Sam’s Club: Increasing Its Beverage Alcohol Presence

While its overall concept remains price-driven, Sam’€™s Club is upgrading its merchandising approach for wine and spirits.

Sam’€™s Club has found its own method of making the beverage alcohol business it operates stand out, building on a chain-wide Walmart sustainable business practices initiative by launching a selection of fair trade wines.

While the program is in its early stages, the warehouse club retailer is promoting it in the approximately 450 units where it sells adult beverages to help establish a particular identity for the operation based on good value for products that address the social and food trends Walmart has in its sites.

Sam’€™s Club introduced its first fair trade certified wine, Neu Direction, a 100% Malbec from Argentina’€™s Lujan de Cuyo wine growing region, in November of last year. The retailer initiated a second Fair Trade Certified wine rollout this past March, bowing with Solombra Reserva, produced and bottled by Argentina’€™s La RioJana Cooperative as a Merlot and Pinot Grigio. Sam’€™s expects to introduce additional varietals under the label, with a Cabernet Sauvignon slated to reach its clubs next.

Beverage Alcohol Evolution

The introduction of fair trade wines is part of an adult beverage evolution at Sam’€™s Club. Although the overall approach remains price-driven, as is generally the case with warehouse club adult beverage operations, the development of the wine element is growing more sophisticated. The merchandising is becoming less pallet-driven, for example, as Sam’€™s features more attractive fixtures built out of individual wooden crates to highlight the breadth of its selection.

Walmart has used crate merchandising elsewhere in its stores, and conspicuously to mount dry produce displays at its supercenters, which allows it to stock and replenish product in the backroom rather than on the sales floor where employees have to work item by item. The system is more efficient and less prone to accidents than might occur on the sales floor. For Sam’€™s, the fact it can merchandise efficiently in a display system that enhances the aesthetics of the department and recalls the case sales traditions of the product being offered is a nice confluence of circumstances.

To some extent, said Gillie Brandolini, Sam’€™s wine buyer, focusing on value and volume caused members of the warehouse club chain to overlook, at times, quality vintages that were available. So the retailer not only employs the wooden fixtures where it has an opportunity to generate additional sales but also signage to demonstrate that it can provide a better price on better wine, as well as offer items that have particular attractions, including the fair trade vintages.

‘€œMost of our wines were merchandised on a pallet basis,’€ he said. ‘€œWe had quality out there in front of the consumer, but in the end just had slower volume in fine wine. So we put some signage out to call attention to it. And we had the wooden fixture we put in there.’€

Merchandising Fine Wine Islands

So, today, Sam’€™s arranges the case-based wooden fixtures in fine wine islands that become the showcase of its adult beverage sections in most clubs that can legally sell wine. In a handful of clubs, the wine area has to be caged to comply with city regulations, and, in those circumstances, Sam’€™s doesn’€™t have enough space to mount the more elaborate displays. Otherwise, the wine islands are operating and critical to the merchandising strategy.

To say that the feature wine displays at Sam’€™s Clubs are limited to fine vintages isn’€™t quite correct, however. Sam’€™s may conspicuously mount a mix of upscale wines, but it also uses signage and placement to spotlight those wines its promoting to address larger trends. Of course, fair trade wine has gotten particular attention but not in isolation. It is offered as a continuity to an organic wine program that Sam’€™s also pursues. Organic wines are mixed into both pallet and feature displays depending on the circumstances of their quality and the design of the merchandising at a given time.

Another consideration is private label. Sam’€™s fair trade wines are in the store on a proprietary basis, but the retailer’€™s own brand program isn’€™t limited to those particular products. Today, Sam’€™s may offer 16 to 20 control brand and private label wines. In its store brand development efforts, the club has featured items beyond the fair trade range and continues to do so as part of its larger departmental strategy to establish among its wine consumers a regular base of customers who are interested in better quality wines but want them at a sharp price. So own brands, including organic and fair trade varieties, can be mounted in the fine wine island display or in the pallet-driven merchandising sections of the department.

Developing Private Label

Brandolini said Sam’€™s doesn’€™t intend for private label to dominate wine merchandising, but it is being developed to play a substantial role in the proposition to the club’€™s members. To some extent, wine is being reorganized at Sam’€™s to better reflect current consumer tastes and preferences that are driven by factors ranging from evolving cuisine preferences to the recession.

‘€œInitially, we want to be known as a branded house and a domestic wine supplier to our members,’€ he said. ‘€œWe want to sprinkle in, where we can, quality private labels like Solumbra. At the end of the day, we want to be known as a branded house that is domestic in nature, and we are changing our mix to make that work. We want to be value. We want to unite what we are doing at this time with the economic conditions. A year or so ago, we would have had some higher price points driving our business than we have today.’€

Sam’€™s continues to include imported wines in its selection, but it has an additional advantage it can press with the fair trade and organic wines that its members accept.

‘€œWe think our members will pay for quality and wines that have a quality story, that can justify the price,’€ Brandolini said. ‘€œThe value of having wine that is fair trade or organic is where members can truly see the quality of the item and the value it represents in the marketplace. Then they will reward you with a purchase.’€

Although they may be highlighted at times, store brands, including organic and fair trade wines, are generally merchandised with appropriate varietals. So, Sam’€™s Zeal Sauvignon Blanc is displayed among other Sauvignon Blancs.

As it promotes acceptance of organic and now fair trade wine at its clubs, Sam’€™s is simultaneously enhancing its sourcing capacity through developing partnerships with suppliers that can help it build the business while identifying new regions and growers that it can work with to expand the presentation on the sales floor.

‘€œControl of the label allows us to maintain the control of the quality,’€ Brandolini said. ‘€œWe can source from any place where they are producing good branded product and from whatever winery. We can source from different locations. We have our own labels, so we can specifically develop green operations with one wine coming from France, one from Spain, wherever organically grown grapes are.’€

As a result, Sam’€™s can keep a steady supply that meets a particular standard no matter what agricultural and other developments might arise.

Boosting Fair Trade and Organic Wines

Indeed, Sam’€™s participation in the market has the potential to boost organic and fair trade growing, said Brad Feagans, vp, divisional merchandising manager of dry groceries, consumables, and beer, wine and spirits. ‘€œNow, you see fair trade coops and organic producers will sell on the open market just to move product, so they’€™re not always sold under fair trade or organic statements. We will sell and make sure, where we need to be, that customers know we’€™re getting the organic and fair trade juice to produce our wines. We’€™ve worked on exclusive purchases of juice as often as we could in a given area to tie up as much product as we could.’€

Sam’€™s steps to enhance its wine presentation are important for its entire adult beverage operation. Currently, while about 450 Sam’€™s Clubs sell wine, 518 sell beer and 253 sell spirits. Wine and the special fixtures created for it send a particular positioning message to members that extends to beverage alcohol generally..

As noted, much of Sam’€™s beverage presentation is pallet-driven. The pallet displays reinforce the company’€™s overall value positioning in beverage alcohol and encourage shoppers keep in mind the sharp pricing they can find there, especially when they consider the bargain per ounce provided by the large packages and case deals it offers.

Yet, Sam’€™s naturally wants to encourage consumers to consider its selection of beverage alcohol whenever they shop. After all, most members don’€™t visit club weekly the way they probably do a supermarket, nor pass one regularly the way the might a neighborhood liquor or party store. So Sam’€™s merchandises to gain consideration of a spirits purchase whenever members are in its clubs. Even when they are shopping its clubs, Sam’€™s recognizes that member visits can have different purposes. Many are simply their stocking up on staples for their homes but others are buying quantities of hamburger patties or frozen hors d’€™oeuvres for barbecues or parties. And many are purchasing for business purposes or in preparation for an event.

For those reasons, Sam’€™s wants to encourage consumer members to consider, for example, purchasing beer on a trip to pick up chips while preparing for a football get-together while encouraging a restaurant owner in the store for cleaning supplies to add one of its fair trade wines to a menu that is adding organic dishes.

As warehouse clubs are destination for many kinds of shopping trips ‘€“ and many that have an entertainment element involved ‘€“ providing a strong adult beverage presentation that balances value and price is important.

Highlighting Spirits & Beer

In their organization at Sam’€™s, beverage alcohol products are arranged consistently. Wine displays, for instance, are basically presented by varietal and flow by taste profile, starting with the lighter whites and continuing through to the heavier reds. In a corresponding manner, spirits are set to begin with vodka and lead through to bourbon and Canadian whiskey. And, as is done with wine, better spirits get special display consideration, presented, as they are, on steel shelving.

Such displays, as end caps, can be accompanied by secondary feature displays adjacent. Within the main end cap itself, sub fixtures that incorporate premium products in a high-profile presentation can call more attention to the main showcase steel fixture. They also mark novel and premium offerings consistent with the ‘€œtreasure hunt’€ merchandising strategy warehouse clubs employ. Offering new and uncommon products on a regular basis is an important part of how clubs do business and the sub-fixture as well as boxed or specially packaged product ‘€“ brandy with a snifter glass appended, for example ‘€“ fit that particular club strategy nicely.

In beer, which is more commonly limited to standard pallet displays, Sam’€™s arranges the presentation to ensure club members are acquainted with the full range of the presentation. So, from a base of standard domestic brands, members can chose from an extended assortment including regional products, craft brews and imports that might range from Blue Moon to Sam Adams to Amstel.

Inclusion in club assortments is no small matter for beer brands. It’€™s acceptance by clubs helped propel the Smithwick’€™s label to popularity in the U.S.

In present configurations, wine is presented in 24 pallet positions fronting a 24-foot wine fixture or two where the product doesn’€™t have to be caged. Wine is merchandised in conjunction with pallet beer presentations, in those locations were they can be offered together, and, again where the law allows, 15 to 24 pallets of spirits presentations.

Going forward, beverage alcohol will be a dynamic element of Sam’€™s merchandising mix. ‘€œBeer, wine and spirits are a major initiative for us, and we will continue to pursue that wherever we can,’€ Brandolini said.

Indeed, in June, Sam’€™s debuted a new club it had expanded and relocated in Newington, CT, with 25,000 additional square feet, much of which was devoted to a dynamic beverage alcohol section.

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