HOLIDAY PROFIT PLANNER
FROM MASSIVE IN-STORE DISPLAYS AND FESTIVE DECORATIONS TO CUSTOM GIFT BASKETS, IN-STORE GIFT CENTERS AND A
VARIETY OF SPECIAL SERVICES, RETAILERS USE A VARIETY OF TECHNIQUES TO INCREASE HOLIDAY SALES.
Bigger is better when it comes to holiday merchandising. But to ring up additional sales and maximize profits, it’s just as important to have a knowledgeable and solicitous sales staff as well as a range of supplier gift sets and co-packs and, where permitted, the extra services and promotional initiatives — such as gift baskets, tastings and in-store gift centers — that can make the difference between a ho-hum holiday and a spectacular selling season.
Big, bold and colorful in-store displays, utilizing supplier point-of-sale materials, a retailer’s own creative display-building prowess or a combination of the two, are among the most important ways to capture customers’ attention and spark impulse purchases. While effective in-store merchandising is an important year-round effort, it takes on special significance at the holidays.
“We’ve found that you’ve got to get consumer attention on the product. What we’ll do is visually try to get their attention,” explains Charles Sonnenberg, of Frugal Macdoogal’s, a leading retailer with operations in Tennessee and South Carolina and known for his elaborate and eye-catching in-store displays.
Sometimes, a simple case-stacking and case card are enough to catch a customer’s attention. However, larger, more intrusive, and inventive displays are often required not merely to stop customers in their tracks and generate appreciative “ooh’s” and “ahh’s” but to actually trigger a purchase.
Which products do retailers want to showcase in high-impact displays? While there are many factors to consider in deciding which brands to display, many retailers say that featuring higher-priced brands that lend themselves naturally to gift-giving are most appropriate. For example, one retailer pointed out that if he had to choose between a display for either a premium vodka or a super or ultra premium, he would almost certainly opt for the higher-priced brand. The reason? Simply that increased sales of the higher-priced product would result in a greater level of profitability as measured by actual dollars rather than percent of markup, or margin.
Even stores that don’t ordinarily accommodate enormous displays of product often find it rewarding to set up special in-store gift centers during the holidays. “Our warehouse style doesn’t lend itself to massive displays although we do create displays for gift baskets, co-packs and seasonal products,” says Mike Sanford, general manager of Spec’s in Houston.
While supplier co-packs and gift sets form an important component of holiday sales, gift baskets represent an opportunity for retailers to provide a highly desired service that caters to the needs of key customer segments while simultaneously selling high-profit products and promoting their own expertise in spirits, wine and related gourmet and gift items.
Noting that corporate gift-giving in Texas is rebounding sharply from a fall-off several years ago that was related to a downturn in the local economy, Sanford observes that the practice of corporate gift-giving has evolved over the years. “It used to be that a company might buy 100 cases of Jack Daniel’s and give everybody a bottle. But now it’s more focused on wine and more focused on the presentation of the gift basket itself.”
Each December Spec’s distributes its own catalog in which up to 30 pre-made gift baskets are featured ranging in price from $14.99 up to about $100. “That gives customers the opportunity to come in and make a quick grab and go,” explains Sanford. “The reason we have so many is that people have different budgets and some of our baskets are wine-only or spirits-only or non-alcoholic.” Spec’s also creates custom gift baskets. “The best-sellers vary from year to year,” says Sanford, “but $35 to $50 seems to be the magic price point for the pre-made baskets. There is no magic price for the custom-made gift baskets — we’ve done them for $14.99 up to $1,000 — we’ll get calls from customers who say they want to spend ‘X’ and this is what they drink, just fill up the basket.”
A full range of gift-giving and party consulting services are a hallmark at Brown Derby stores in Missouri. “We have a feel for what our customers want and service is very important at a full-service store,” says owner Ron Junge. “So we have party planning, full service deli very, specialty wines and cheeses, gift baskets, gift wrapping and just about anything else you can think of at our two fine wines stores.”
Retailers also laud the quantity and quality of supplier-created holiday co-packs and gift sets. These items are especially important for retail operations that do not create their own gift baskets because they allow for the establishment of in-store gift centers, a source of incremental business.
At Liquor World stores in the mid-Atlantic region, for example, 20′ x 8′ islands featuring a wide array of supplier gift packs are set up for the holidays. Liquor World arranges all of the supplier sets together for a visually impressive presentation that appeals to casual browsers as well as shoppers on a gift-finding mission. “We are competing not just against other liquor stores and beverage outlets but also against department stores and other specialty retailers to convince customers to buy a beverage as a gift,” notes co-owner David Trone. “We think there is a lot of add-on sales potential in these gift packages and the spirits suppliers in particular seem to excel at producing the very best packages.”
Trone also believes in dressing his stores for the holidays. It’s not unusual to see “a significant number of themed holiday displays” at Liquor World “from champagne Christmas trees to major wine displays and Christmas decorations such as sleighs, toy trains and fireplaces on floor-level platforms and suspended from ceilings. The key is you want the store to have a festive, upbeat, exciting appearance,” explains Trone. “We want our customers at a fine wine superstore to feel the same way kids feel when they go to a Toys R Us. We want to set the tone for the holidays.”
Increasing High-End Sales
With the holiday selling season in view and a raft of new ultra-premium entries across a broad spectrum of categories, what can retailers do to increase their sales of higher-priced spirits?
“Ten years ago, who would have thought we’d be selling vodkas for $35?” asks Liquor World’s Trone.
“But today, we sell a lot of it. The product is good and the packaging is beautiful. Who knew?”
Who knew, indeed. Today, however, retailers know more than ever about what it takes to sell the good stuff — the boutique tequilas, small batch bourbons, esoteric single malts, outrageously priced cognacs and hard-to-find armagnacs not to mention exotic rums, specialty gins and a plethora of outlandish vodkas.
Conversations with a handful of leading retailers around the country quickly reveals a consensus on a couple of key points: shelf position and product knowledge are perhaps the two most critical elements in successfully selling high-end spirits at retail.
“There’s really an insignificant number of people who come in and ask for single barrel bourbon,” observes Frugal Macdoogal’s Sonnenberg. “It really is in-store merchandising” that makes or breaks such a potential sale. The challenge, he says, is to position the product within the store so that attention is focused on it — with an old whiskey barrel display, for example. “Then there has to be more than great bourbon. You have to have meaningful information on it that legitimizes why it is special. And then it still requires some selling” by store personnel.
“It’s very simple,” says Sanford, of Houston-based Spec’s. “Shelf placement is the biggest key.” At Spec’s, as at other successful retail outlets, super premium products are placed on the “eye-level” shelf to maximize sales.
About three years ago, Brown Derby stores changed its shelf management program in order to place high-end products at eye-level. “Our shelf planning is based on dollar return,” says owner Junge. “A lot of people put private label at eye-level but we put higher-end items there because they represent more actual dollars of profit.” At some of his locations, Junge has also set up special sections to showcase items of $100 or greater value. “At some stores we have the items in glass cases or behind glass doors.” These sections contain mostly cognac, armagnac and scotch.
In addition to eye-level placement and the extensive use of shelf talkers, Spec’s makes good use of its salesmen and in-store tastings. Sanford says tastings have been permitted in Texas for about three years and are still somewhat restrictive in nature. Nonetheless, he says they have been quite useful in promoting sales of high end spirits. “Tastings are very effective. There are times when, if it’s a $700 or $800 bottle, if we sell a few bottles we’re ecstatic; and if well sell through 8 to 12 bottles of a tasting of a $30 to $50 bottle we’re happy.”
The benefit of in-store tastings go beyond the immediate objective of allowing a customer to sample a product and making a sale. “Once they buy it, they have their friends try it and we get it into more people’s mouths to try it,” Sanford says.
In addition to tastings, Spec’s stresses ongoing product information and education for its store personnel, especially for the people on the floor selling. “We train our employees and we have seminars all year long,” explains Sanford. We try to do seminars on categories rather than individual products. We want to give our people a working knowledge of why a customer should spend $100 on this versus $50 on that.” He says that the training is focused on product knowledge rather than specific sales techniques or suggestive selling strategies. The thinking is that if the store personnel is well informed, interested in the products and friendly, they will be able to assist customers by relaying the information and making them comfortable with the decision to make a high end purchase.
“There are a lot of little things that go into successfully selling” high-end spirits, adds Liquor World’s Trone. “Selection, critical mass, shelf position and promotion” are some of the more important aspects of the effort, he says.
Critical mass means having a broad product selection in the store to get the customer’s attention. “One or two vodkas are not enough,” he says. “You need about 20 to make a statement. Then we put them all together on the eye-level shelf and they feed off each other and the customer is drawn to it. If you have 20 vodkas, it gives the whole category more credibility and it makes the customer think, ‘there must be something to this.'” As for promotion, Trone says that favorable reviews and tasting notes are among the most efficient and cost-effective methods.
“Now we have people coming in looking for a specialty tequila and they are quite prepared to spend the type of money that is required and it’s incumbent on us to sell them on it,” says Sonnenberg. “They are basically coming in with a mindset that they want to spend $50. So we should try to sell them on a $60 product. Again, once the customer is in the store, we need to say this is an ideal gift for holidays.”
So, as retailers set about setting the tone for this holiday season — decorating stores, hiring and training extra help, setting up gift centers, preparing gift baskets and planning displays — it’s important to note that the five weeks from Thanksgiving to New Year’s Eve constitute the most critical sales period of the year. And with a strong economy there’s every reason to think this holiday season will once again be a bright one for beverage alcohol retailers throughout the country. As Brown Derby’s Junge says, “I think this holiday season is going to be good. We’ve had strong sales this year, so if it continues the holidays will be as good if not better than last year.” *