Judging by the constant drumbeat of media coverage, it would be logical to assume that the most important products on wine and spirit retailer shelves these days are craft beers and spirits, or wines from recently- discovered regions.
But retailers know the real deal: a large percentage of their sales, and an untold amount of profit, come from the best-known and leading brands in any category. Volume in retailing is almost always king, and making sure customers can easily locate their favorite beverages is something any savvy retailer values.
The steady flow of profitability from major brands is only one of the reasons that it makes sense to prominently invest floor space and energy into quality displays and other merchandising efforts around them.
“These are power brands that drive foot traffic to a store, because high-volume brands are the ones consumers are looking for,” says Mitch Cristol, director for off-premise trade marketing, Pernod Ricard. “They want to buy them, so using displays for these products to bring customers into your store is the first step in driving conversion to other products.”
In other words, there are many reasons why retailers can’t afford to neglect these brands, but first and foremost is building a steady stream of interested customers.
“Shoppers are not as loyal to a specific store as you would hope these days, so in order to encourage loyalty and stay relevant and competitive, retailers still need to provide easy access to the brands that move at pace,” says Kelly Georgetti, activation director for mixables at Beam Suntory. “Merchandising is about driving consumers to make a decision at the point of purchase, and our role as a supplier is to try to help retailers sell more.”
In order to break through the clutter and ensure merchandising pieces work the hardest for brands, retailers should embrace tactics that help the shopper make a buying decision, Georgetti says. “Whether it is understanding what the product is, how to use the product or what occasion it’s targeted for, merchandising tools should help shoppers navigate and select. Therefore, it’s crucial to delineate the roles different merchandising tactics play.”
The more compelling the brand in terms of story, heritage, volume and seasonality (among other issues), the easier it is for a retailer to justify committing the space in today’s clean store environment. Seen as a form of retail theatre, well-selected displays can enhance the store, establish its reputation, encourage the customer and drive incremental sales.
In the last few years, the particulars of retail merchandising have evolved and expanded. New, modern stores are more geared to digital merchandising, a “clean store” policy that limits supplier displays and creates a preference for store-created presentations. Large grocery and chain retailers look for bespoke displays, expecting broad input into what suppliers offer. Smaller, niche stores seek few supplier merchandising or POS in order to accentuate the personal connection to shoppers. All of this makes it more complex to create incendiary merchandising tools, and suppliers are sometimes shying away from one-size-fits-all strategies.
“Ten or twenty years ago, displays were everywhere; now everything is mandated by national buyers who are really savvy about what works and what doesn’t,” says Wendy Nyberg, VP of marketing for Trinchero Family Wines. “Now we have to execute knowing we might have to share a display with a competitor.”
Pick the Right One
When deciding what sort of merchandising displays to adopt, retailers should look for things that suit their target customers. “Consumers come into a retailer’s business looking for certain things,” says Steve Wallett, VP of category development and strategic accounts marketing for Diageo. “They may see the big national brands promoted outside the store and they want to be able to find them easily, but they also get frustrated easily.”
Big brand displays should be used as a way to help customers navigate a store, he says, as customers locate themselves in a store using brands like Smirnoff as a landmark for a category, starting with a trusted brand and then looking for the flavors, sizes, other brands or extensions within the category afterwards.
Wallett says research shows about a third of consumers will leave a store if they can’t find the product they want quickly, while the other two-thirds might buy another brand but may not return to the same store the next time, especially given the growth of beverage alcohol competition today.
While many stores like to cooperate on merchandising plans, others limit what they use. At Total Wine and Spirits, the 110+ unit big box chain, shelf space is entirely programmed alphabetically in-house, says Melissa Devore, VP of wine buying, Total Wine & More. “The number of facings given are in direct correlation to each wine’s volume, and so the larger national brands get the appropriate facings based on that.” And that can change store to store – if a wine sells better in one market, the store adjusts correspondingly.
Total Wine doesn’t take on a lot of wine supplier merchandising, given its large private label business, though in spirits displays suppliers are welcomed, she says. “The key on the supplier side is providing great POS so customers are engaged with things that make it different for them; that’s what we rely on suppliers for – to get their brand message across through things like bottle neckers or shelf talkers.”
POS can still be an effective way to promote the brand, but with the prevalence of clean store policies, suppliers need to be creative in their approach, Georgetti says. “Because of this, we are seeing a shift from traditional print POS to signature, iconic display items (i.e. Jim Beam Pot Still) and more engaging tactics to leverage the shopper’s interest, provide education and engage with the consumer before they enter the store.”
In general, Total Wine’s merchandising space is based on seasonality, with easy-drinking wine getting summer preference and more expensive, gift-giving brands featured later in the year. To keep supply steady, the stores order multiple times weekly during year-end holidays, and have case stacks available of popular items in storage so that associates can provide them quickly for those customers buying in quantity for entertaining.
Big Beer Brews Sales
Given the size of purchase and display space required, beer retailers have long had a love/hate relationship with merchandising. But doing it right is even more crucial during a time of such volatile consumer behavior. Says Tim Gossett, VP of category leadership, national retail sales, Anheuser-Busch, “We believe a balanced approach to the beer category is necessary and the data proves it. Retailers that focus on one beer segment at the expense of another grow slower than the market average. Retailers that apply a balanced approach between segments, however, are growing faster than the market average, due to the fact that even loyal shoppers spend dollars on beer outside their favorite segment.”
He cites InfoScout research data that shows premium/value shoppers spend 27 percent of their beer dollars on other segments, while the high end (craft/import) shopper spends 43 percent of their total beer dollars on the premium/value segments. Premium beer, with the highest penetration, drives traffic to and represents the majority of retail dollars spent on beer, while the Value segment has the highest shopper loyalty, with those shoppers highly responsive to merchandising features and displays.
According to beer consultant for Florida’s ABC Fine Wine & Spirits, Josh Beerman, markets like his rely on major suppliers for displays and sales, despite a growing craft brew business. In May, he had success with a Corona Cinco de Mayo display including piñatas and other paraphernalia set up about two weeks in advance, while in the fall, about a dozen much-sought after pumpkin beers are gathered in their own display.
“We’re fairly strong with the national beers. With the tourist economy and the hot weather, people going to the beach after arriving from different parts of the country. Having major brands handy is important. For the older customers who know what they want and aren’t going to change, it makes sense too,” he says. Large stackers of Miller Lite, Budweiser and Yuengling “seem to work like crazy for us,” he adds. “Especially on weekends.”
According to Gossett, while about 80 percent of beer shopping trips are planned, even the 20 percent of unplanned purchases are important. “Displays are an opportunity to remind those shoppers about needs they may have forgotten to think about for their shopping trip,” he says.
Displays also give retailers an opportunity for cross-merchandising, to sell shoppers multiples of products in multiple categories and create occasions. For example, displays can help sell a “plus one,” such as a 12-pack plus a different six-pack or a 12-pack plus snacks. Wallett points out that consumers tend to look at most displays and even if they don’t buy right away, they are more likely to take a display product off the shelf later if it provides awareness and interrupts their trip.
Building a Bigger Purchase
Making it easier for customers shopping for their necessities is the main reason for significant high volume displays, but there’s also building incremental sales. It’s something the Sutter Home “Build a Better Burger” campaign has been doing for 25 years. But recently the approach changed, according to Nyberg of Trinchero Family Wines.
Perhaps the longest-running retail program in the wine industry, the burger promo’s relevance needed adjusting to market and merchandising realities. Offering $100,000 for the award-winning recipe might have spurred awareness of Sutter Home, but did it actually attract customers to buy the wine and other burger-making items?
“It’s been super successful and retailers look for it in May and June, but the question was, ‘Is the consumer looking to enter a recipe contest or looking for a solution? What’s the hierarchy of messaging?’” Nyberg says. “For the first time we didn’t lead with the contest, but instead promoted 25 years with 25 recipes customers can achieve in 25 minutes or less (and by the way, here’s the recipe contest). This is more attractive to retailers because it communicates with more people in the store.”
Retailers often want merchandising that sells more than one item, especially given the contemporary clean store approach, she says. More importantly, merchandising that sells rather than amuses is far more important on the store floor.
“We all as marketing folks want to find the big idea, but a lot of times you come up with the most creative idea, forgetting the thing you’re trying to do in the store, which is hitting the customer with the right message and a solution quickly. What does the customer want when they walk in the store and what is the solution you’re giving them? A lot of promotions might be clever but they need to resonate with a customer going into a store who has 20 minutes to shop.”
Specific marketing periods are great times to take on innovative merchandising. Says Mike Maihen, director of retail field sales for Jack Daniel’s, “Retailers are continuously pushed to carrying too much inventory, but also tasked to grow dollar share in their category. We have taken a portfolio approach to try and help drive higher basket ring – one example of this was with our Spirit of the Cup program last year that was well-merchandised with a variety of brands in our portfolio that tied to the World Cup.”
He says higher volume item displays also should offer the “wow factor” that will drive shopper basket ring (for example, their “Grill Out” program with offers on meats, sauces, and more).
Especially in spirits and higher-end products, the year-end holidays offer great opportunities, but shorter periods throughout the year are likewise important. A comprehensive approach works best, say most suppliers.
“Occasions offer an opportunity to provide gifting solution, with things like gift tins, engraved bottles and other special merchandising tools that can specialize a brand and draw gift buyers, Wallett says. For holidays like Memorial Day or Thanksgiving that call for more entertaining, providing shopping solutions – recipes, meal suggestions, product usage for group service – is extremely helpful.
Encouraging and reassuring customers to take a chance is the goal of many holiday displays. “Getting something that puts people in a buying mood and not thinking about what they’re spending, but instead gets them wrapped up in the excitement of the holiday, frees them up to spend a little more,” Cristol says.
“Shoppers are looking for impactful, inspiring displays that catch their attention and get them excited to celebrate the holiday,” Gossett says. He suggests creating stories about how consumers can interact with a product, like creating an attractive cook-out theme. “Planning deliberate and thoughtful cross-promotional efforts throughout the store can heighten shoppers’ interactions with other categories, which means higher basket rings,” he adds.