist," he says. He also has a display each year around Thanksgiving created by Clicquot. "They are very good at it," comments Wallace.

Merchandising in the store incorporates a great deal of press which Wallace and his people round up for themselves. Wallace believes that the press drives sales. "You don't get much support from vendors," he says in regard to gathering wine writer endorsements.

He also uses photographs when they are available. Buyer Gary Fishman visits wine producing regions around the world and takes photographs which he incorporates into point-of-sale presentations. When Wines & Vines visited the store one display pictured a snapshot of Gilbert Rokvam, technical director at Chateau Lafite-Rothchild and its various other properties. There was also a display featuring an inexpensive white French wine with a photograph showing Fishman and the winery owner with a strong recommendation for the wine written below.

Wally's relies heavily on the store newsletter. Wallace credits much of the growth of the business over the years to this merchandising tool. His 15,000 address subscriber list will be supplemented for the next issue with a 70,000 copy insertion in the Los Angeles Times. Wallace is puzzled by the lack of time and talent wineries and wholesalers commit to his newsletter effort. "We have targeted the market," says Wallace of his newsletter. Speaking of vendors he adds, "Our newsletter is the best place they can put their energy. They should be banging down the door to get in our newsletter."

Background research for this article revealed that merchants notice a large gap between the willingness displayed by local sales people who call on the store and the creative resources within the sales person's own company. The sales people make promises, but they can't deliver because the creative mechanisms are not in place in their own companies. With the few exceptions noted, they typically can deliver only materials that Palmer characterizes as "archaic."

Wallace offered praise for two sales people in particular, Peter Morton, of The Henry Wine Group and Daniel Philips of Associated Wine Distributors. Wallace says that both sales people spend enough time in his store to understand thoroughly his goals and style. As a result, Wallace says, they provide merchandising materials that fit. "The guys that do the best in terms of sales to the store are the ones who go the extra step," Wallace concludes.

Philips says, "I pick up the zeitgeist of the store. That doesn't happen by going in once every few weeks."

WINE COUPONS BECOME MORE COMMON IN THE CHAIN GROCERY STORES

Coupon offers, once a novelty in the premium wine arena, are now commonplace, and they are increasingly oriented toward cross-merchandising. A May, 1994, survey of Lucky, Hughes, Albertsons, Ralphs, and Vons chain stores in the Southern California market turned up more than 20 coupon programs ranging from instant discounts on wine, to mail-in rebates, to discounts on Washington State apples and non-food items.

Sebastiani offered $3 off on any combination of Sebastiani Chardonnay and flowers or film. Columbia Crest offered $1 discount on poultry or seafood, and up to $10 back on wines, the amount being determined by the number of bottles purchased. Another Columbia Crest coupon provided discounts on three pounds of apples.

Sebastiani's Lou Willsea explained, "We have 17 programs running at present offering either rebates or instant discounts. Four of them are available in California. Our experience with cross-merchandising is that the return is much lower than instant redemption coupons. The main reason we did it was to appeal across the broad market of grocery, drug and independent stores. It provides something for everyone." Tiered rebate programs, according to Willsea, are "tremendously successful." He said that two-thirds of the responses to tiered discounts offered by Sebastiani are for the maximum rebate.

Robert Mondavi's Woodbridge line also had a sliding rebate structure up to $5 linked to size of purchase. Beaulieu Vineyard used coupons to encourage the purchase of greeting cards.

The reception coupons receive varies from chain to chain. Lucky had the largest selection among the stores surveyed. Hughes had far fewer coupons in place than Lucky. Ralphs displayed coupons specific to that chain. According to a chain account manager for Southern Wine & Spirits, chains differ in their policies regarding coupons depending on their stance regarding doubling the face value of coupons; they decline coupons they are not willing to double. Some coupons specify in writing that they are not subject to doubling.

Benziger Winery, instead of offering a cash discount, invited shoppers to enter a drawing for a Mercedes-Benz and other prizes.

THE FUTURE Of MERCHANDISING IS INCREASINGLY ELECTRONIC

Wally's has embarked on an advertising program with KABC talk radio in Los Angeles. The station operates an interactive phone service which KABC members use to learn about local products and services. One part of this program is called the "Connoisseur Line." The station tells prospective advertisers: "This exposure is directed to callers who specifically want information concerning liquors, fine wines and gourmet foods."

After listening to information provided by beverage producers, the caller can then access a list of local retailers that also advertise on the system. The caller can be transferred directly to the retailer at the touch of a button to place an order for delivery or to get more information.

The cost is relatively modest by radio standards. Brand owners are charged $3,000 to have their message on the system for six months. Retailers pay $2,400 for six months. Restaurants are charged $2,000 for six months. Restaurants can update their recorded message to reflect daily specials - including wine-by-the-glass offerings or wine-maker dinners.

Costco/Price Club is putting muscle behind its Quest electronic ordering system. The Quest system is a touch-screen arrangement in which shoppers can order merchandise that is not carried within the store. Some marketing experts believe it is only a matter of time before shopping by home computer becomes routine.

SUMMARY

As specialty wine retailers diminish in number, each benefits in the form of increased sales inherited from shops that fail. The Wine House, Wally's and the Wine Club all currently report dramatic increases in sales over 1993. None of the three uses traditional liquor-style point-of-sale, all rely heavily on their newletters, and all three are customer-oriented. To date, suppliers lag behind in providing these merchants with what they declare they need, and what they declare produces sales for them.

COPYRIGHT 1995 Hiaring Company
COPYRIGHT 2004 Gale Group