The ongoing ‘them and us’ outlook of independent retail when referring to the chains is understandable and realistic given the business goals, financial backing and supplier clout differences between the two off premise routes to market.
The chains have brought fresh ideas (many borrowed from grocery) into liquor retailing, whether that be marketing campaigns, adverts or increasingly – clever deals and specials. They have broken the mold of liquor retail and it is high time the rest of us get on board if we are to be relevant and compete in the future.
Should an independant retailer simply squeeze his margins and attempt to build business using the same promotional schedule as 5 years ago? Should the distributor limit himself to selling branded liquor to liquor license holders, accepting a small middleman’s cut as recompense? Should wineries leave the selling to their distributors, relying on a small pot of accrued co-op dollars for distributor initiated trade promotions?
Take the big box retailer. It sells booze to the public. It sells booze to cafes, restaurants and even other retailers. It even has the odd rep who builds direct sales with local businesses. It has the clout to demand very attractive trading terms, discounts and advertising spend from its suppliers. It then creates it’s own brands to compete directly with it’s supplier’s products – whilst making massive GP on these products along the way. It also uses these brands to create the illusion of super specials (buy 12 bottles and get a free/discounted carton of beer etc). It parallel imports some products (eg beer), cutting out the local producer/supplier entirely.
In short, it is a retailer, distributor, producer, importer and marketer on a national scale. Bravo.
To compete with this sort of modern and nontraditional operation, the rest of the wine trade and industry really needs to take a good look at how it adds value, find some like minded partners and work together in more areas than their own traditional field if long term growth is to be guaranteed. Distributors can work with their own winery suppliers to come up with their own home brand that generates more GP for them and volume for their suppliers. Wineries can align their marketing and promotion activities with the needs of each market by working with their distributors and their unique areas of strength. Those wineries who go direct to market themselves can align themselves with banner groups, hotel groups or even other wineries from different regions to add value to their offer.
What I’m suggesting does not have to be revolutionary and in many cases, steps are being taken by forward thinking operators to come up with modern solutions to a very different liquor trade landscape than yesteryear. Changes in focus, style and delivery do not have to be driven by squeezing margins, rather squeeze out rehashed ideas and methods and identify different ways of doing business in order to, once again, add value.