Innovative ideas for retailers

Being fairly new to the retail side of the wine business, I like spending time talking with others that have a proven and long track record in this arena in hopes of learning more about how they operate. Reading articles and of course this forum have provided lots of valuable information. What I’m hoping to do with this post is create a small pool of distilled wisdom where specific thoughts on retail can be shared. To set the example, I’ll lead the conversation with a great little find I learned about just the other day. With all the discounting and price drops happening, this may come of great use to many.

So, you get a wine on special, which seems to happening a lot now a days. You’re enthusiastic about the great price on a wine that is already proven in your store or it’s something you’ve read about that has some very positive reviews from a critic you respect. Now, knowing its something you can get a little, or a lot of extra “fluff” on you proceed to give it a sale tag and (hopefully) watch it generate you some money.

Most stores have a case discount policy of 5, 10, 15%. And here is where I got excited with this new idea I came across. Instead of giving them a case discount, give them an extra bottle… make it a baker’s dozen for their purchase. How does this make sense?

So you bought however many cases of wine at, lets say $10. You mark the wine up to $20 which now gives your product a 50% margin. A guy/gal comes in and wants to buy a case: $20 x 12 = $240. With a 10% discount, that becomes $216. That’s a total savings of $24 dollars to the customer. Now, instead of giving them a discount, you give them an extra bottle of the same kind they bought or something different, but of equal or lesser value. In effect, you’re giving away only $10 worth of product that has a perceived value that is at least twice as much.

Also, with the main objective being to bring them back and have them shop with you, giving them a bottle of something different might open their eyes to something new, making you their new best friend. If nothing else, they’re forgoing some savings in exchange for a bottle of wine that might give them some new excitement and bring them back for more.

As always, comments are welcome and please, share your stories. Cheers.

“Most stores have a case discount policy of 5, 10, 15%. And here is where I got excited with this new idea I came across. Instead of giving them a case discount, give them an extra bottle… make it a baker’s dozen for their purchase. How does this make sense?”

That is illegal in many jurisdictions.

How about you simply use a normal markup and sell it for $15 instead of an egregious 100% markup?

Chuck, I think he is talking about deep closeouts. But I hear you anyway…

I understand, but unless they bought it ALL, some other retailer is going to buy some at the deep discount price and undersell you by $5-7.

Check your PMs…

JP

Give them the discount. Your customers can quickly figure out the bottle is a very little discount, even if you advertise BUY 12 GET ONE FREE. ONE bottle versus TEN percent. Even when they are buying cheap wine its obvious. If they were buying Screaming Eagle for $1200, they might consider it, planning to flip the extra bottle for $1,750.00 to get their 10% discount. Don’t play your customers as stupid, it will bite you in the butt very quickly.

Figure out what wines you can discount and how much of a discount you offer. Hard to get/limited wines, no discounts; readily available large production, 10 %, somewhere in between, 5 %.

Sell it for $13.50 - move it out quick and call it a day

The wines with which I was considering doing this with are the ones like Roberto said, deep discounted. Very deep. Either end of vintage, supplier close out, item close out… So yes, I am dealing with wines that I’m getting the very last of. Other retailers and merchants already have it and their prices are set. If I can get a nice margin and still be a lot lower than any competitors, I think it’s a good deal all around.

For example: I bought the last couple cases of Domaine Serene Vineyards Rockblock Del Rio Vineyard Syrah for $12 each bottle. Before I did, I looked online and check out the average prices. I found the average price to be $45. What’s my sale price? $25. I think that’s a very fair, if not almost rock bottom price for a wonderful wine. I get the extra margin, the customer clearly pays well below what other stores and merchants in the area have it priced at, if they have it at all. In my mind, everyone wins. Or am I missing something here?

In effect, we’re not talking about regularly discounted items, or a ones that have a long and steady supply. Just the really big, cool deals when and if they come around.

I will have to check into the legality of the baker’s dozen, thanks for bringing that to my attention Roberto.

Thanks for all the input guys, very much appreciated.




Now I would have approached that differently - keep the price @ $45 a bottle - and give them a bottle free for everyone they purchase -

I would have left the price at $45 and done an e-mail blast saying
“this is an un-advertised Customer Appreciation Offer $25.00” .
In store sale sign with regular $45 & sale price , with whatever price you decide on.

So much for ‘Innovative Ideas.’ [snort.gif]

JP,

I think it’s an idea worth trying, and in addition to the benefits you outlined, it also builds value into your shop’s service rather than the race-to-the-bottom, who-can-sell-it-for-less mentality that is gripping so many of the retail shops. You make more profit, support the wineries by stemming the freefalling shelf prices (even if just a bit), and still pass on savings to your customers.

The only question I can think of is whether or not your customers will perceive “baker’s dozen” as compelling as “10% off” (or whatever percentage). We pretty much have a Pavlovian response to the " $_____ off" construction, so depending on your presentation and clientele, you may or may not have an issue with this.

In any case, if you try it, it’ll be an interesting way to interact with your customers, and give you some feedback on how responsive they are to “unconventional” incentive and marketing initiatives.

Let us know if you try it and how it goes!