I am a voracious reader and spent a lot of time digesting books on sales and marketing. In 2002, I was impressed by the best-selling book, “Why We Buy: The Science of Shopping” by Paco Underhill. I purchased over a dozen copies and gave them to my executive team at the Pennsylvania Liquor Control Board (PLCB), including the directors of marketing and store operations. A few years ago, it was the book, “Contagious: why things catch on” by Penn Professor Jonah Berger that I distributed to my team to inspire them.
While it was well over a decade ago, I took my marketing team to learn from leading retailers and industry leaders and see what they were doing right. We visited with the affable Michael Binstein at Binnys Beverage Depot, Sam’s in Chicago, Michael Aaron at Sherry Lehmann, Jeff Zacharia at Zachy’s and Total Wine in Claymont, Delaware.
Since that time, I have visited hundreds of retails stores and have learned best business practices from so many talented retailers. In particular, I have spent a lot of time and visited every major wine and spirits store in the state of New Jersey. Competition is so keen there, and having studied that market carefully, I believe I understand why certain retailers thrive and others struggle.
Some wine retailers effectively trade up their consumers and make sales more profitable, while others stagnate.
It is important to understand that consumers have an ambition for the good life and that wine is an affordable luxury. Selling that more-expensive bottle with better profit margins is one of the most important keys to success.
On the other hand, it is important to know your customer and your price points. You can’t sell wines that don’t fit the demographics of your store. If you find that special wine for your customer that is a trade up, it’s important to introduce special wines and create a lasting relationship with your customer.
I recently chatted with Chester Malloy, who has been at the iconic Circle Liquors in Somers Point, NJ, for 40 years, about trading-up consumers.
“I’m really not working at up-selling my customers because you certainly can’t make it seem like you’re trying to get people to spend more,” he said. “It’s about service and making a lasting friendship with your customer. I ask them lots of questions about what they buy and what they like and start a discussion. I then find a superior wine for them that matches their taste profile that over-delivers in every way. I want to make the shopping experience very special.”
This is a valuable lesson. Customer service and credibility are the key to naturally trading up your customer to better wines.
I remember presenting wines to retailers after the financial crisis, and 2009 was a bear of a year. Consumers were trading down and retailers watched their inventory carefully because it seemed like the sky was falling down. But since then the ultra premium wine category (in the $15-20 range) has been on fire, with gains every year. Consumers are feeling better about the economy with the stock market at record highs, unemployment low and inflation in check. Of course, the economy is always subject to change, but the last seven years have seen a good run.
Offering wines with an outstanding Quality Price Ratio is the key to success, and this only happens when all three key factors fall into place: Customer service, superior selection and attractive pricing. If you have not focused on this, then you’ve lost the advantages of the premiumization of wine.
The wine consumer is adventurous and willing to discover, therefore knowledgeable and enthusiastic staff is a must. And the bottles you want to sell must be nicely merchandised, capturing the consumer’s imagination with shelf talkers or point of sale materials. One thing for sure is that once you trade up that customer to a more special bottle of wine, they will never go back down. It’s getting them to that next level that is the key.