Wine retail used to be a game where, like German football teams, the supermarkets always won in the end. Is this about to change?
Who would be a retailer? You’re only as good as your last set of weekly figures, and your last deal with a supplier. The pressure is constant, and wherever you look, there lurk ambitious (and often desperate) businesses waiting to pinch your customers.
In this bearpit, it would be better to be the biggest bear . . . or would it? For the past 20 years in the UK it has been an accepted wisdom that the largest supermarket groups were going to continue their inexorable advance into every area of our lives, crushing all those smaller rivals who lacked buying power and economies of scale.
And so it has proved, largely, in the wine category: supermarkets now take a larger share of the UK wine spend than at any other time in history. Specialist retail chains have exploded (Unwins, Thresher), or become shadows of their former selves (Oddbins), leaving just Majestic as a substantive wine specialist chain.
And yet, as some of the recent reverses suffered by Tesco, Sainsbury’s and Morrison’s would suggest, they aren’t having it all their own way. The well-documented rise of the “hard” discounters such as Lidl and Aldi, both of which started modestly in the UK around 20 years ago, suggest that the rules are being rewritten. The fact that they belie their discounter status by daring to sell high profile wines costing over £20 also suggests a more buccaneering attitude to wine is coming into vogue.
It is in this environment that some intriguing data points are emerging from our soon-to-be-published UK Independent Retail Report. By all conventional analysis, the independent retail sector ought to be toast by now. And yet it is growing: sales up to nearly £500 million in 2013, +7% compared with the previous year; total outlet numbers up to 744 vs 510 in 2007.
The total population shopping in independent hasn’t changed much – it has remained steady for the past 4 years at about 18% of all monthly wine drinkers, or 5 million people. The demise of the specialist chains gave a large – but one-off – boost to the independent sector, freeing former employees and franchisees to shape their own offer and merchandising based on their own understanding of the local market they served.
What seems to be pushing the sector forward nowadays is some sensible lateral thinking on how to utilise selling space, technology and customer relationships. The Independent Retail Report documents some of the new business models that are gaining traction: the online channel, food offerings and also on/off premise hybrid venues.
UK wine retail remains the province of the brave – or foolish, depending on your point of view. It used to be about soulless cost-cutting; now it’s about grafting new ideas, quickly, and exploiting trends before they fade, in a fierce and increasingly diverse competitive environment. That’s progress.
Author: Richard Halstead