US specialist and independent wine retail are pivoting their business models to attract an increasingly online and social-media driven customer
Generalising about wine retail channels in the US market is no easy feat. Given the complexity of the country’s alcohol laws, which differ widely from state to state and, in some cases, even from county to county, tracking developments in any given channel can seem like somewhat of a tall order. Some states monopolise all sale of alcohol, the so-called “control” states, while others adopt a competitive model, certain types of store thrive in some jurisdictions and are completely absent in others.
Even within the competitive-model states there is considerable variation. In New York the specialist and independent retail environment flourishes thanks in large part to the single-licence law, allowing only one off-premise licence per store owner and requiring them to live within a certain distance of the premises. In other competitive model states, by contrast, independent retailers compete alongside big-chain supermarkets.
Yet behind this murk of divergent legislation some universal retail trends can be seen, and are described in full in our new US Specialist & Independent Retail Report 2016. One principal development is the seemingly inexorable rise of social media as central to the business strategies of specialists and independents. As small businesses, specialists and independents have to work especially hard at publicising themselves among their target customer base, and this base is shifting with growing velocity in the direction of Millennials.
Millennials, lovers of immediacy and champions of socialisation, are prime drivers of the rise to prominence of social media in the retail world. Their valuing of instant access to peer review and friends’ advice makes social media central to their shopping habits. In this environment, any specialist or independent retailer with hopes of long- or even short-term success will need to be dedicated to building an attractive and well-publicised social media profile.
A second universal trend that affects the world of US specialist and independent wine retail is an increasing emphasis on direct-to-consumer sales. Recent changes to the law in some states have resulted in this emerging channel taking on a new importance and flooding consumers’ homes with a vast virtual range of brands, regions, and countries of origin.
Central to these developments – and to the world of American specialist and independent wine retail in general – is the so-called BosWash corridor. This is where the largest concentration of specialist and independent retailers are to be found, and where the two principal types of consumers for this channel are most clearly to be seen – and contrasted.
The first, consumer type A, is brand driven. These consumers are influenced by critics’ reviews, scores, and tend to opt for big names that they recognise and trust. They are tight-walleted and tend to stick to more traditional media for wine information.
The second, consumer type B, is far more adventurous and involved. These consumers are interested in learning about new styles of wine, and, as internationally-minded, relish trying wines from a diverse range of countries and regions.
Targeting these two very distinct consumer types effectively will be crucial for the specialist and independent sector in the US going forwards if they wish to survive in an increasingly competitive and increasingly online retail climate. Yet the contingent nature of this observation belies the overwhelmingly bright prospects facing the US specialist and independent retail landscape.
On both ends of the distribution system – production and consumption – the wine category is diversifying and expanding. Winemakers are showcasing an unprecedented variety of products on the one hand and consumers thirsting for greater variety than ever before on the other. Whether it was the chicken or the egg that started it is academic for the purposes of specialist and independent retailers. As experts and enthusiasts who capitalise on the richness and diversity to be reaped from the world of wine, if they play their cards right they can only stand to benefit and, perhaps, have their day in the sun.
Author: David Thompson