How to Survive the Wine Retail Business

Steps for success in a changing economy



I recently had the opportunity to sit down with several friends who work in retail stores here in New York City. Over the course of several days and a few long conversations, I began to think of their plight. Not only have they been fairly battered by the economic climate of the past several years, but they are constantly facing new challenges. Better Internet availability of wines, impending approval of wine in supermarkets, the need to keep up with social media’s demands (from maintaining a presence on Facebook and Twitter to rethinking in-store signage and advertising), all combine to make retail a bit of a scary place today.

I’ve put together a few thoughts on what retailers might want to consider while moving forward through 2012, but I’m also reaching out to all of you. I would love to hear what you think about the state of the retail wine buisiness. What do you think forward-thinking retailers should be doing today to make sure their businesses are growing tomorrow?

Photo courtesy Caliper Studio via Flickr/CCAnd retailers, what can you do to help ensure your continued survival? The first point is so obvious that it can be easily forgotten.

  1. Remember you are in the service business.


Sounds obvious, right? But judging from my experience, this is not always the case. I’m sure many of you might respond that you are in the wine business, which while technically true is a meaningless diversion. Retail wine sales are, by definition, consumer facing commodity sales. Yes, part of that role is providing expertise, but I often see the very fundamentals of commerce being ignored. Like what? How about cleanliness, courtesy and respect?

It is that simple at its base. Keep a clean, well-organized store and consumers are likely to think more highly of you.

Treat customers with courtesy whether they are buying $5 or $500 worth of hooch. You really can’t judge a book by its cover, and I am walking proof of that!

And respect my intelligence, please. I know what corked wine is, and even cooked wine, but I do recognize that many consumers don’t. When those consumers want to return a bottle, it is often because they don’t like it, not because of the defect they claim to detect. We know that, but what I also know from my years in retail is that a minuscule percentage of wine actually gets returned. How little? In my experience, somewhere between one-tenth and four-tenths of a percent.

That is still a lot of money, thousands of dollars on each million in sales, but you should take the hit. Not because of the people who don’t know what corked wine is, but because of the people who do! Treat the wine lovers and wine geeks well and they will not only return but will spread the word about your policy and attitude towards them. I’ve been on the receiving end of both good and bad publicity, there is no doubt which I’d rather see.

   2. Talk to your customers


This is treading more into the social media end of things, which is still a giant time-sucking black hole if you ask me. We’re all desperately involved in social media, not so much because it pays such big returns, but because we’re afraid of missing the boat in case it does.

You have a finite amount of time in your day, so how much time should you spend on social media and what should you be doing? Simply stated, as much time as it takes to build up your audience. If you don’t have much of an audience, then it doesn’t really matter how much time you spend working your social media strategy because no one will be listening.

That brings us to the crux of the situation. To both attract and engage customers you have to provide value to them. Don’t think of social media as an advertising or marketing channel, think of it as an educational and enjoyment channel. I’m not saying that you shouldn’t use social channels to promote your store, sales and events, quite the contrary in fact since each of those could be a perceived benefit to your customers, but that cannot be the totality of your messaging.

Let people know where you’ve had a great meal or food and wine pairing lately. Set up a time to answer questions, either virtually or in the store, about the basics of wine. Virtual Q&A is a great tool since it allows those who might be embarrassed by their questions to ask them in relative anonymity. Give your social channels a personality, be responsive and make sure you get involved with other social channels my commenting, liking and interacting.

This is all a strategy to win friends and fans, who eventually turn into brand advocates. The bigger your base, the broader your reach. All of a sudden you’re recommendations are being broadcast not only to your group of fans, but to their’s as well. If there’s one thing I know for sure, it is that many of those wine geeky enough to follow a wine business’s thread, feed, or page are looked upon as “the wine guy or gal” in their personal circles.

That’s the way to build up your audience and reach, organically.

   3. Do something to get attention.


This is something that has been kicking around inside my head for years, since cellphones first had cameras and I saw people take pictures of bottles and shelf talkers in the store.

Today, those pictures can get plastered across the web instantaneously, on peoples Facebook and Pinterest pages, or Flickr feeds.

I always thought it would be good idea to be outlandish enough to make people stop and take a picture of an in-store ad or display. Something that they would want to share with their friends, and yet was clearly branded by the store. I’m no longer in retail so I haven’t given enough thought to this idea lately to come up with some concrete examples, but with the explosive growth of Pinterest lately, you can see the writing on the wall.

We are moving from a text-based world to a visual-based world. Icons and badges have replaced words. QR codes have tried to do the same, though with limited success seeing as they were very much a transitional step. Today, images get the most traction in social media. People love them, and are quick to post and convey so much so quickly.

This is bound to be the next frontier. Getting people to take and share images of your displays, events and advertising could be big, even though I know we’re not quite there yet. So that brings me back to the beginning. While I’m hoping to offer some thoughts here to help stimulate this discussion, what I’m really looking for are your ideas.

Let me end this by simply asking you to let me know what you think will be required of retailers over the coming years. How do you plan to remain relevant in an increasingly complex world? I really would love to know!

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Comments

  • Snooth User: KatieCav
    Hand of Snooth
    806279 117

    Great post Gregory! As someone who is in the process of entering the wine retail business, I find this article to be extremely thought provoking.
    Customer service is the number one topic that sticks out to me. For research, I have been visiting wine stores all around the United States and the lack of customer service absolutely blows me away. How hard is it to say hello to a patron or ask if they need any help? I want to feel welcomed and valued when I go into any store, restaurant, winery, etc. Anywhere I need or want something and I have to spend money to get it. No matter how much or little that amount is.
    When someone shows a genuine concern to help that's when I know I am in the right place. If that place happens to charge more than a place that does not take the time to help, which one do you think I will be returning to?
    Thanks for the post and I look forward to reading other thoughts. Cheers!

    Mar 03, 2012 at 10:54 AM


  • Snooth User: Snoother 414715
    Hand of Snooth
    414715 1

    First let me address the issue of wine in supermarkets. Impending is a good way to look at it but retailers should join together with Last Store On Main Street to fight losing our revenue to out of state corporations like Austin Tx. Based Whole Foods and billion dollar corporations like Wegmans. Most consumers don’t realize that the state of New York since the state of New York NEVER allowed wine in supermarkets retailers specifically chose locations close to supermarkets to open their stores. Wine shops are the best example of small business out there. We are only allowed one license which means one store. It may be less convenient to have to make an additional stop to pick up your favorite wine, but you are helping your community and guaranteeing employment for thousands. You are also receiving service and a wide selection. While I’m at it, is quite condescending to suggest that we do not realize that we are in the service industry. Deliveries, in store tastings and seminars are ways that we at Bowery & Vine serve our customers. Supermarkets have already put the butcher, fish monger, florist and bakers out of business some supermarkets even have optometrists there so you can buy your eyeglasses there as well. Don’t let them take away the independent wine shop.
    The person who wrote the above post must have never visited my shop or even my competitors in Manhattan who have sommeliers on staff who LOVE nothing more than to give service and talk wine.
    Bowery & Vine

    Mar 03, 2012 at 12:51 PM


  • Snooth User: Eric Guido
    Hand of Snooth Voice of Snooth
    92549 157,804

    Great post Greg

    I think the biggest thing you hit on is Customer Service. I've seen some of the worst customer service ever, in wine retail stores. It's almost as if a number of retailers think that it doesn't apply to wine retail. However, I have been seeing an improvement lately, but it seems that some of the big places will never really get it.

    Another problem is organization. I don't know if the problem is that too many people are drinking the kool-aid, but it's hilarious how many times I've bought wine that wasn't really in stock or drove an hour to pick up a bottle that was accidentally not moved from an offsite storage location. Another favorite, buying wine and getting home to find that the retailer packed the wrong wine in my boxes.

    Mar 03, 2012 at 3:05 PM


  • Snooth User: wineclosetinc
    Hand of Snooth
    68951 134

    Thanks for the post on this subject. As a wine merchant in a small town competing with big box stores, I find the tools you noted are extremely important, but also keeping an open mind, listening to customers and being flexible has played a crucial role in surviving in this economy. Thank goodess we started out with dual licenses because people here really want a relaxing place to hang out with friends and enjoy a good glass of wine...and it's the good sales skills of my staff that gets them to take a bottle home with them when they leave.

    Mar 03, 2012 at 4:22 PM


  • Snooth User: Kenner
    118554 26

    I hope that the big boxes don't sell wine for all the aforementioned reasons. If you think service, or information is poor in a wine shop, imagine what it will be like at the mega mart! Talk about buyer beware.
    Customer service and wine knowledge should trump price. If those guys do get the go ahead, I hope they lose their shirts on the deal.
    And I can vouch for Bowery and Vine; I did some promo pouring there a while back. Nice folks and good products.

    Mar 03, 2012 at 5:17 PM


  • Snooth User: copekat
    247167 0

    Fantastic post! 10 years ago I help lead a petition to get wine sales in our local grocery stores as I had to drive to the next county 10 miles away to buy a bottle of wine and/or liquor. Beer was available everywhere. 9 years later, I rarely buy wine in the grocery store 3 blocks down the street as the new wine store 3 miles away has such fabulous selections and amazing customer service!

    The grocery stores carry what I call "fashion brands" or the popular names that everyone knows, (which I'm not being snobby here, because one of my favorite bottles of wine retails round $15) but there isn't a depth or breadth of selection and never anyone who can help me or answer questions.

    I went into the wine store today to specifically look for a $19 cabernet I tried at a dinner two weeks ago. After getting into a wonderful conversation with their wine steward, I walked out with the original bottle PLUS three fabulous finds he had on sale at 20-25% off and one amazing wine I had been searching for that was still a deal at $65. I spent $185 (before tax) and walked out feeling like I won the lottery! THAT is customer service.

    Mar 03, 2012 at 5:37 PM


  • Snooth User: Gregory Dal Piaz
    Hand of Snooth Voice of Snooth
    89065 201,880

    Thanks so much for the amazing comments you've all posted. I need to reread them and see how I can make my next missive tot he trade as useful, if not more useful than this one. There must be something we can do together to help leveling the playing field, giving retailers who care an edge over those who are just big.

    Mar 04, 2012 at 10:38 AM


  • Snooth User: michaelc
    134999 4

    Great article, Greg. And all the comments were wonderful as well. Let me share about the world outside of New York. I am a wine retailer in Seattle at the Fremont Avenue Cellars (formerly Fremont Wine Warehouse). This is a State where wine has been offered in grocery stores for as long as I can remember. In the past several years grocery, but not big box stores, have added wine stewards, and upgraded wine departments that are like a mini-wine shop. Of course the wine steward isn't always there, and the level of service and knowledge is inconsistent at best. My customers have come to trust me and enjoy learning new things about wine every time they come for a weekly tasting, twice a week, order something special for an event or wedding, or just to pick up something for dinner that night. We have earned a 5 star rating average on Yelp where the level of service is often commented on. Yes, we struggle in this economy, but we have loyal customers who make a separate trip to buy wine from us. We are located two blocks in either direction from grocery stores with nice wine departments, but every day I have customers who walk in my door carrying their groceries from one of those stores, to buy wine from us. I ask them why, and the answer most often is "better service, better knowledge, and better prices." Listen to your customers. They will show you the way.

    Mar 04, 2012 at 1:58 PM


  • Snooth User: cathytsui
    1004508 5

    great comments and great article. Customers are happy to use the money to buy the wise. knowledgable and resourceful to help customers to get insight and straight information about sharing the customers where they can find others wines which they can not find here, or price ideas the customers can really get benefits from buying such as upcoming promotions and whereabout. just use computer to search update resources for customers. A transparent trading environment and intimate neighborhood feelings would be good to arouse customer's loyalty.

    Mar 04, 2012 at 4:56 PM


  • Snooth User: manksy
    185038 0

    I work for a "grocery store" in California, where grocery stores compete with small wine shops. Grocery stores stick with a large number of wines, most within the $8 to $15 range. Trader Joe's drops the bottom of that range to $1.99, but rarely steps above $15, despite carrying an inventory of more than 400 SKUs, and most other grocers carry many fewer SKUs, and extremely limited selection (e.g. very little range of international wines, and only 5 or 6 varietals).

    Local and small wine shops in LA, where I live and work, carry more distinctive wines, more varietals, and more local and international variety. Most, if not all, of their selections are priced above $10, and, in the bottom range, there are few selections. But all are masters at customer service. Even the smallest offer extensive tasting schedules, and always have staff available to recommend a bottle. The most successful have tastings that are thronged, often as many as three weekly.

    Stores like Trader Joe's pay attention. Though they dominate the low-end of the market, they still see the need to educate customers. They always feature wines in their flyers, and, in some stores, provide staff to recommend wine, whether it's their sales leader Charles Shaw, or wines that, per bottle, cost as much as a case of Shaw. And, if anyone remarks on the success of TJs, they point, first, to customer service. And customer service there simply means being available to answer questions, and knowing what the store offers.

    I'm sure NYC is a challenge - that grocery chains might compete is definitely something to be reckoned with. Quality and knowledge are the keys to success, and social networking, in whatever form (images, recommendations, links, blogs) is helpful. But remember that you're probably not competing for the same people, and that yours (ours) is a specialty business that can easily distinguish itself by product, product knowledge, and customer service.

    Mar 05, 2012 at 12:14 AM


  • The opportunity for stand alone wine and beverage stores that I serviced in the early 70’s after being a sommelier for three years, is still a valid opportunity. This does not seemed to have changed much, it is the players that who do not see the magical fish tanks they need to build in their stores. ( At age seven I went to see Santa Clause in a Macy’s and they had all of us kids walk up and down several ails with fish tanks on both sides. We were all so spell bound by the different displays that we did not mind waiting 30 minutes to see Santa. I never forgot that magical feeling walking among fish tanks so well displayed). Stand alone wine and beverage stores need to think about making their wine section a magical place for wine novices and wine buffs. I am not talking about sets and props necessarily but a selection of wines that makes a walk down the rows of wine or shelves mystical. You want that wine buff going wowww, Geee, what a selection of wine. I could spend hours just fantasying what all these wines are about and what they taste like.
    You don’t need every wine in the wholesale catalogue but build each section with price in mind first.
    ( rotating your inventory should always be first on your mind, a couple bottles to impress is fine but you don’t need cases when you sell a bottle a month.) Try to build by each section by country, then region then place recognized self selling labels along with smaller unknown wine makers who produce their own style to make it a novelty for wine buffs to discover. Your wine novices will float into this area in time and it will be a drawing card for all who want to know about wines in this region. Educate your staff and when you have tasting only pour wine that is ready to drink and have suggestions of food pairing.
    If you are not in a super wine buff neighborhood then think if building your wine select not just by countries and varietals but line your bottles up from the lighter wine to more complex wine in that varietal selection and use cards or neck signs to tell the story about this section of the wine. Make your display educational about the points the wine novices are interested in hearing and understanding so that their expectations will not be disappointed when they try the wine. Wine buffs appreciate this as well because they are always learning.
    I would also suggest that as a store owner, you visit the local restaurants in your area, as many of your potential customers eat there. So why not feature the wines that sell well in the restaurants. You will probably see a change in foot traffic soon enough. Work with the restaurants, let them know you have their wines so the guest will enjoy more of the wine and it will be a drawing card for both your business. Take the time to work with your wholesaler as he is interested in more business from both of you.

    Mar 05, 2012 at 11:44 AM


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