Some thoughts on the way forward for Independent Wine Merchants.
Whenever I read the results of a survey about the wine business there are always answers that surprise me, or follow up questions I’d like to ask. The recent reader survey in Wine Merchant, the publication which goes to some 700 independent wine merchants in the UK, proved to be no exception.
How viable is an exclusive range?
The first point that intrigued me was this. Is it really the case that only 34% of respondents thought it ‘very important’ to be certain that suppliers are not selling the same wines to nearby rivals or trespassing on their wholesale business? To be fair a further 40% thought it fairly important, but this still implies that 26% weren’t that bothered. If I was running a regional Wine Merchant my ideal would be to have a range that was unique to myself, excepting perhaps at the super premium end, and only deal with suppliers who didn’t embarrass my retailing or wholesaling activities.
Maybe this is a naive aspiration? When it comes down to it is this ideal compromised by the realities of the marketplace: the lack of suppliers perhaps who can offer exclusivity in addition to other key elements of the business mix? Or does it simply depend more fundamentally on the strength of one’s finances or the absence of time to go direct to some producers? Perhaps there is something else going on here that I don’t understand?
One of the nuances of the wine category is the enormous diversity of wines available and the paucity of individual producer brand names which consumers actively seek out. In theory therefore every retailer, large and small, could have a unique range: a range on which it is possible to stamp one’s personality and which reflects one’s own particular enthusiasms. Very few consumers, however knowledgeable, are entirely comfortable when buying wine even if they are at the level where they regard the process as exciting as opposed to daunting. Even at this level they need guidance. A good retailer or wine merchant to them works like a subtle signpost when they are lost in a maze or a prompt in a particularly time consuming crossword.
This all implies that a well marketed range can, in theory, establish a profitable franchise even if the consumers involved are generally only familiar with the individual wines on a regional or varietal level.
How are wine merchants communicating with key customers?
And this leads me on to my second query. It is far from clear from this survey the proportion of respondents who are actively building, and communicating effectively with, a data base. I can imagine the 60% or so using Facebook or Twitter are doing so, or those 23% using an email newsletter (who may of course be the same people), but I’m intrigued as to the level of sophistication of the communication both amongst those using social media as well as the rest.
When I started advising English Wine producers, many with cellar door facilities, it was surprising to me how many had not been either collecting purchasers’ details and\or following them up. It is apparently nine times more costly to recruit new consumers as it is to develop existing customers. This may, of course, be one of those stats that gets trotted out yet has no basis in fact, but it sounds plausible to me.
In my ideal Wine Merchant, I would be focussing on selling my unique range to an expanding hard core of loyal and profitable consumers. I would hopefully ensure they remained loyal by a combination of excellent service and a range which represented a blend of existing favourites plus exciting new wines which I calculated were within their comfort zone, but closer to its edge.
The key to me, and what I would hope would separate me from my larger competitors if not some of the rest, would be the creation of a personal profile of each valuable customer so that my follow up emails would be welcomed as relevant and individual and not treated as yet another general wine offer.
I buy wine from various retailers, big and small. Not once have I received an email or phone call asking me whether I liked the case of wine or whether I’d be interested in buying the follow on vintage. Not once, in fact, have I received a personalised, as opposed to a general, communication.
Is this because I’m not a particularly valuable customer, in which case fair enough, or is this simply not general practice? I remember years ago making this point at an industry conference and being told very firmly that there aren’t enough hours in the day to operate in this way. Is that still the case? Has technological advance made this more feasible or have we still got a way to go?
The competition is only going to get tougher.
We exist in a marketplace in which the competition is intensifying. Technology increasingly allows retailers to target consumers of above average value in terms of wine purchases. One can indeed envisage a world in which such consumers receive a blizzard of such offers, particularly as more and more producers start selling direct.
Surely a key competitive advantage for a regional Wine Merchant in such a situation is the ability to take personalised service to its ultimate level- a level beyond the reach of the majority of the big players. By offering a combination of “clicks and mortar”, or, to put it another way, a combination of personality, playing the local card, the classic ambiance of a wine shop, backed up by the effective use of technology, wine merchants can steal a march on the competition.
May be this is happening, it would be reassuring to discover that it was. Because the major retailers are developing their own database marketing skills, while their range in store is becoming in some cases local as opposed to national.
The Independent sector, to keep ahead, must play to its strengths and a combination of a near exclusive range and personalised marketing seem to me to be two vital elements in its armoury.
NB. This post appeared as an article in The Wine Merchant on 13 May- http://www.winemerchantmag.com.