The Grapevine

Retail Wine Strategy: Competing On Price is a Mistake

May 30th, 2017

You may think you are competing on price in your retail wine shop, but your customers know otherwise. [level-members]

According to a 2014 survey by Rosen Retail, price was all the way down at #6 on consumers’ list of what drove them to shop one store over another. Service and selection topped the list, in that order.

Of course, that’s not to say that someone won’t drive across town for a loss-leader. We know of a local merchant who sells 1.75 liter bottles of Dewars for less than most area shops can buy it. Volume helps, but this shop is using the Dewars to get people in the door.

So while you certainly don’t want to gain a reputation for being expensive, your focus should be much more firmly on the things that matter most to your customers: service and selection.

Service is critical. And it’s not just about being polite and friendly and knowledgeable. It’s also about making retail much more of an experience. That’s the natural trend for national retailers in all businesses as they try to compete with the convenience and cost-efficiencies of online retailers.

And that trend simply has to trickle down to Main Street shops because consumers’ expectations are being shaped by the changes. State-by-state regulations might preclude you from pushing the envelope too far, but we’ve heard about food and wine experiences, wine books being sold alongside bottles, and other interesting approaches to making your shop more than just a “wall of wine.” It’s worth investigating what you can do, particularly if you’re passionate about wine books or food and wine pairing or some other natural accompaniment that will help you stand out.

Selection is the more interesting issue, since most of us don’t have unlimited warehouse space to be able to stack every bottle under the sun. That means you have to do a great job of selecting wines based on a number of criteria:

  • Are they true to the personality of the shop?
  • Can I sell them enthusiastically?
  • Do they compete well with other similar wines being offered locally?

That middle question is perhaps the most important. Since there is no real qualitative way to prove that your $12 Chianti is better than the competition’s $12 Chianti, a consumer’s decision is often going to come down to how well you “sell” the wine.

I put “sell” in quotes to make it clear that we’re not talking about used-car sales tactics. We’re talking about how you differentiate the $12 Chianti from the $15 Chianti, and how you recommend one versus the other based on what the customer has told you they like, what they’re serving, etc.

Excel at superior service and an interesting breadth of selection and price won’t be on anyone’s mind who comes into your shop. Especially when they come in for the second time …