LAS VEGAS -- A well-run destination wine department can help independent supermarkets stand out in a competitive environment, retailers said at the National Grocers Association's Supermarket Synergy Showcase 2004 here.
Stores that implement wine programs correctly will see increased customer counts, better average transactions, and increased gross profits in Center Store and overall, said Doug Sumpter, a former Albertsons executive who is now a senior partner of The Rosengarten Group, a food trade consulting firm based in Tarrytown, N.Y. He cautioned, however, that wine requires special attention to be successful.
"If you put your mind to it, wine can be an important point of identification for your store," Sumpter said.
Wine has certainly helped Western Supermarkets, Birmingham, Ala., grow sales and gain stature, said Darwin Metcalf, vice president of operations. Metcalf oversaw the creation of wine "store-within-a-store" departments at its two locations, each of which has grown wine sales from around 2% of the store's total distribution to around four times that since 1992.
A key decision was hiring a wine consultant, who is responsible for managing the department, making recommendations to shoppers, and staying abreast of changing tastes and trends.
The wine consultants at Western's stores have become so important that Metcalf believes changing them contributes to periodic sales slowdowns. He recommended finding qualified consultants through local wholesalers who have knowledge of pricing, or wine stewards at area restaurants with experience pairing food and wine.
"Why hire a wine consultant? Because they sell wine," Metcalf said. The average supermarket manager or other employees without experience in the wine business cannot be expected to keep up with the changing mix, he added.
Western located each of its wine departments in the perimeter of its stores in part because many customers looking for wines are likely to shop slowly.
"You have to give them room to lose themselves without getting bumped out of the way," Metcalf said. Stores that leave their shelf-set decisions to their distributors may find wines arranged by brand, but Metcalf strongly recommends setting by variety because it makes the best overall impact.
"If someone asks for a chardonnay, we can show them an entire block of chardonnay. It's very impressive," he said.
Elsewhere in the stores, wines are merchandised in an 8- or 12-foot cold box, and displayed in stand-alone stacks. One display island features wines all priced under $10.
Western boosts sales by offering an everyday 10% discount on case sales, accounting for some 40% of the revenue from wine departments, Metcalf said. The store encourages consumers to mix cases. Although the majority of wines sold are priced between $10 and $15, consumers making cases will often include at least one $30 bottle. Store staff prepares cases and marks them with the shoppers' names, leaving them conspicuously on the floor for pick up.
"Shoppers will often see a case with their neighbor's name on the box and think, 'This is the way to buy wine,"' Metcalf noted.
Western's reputation for wine is supported by various events, Metcalf said, including an annual charity event and tastings. "That's helped establish us as experts in the business," he said. Area newspaper wine columnists frequently use Western's wine consultants as sources in their articles.
Stores looking to add wine should begin by partnering with a local distributor, said Sumpter, the consultant. They should then develop a game plan based on area demographics and logistical and financial goals.
How a store merchandises wine can be the most important decision, Sumpter said. Stores should be prepared to devote a minimum of 2,000 linear feet of shelf space. As much as 50% of a store's wine sales can come from display racks, he added.