With grocers entering the wine race and investing in technology to optimize service and margins, traditional liquor stores face a critical but reversible threat
Competition for wine consumer share of wallet is getting fierce.
The wine business is booming; with premium wine sales at +10-14% over 2016*. Wine companies are on an acquisition spree. New grocery chains are entering the space. Those already in the game are investing in wine dispensing and preservation systems. Wine enthusiasts are consuming more, and giants like Starbucks, Amazon and eBay decided they too want a piece of the pie.
Starbucks started to sell wine in many of its stores and plans to expand to 2000 stores or more in the US and Canada.
Amazon even introduced its own brand of wine recently.
eBay went from selling just high-end wines, to offering the full gamut.
These tech-focused financial powerhouses will be investing heavily in new ways to engage consumers and keep them coming back.
One of the challenges these companies must however overcome, is the relative lack of wine expertise that traditional retailers offer. While they plan to fill this gap with the right staff, the reality is that technology will eventually play a far greater role in helping them to address this issue.
With minimum wages on the increase, consumer-friendly technology tools will likely be the best way for these high-traffic retailers to professionally service more wine consumers quickly and cost-efficiently.
When was the last time you could quickly locate a staff member at your traditional supermarket, ask them a question on a complex product like wine, and get the right answer? Especially on a busy day, or a particularly quieter day of the week?
By being pro-active, traditional liquor retailers have a lot to gain, but also far more to lose, if they remain indifferent or static. Lead, follow or get out of the way!
Traditional wine retailers can anticipate the new competition by providing better, consumer-centric wine education and information online. More engaging, relevant and useful wine rating systems instead of the typical star ratings, and food pairing and personalized wine matching self-serve tools. They can also be leaner and more profitable, by investing in real-time consumer wine tasting sensory data that enables truly personalized service, better decision making and quicker inventory adjustments.
Having now acquired Whole Foods, Amazon will push its wine business harder than ever.
Technology tools and consumer sensory data acquisition platforms from companies like Quini could be deployed by retail behemoths to gain a competitive advantage that has never existed before. To assist wine shoppers to pick the right wines, in milliseconds, without having to consult with a human wine expert.
Real-time tasting data will enable Amazon, eBay and others to individualize wine recommendations and shipments, push new wine style ideas and requirements directly to key suppliers and winemakers, and further improve inventory allocations and logistics….including automatic replenishment.
It’s the age of automation, and these folks are the masters. They are in it to win it.
And we haven’t touched on drone-based home delivery yet.
Heinen’s, a large grocery chain that operates 22 locations in Ohio and Illinois, offers at its downtown Cleveland location, impressive self-serve wine dispenser and preservation stations (WineStations) from Napa Technology. The store runs tasting events regularly too, and has the floor space to do a great job at it. They offer real wine glasses to give customers the best wine tasting experience and drive new revenue too.
In Canada, Overwaitea Food Group that owns Save-On-Foods supermarkets, and Loblaws, which also owns and operates Real Canadian Superstore, and others, have just entered the wine market. They too will give Canadian traditional wine retailers a thing or two to contemplate.
To get ahead of this threat, liquor stores must swap current thinking with innovative out-of-the-box ideas, tools and processes. And for that matter, this includes ALL brick & mortar wine sellers, both on premise and off-premise.
Technology that enables staff to provide better and faster service to more people, has become an urgent must, not an option.
Soon, liquor store staffers who can’t produce a perfect wine recommendation as quickly as the customer can for themselves using their own cell phone, will hinder their company business and blow more wind into the sail of the large newcomer down the street.
For retail wine experts who might be worried that such technologies might replace them, fear not. As far as we can tell, technology is as good as the information you feed into it. On the contrary, embrace new technology to help you do your job more efficiently and deliver even more value to your employer. In the future, even when automation will seem to take over, global management consultancy McKinsey & Company, in its The Future of Grocery – In Store and Online Podcast, also foresees the economy will still need people to function.
The game has changed.
The new challenge for the traditional liquor store is to adapt quickly, deploy more technology, or risk going by the way of the old travel agency.
The retail trend is more and more “try before you buy”, in all food categories, including wine and other alcoholic beverage selections. Saturday tastings, often presented by wholesaler representatives, are more and more prevalent. If wholesaler representatives are not on hand, how will you train your staff? What tools will give them to help them do their job better when a customer asks?
And “tasting rooms” called wine bars and wine lounges are being more and more widely available. Increasingly, bottle shops / tasting rooms are disrupting both wine retail and wine lounge markets with their hybrid concept; both on and off-premise. How will they train their staff and service customers?
These offer alternative meeting places (wine and small plates) to sports bars and other destinations. How will they train their staff?
I am seeing a pattern here. Do you?
* Silicon Valley Bank – State of the Wine Industry 2017