Consumer Conversations And Retail Roulette!


I’d like to challenge the idea that major retailers should be more engaged in shaping the future of Australian wine brands.

Why? Because in most cases, retailers are not brand builders…unless, of course it is their own brand, which now just happens to be the fastest growing segment within those sceptred aisles…’Finest’; ‘First Choice’; ‘Premium’ – take your almost generic, own-label pick.

A recent conversation with Dan Jago, the astute and eminently likeable Director of Beer, Wines & Spirits for Tesco, left me in no doubt: “We are facilitators of distribution, not creators of opportunity, and we are certainly not here to build your brand for you…” I would consider that a fairly definitive response, and one that openly invites the brand owner to play better poker in the bidding and acceptance game of category planning.

But like unfortunate children who seem to forget the pain of an inquisitive hand in the fire, the usual suspects still queue up and expect a different result to the chastening  ‘you’re-in/you’ve-missed-your-hurdle-rate/you’re-out’. Retailers do not do this to be obstructive – supplier retention is, after all, a key contributor to profitability – but rather because they are in the business of giving their consumers what they want.

Accordingly, a strong indication of consumer preference is reflected in the volume and rate of sale of any given line or sku, and hence its standing as the ultimate litmus test of what’s in and what’s out. Consider shelf-space occupancy as a kind of performance-related, buy-to-let scheme and you begin to get the idea…

The trouble with this model, apart from its dauntingly Darwinian process of selection, is that it assumes that consumers actually know what they want, merely than what they like or can have. When a brand matures, or when a category stalls, immediate intervention is needed or else the inevitable consumer drift will happen. And while this ‘drift’ may be a fair reflection of current popularity, it should not necessarily be taken as a true indicator of future potential or absolute lifespan.

The missing piece in today’s retail engagement is consumer connection and ongoing ‘trial and discovery’ – a very different game from the usual ‘trial and error’ of in-store dispensing. In the search for a meaningful exchange between brand owner and consumer, the point of sale was traditionally viewed as a successful conclusion. It now should be regarded as an opening line, and the vital opportunity to turn a purchase decision into a brand conversation.

Retailers don’t build brands, brand owners and consumers do. Where is your consumer conversation currently happening, and can your brand speak for itself?

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14 Responses to Consumer Conversations And Retail Roulette!

  1. craig walsh says:

    I agree big retailers dont, & cant build brands.
    But independent, passionate retailers can & do build brands. Often to then see them ruined by the chains & larger independents who compete with the chains purely on price.
    Unfortunately there aren’t enough of the independent, passionate retailers around.

  2. winehero says:

    Hi Craig

    Thanks for visiting. I would have to admit that tarring all retailers with one brush is a bit rich…there are of course many different kinds of scale, service, and philosophy within their ranks! The piece was largely with reference to big-box retail, and a consolidating platform that seems increasing focussed on volume; price and convenience. Ironically , the ‘added value’ component would appear to be less range/choice, less interaction and discovery, and less encouragement to exercise preference beyond price or deal. Might work for baked beans and loo roll, but doesn’t do it for me with wine! thanks again for your time and comments. ph

  3. More premium brands are definately important for independents paticluarly for online sales. I think its a great opportunity for independents that the large players aren’t and perhaps can’t help producers build brands.

    • winehero says:

      Hi James – thanks for visiting winehero and sharing your views. Quite right to point out the positive potential of independents, and the fact that they can offer a very credible alternative channel to the smaller, premium players.

      Cheers!
      ph

  4. I think your comment applies very specifically to the UK and wine – and to some other markets. Tesco is very happy to do a bit of brand-building for Benecol, Gilette’s brand and Rachel’s Yoghurt and Guu chocolate puddings, because they are all quite strong brands in their own right. Wine – as opposed to Champagne – is very weakly branded, especially in the UK. If Mr Jago’s customers are as happy to buy Ogio Shiraz (a Tesco own-label) as one from Lindemans or Hardy’s, why shouldn’t he focus his attention on the (highly profitable) Ogio. The day his colleagues can create an Ogio/Tesco razor, the same may apply to Gilette.
    In the US, while Costco has a strong set of own labels and there are a few exclusives, wine brands are stronger and retailers need to stock them.

    • winehero says:

      Hi Robert – great insights and many thanks for posting.

      My issue is not with Mr Jago doing his job (which I think he does rather well…), but rather with brand owners not doing theirs! There is a level of ‘expectancy’ among wine brands that goes beyond ‘naivety’ and well into ‘ill-prepared’…

      As for the scope of the article, I should have been clearer that I was referring specifically to wine. One of the reasons for that is that I don’t really support the position that wine and FMCG goods are analogous – far fewer producers and brands within shampoo, fine fragrances (P&G’s term, not mine!), razors etc, for a start, and therefore a far higher chance of a significant and dominant market share. This – along with margin – makes them far more attractive for the retailer to support/invest. Wine has too long a tail for multiples and big-boxes, methinks…

      Re countries – agree with you on the US, where the national retailer model is less in evidence, but think that the article pertains to Australia as much as to the UK, and to Canada, where, because of the monopoly system, every brand is effectively a provincial liquor board BOB!

      Really appreciate your thoughts – as ever – and rather chuffed that you cared to comment! Cheers,

      ph

  5. Old Parn says:

    Thought provoking post — I’m very interested in this whole area. Apologies in advance for a huge comment…

    Seems to me there’s a difficulty when consumers’ perceptions are confused between retailer and brand. I imagine many buyers of wine don’t even think about the *producer*. If asked, they might say that Tesco was the producer of their bottle of Sauvignon Blanc. Because most people don’t really have any engagement with the producer, or even think about this.

    (Imagine a conversation at a dinner with friends. ‘Oh, that’s a really nice Pinot Grigio — who’s is it?’ The answer to this is far more likely to be the name of the retailer (‘It’s Sainsbury’s’) than a producer.)

    So in a sense the brand owner has to *compete* against the retailer in order to differentiate his/her product from the powerful overreaching retail brand. That’s a big task when you’ve potentially got a very small budget and no in-house expertise. Plus no access to the powerful statistics/market research data available to the supermarkets. And the huge range available (as opposed to baked beans) erodes the chance of brand recognition/attachment/loyalty.

    Supermarkets obviously want to control the territory that separates consumer and producer. After all, as soon as consumers recognise a producer and start to love & demand that producer’s wine, the producer potentially has power to demand better prices from the supermarket. Producers need to be innovative and somewhat aggressive to prevent them from holding this territory.

    Question is, of course: how? Encouraging interaction via scannable barcodes on the label/urls to give feedback and suchlike have started to appear — more innovation in that realm seems to hold some potential. But there must be other ideas…

  6. winehero says:

    Hi Tom – thanks very much for visiting and for leaving such a considered post. I think many of the excellent points you make are mirrored in Robert’s comments, too.

    The big issue is the one you end on – for smaller producers, often without much resource or ‘influence’, what can be done?

    One of the positive realisations of the whole social media revolution is that the cost of building a brand has fallen dramatically, and while the current age and demographic of the average wine consumer doesn’t map exactly against this, it is at least a constructive place to start. If you look at a what a wine brand like @teusnerwine is currently achieving, it demonstrates that having a ‘voice’ can really deliver cut through.

    Ultimately, though, I think the smaller players will have to find their own way through alternative channels and means, because the BIG problem is not ‘Brand X’ or ‘Retailer Y’, but ‘Brand Wine’. Beyond Champagne, we have not yet created a real differential that the mainstream consumer values. If we had, there would be more elasticity in price points, more margin for investment, and more compelling reasons for retailers to use wine beyond promotions aimed at footfall.

    I think the answer to this one needs more thought, and some collaborative action!

    Cheers, ph

  7. Ric says:

    “Consider shelf-space occupancy as a kind of performance-related, buy-to-let scheme” – that holds true for the bottles with a non-house brand (i.e. the producers own brands). The supermarkets can give their own-branded products more facings, and in a relatively un-differentiated product category like wine give themselves an advantage. So that hurdle rate becomes harder to achieve, and keeping the facings becomes a Sisyphean task – your facings are reduced to make room for a home brand, so your sales drop, so your facings are further reduced …
    The future for Australian wine is in less volume, not more.

    • winehero says:

      The ‘less is more philosophy’ just doesn’t seem to be taking hold…I do not argue against the logic of it, or even that it is critical if Australia wants the chance of a truly sustainable future, just that certain operations – brand owners and retailers alike – seem content to ignore it.

      Perhaps more alarming still, the consumer seems relatively unperturbed by what actually amounts to less choice, less range and less interest in return for simply cheaper wine. It’s as ‘anti-brand’ as you can get!

      ph

      • Old Parn says:

        Great final paragraph, there, winehero. Pretty succinct summary of the problem.

      • Ric says:

        I think you’re right – and I think it’s going to take a painful adjustment to (particularly) our domestic market more the message to get through to producers, especially the high-volume folks who are seduced into thinking that big sales to retailers is a long-term winner regardless of the price (I take the point that currently there is wine that possibly needs to be moved at any price, but this is not a long-term strategy, and I would argue that it MIGHT be better LONG-TERM to write off some of the liquid rather than sell it at a loss. Not too many businesses can afford the loss of cash flow though – although I DID say “painful”).

      • Ric says:

        The consumer situation is a little more interesting – even as a relatively “sophisticated” palate (tongue slightly in cheek there) I find it hard to resist the siren call of the Dan Murphy/First Choice barns (I guess nobody will believe me if I say I only go there to buy beer? :) ).

        This is where we may see some payback from better and increased wine tourism initiatives – I’m not sure how much the increase of cellar door “attractions” (food, merchandise etc) is driven by the short term need to find alternative revenue sources, but it IS an opportunity to increase the range of wines that consumers are exposed to.

        In terms of volume, of course, this is a slow process – but wine tourism and restaurant sales may be the only way forward for small producers – even enlightened independent retailers have limits on what they can showcase. Given that, I’m not at all surprised by the uptake of social media by wine producers – it’s a relatively low-cost, low-risk way of getting to a group of people who have built up an advertising-resistant carapace around their attention. As a statistically insignificant but relevant sample: Pindarie Wines got a party of fourteen visiting last weekend – eating lunch, trying and buying their wines – because they responded to a tweet from me looking for something in the Barossa.

  8. Reddangel says:

    Everyone is talking about the ‘consumer’ in a way that sounds as if they are unreachable – across the trenches. We in the trade talk to each other and stay inside a bit of a bubble which I believe is of our own making. Lets face it, wine consumption is dropping as wine production keeps increasing. Is your wine FMCG or a luxury product? Both? Neither? Most of the marketing of wines is pretty abysmal. Take the Hardy’s campaign in the UK at the moment – Come Dine With Me. The programme is hilarious and the diners drink plenty of wine but none of it Hardys. That is very expensive advertising space and I think they have really missed a trick. TV food programmes are everywhere and very enjoyed by our elusive customers. Put the food and wines back together in a simple and fun way …… maybe

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