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managemenT TipS
Movin’ on up,
not juSt out
CloSeoutS happen; the key iS to ContRol loSSeS and Retain thoSe CuStoMeRS devoted to bRandS
By RogeR MoRRis
Shelf space and display areas are like valuable commercial real estate for wine and spirits stores, so owners can ill afford to let it be wasted on slow-moving prod- ucts. Yet, that is what too often happens, especially when a closeout of a product is looming in the not-too-distant future.
How can retailers move out sluggish inventory without tossing it in the deep- discount bin alongside damaged labels and bulging corks? At the same time, how can you retain those customers who may have become devoted to it?
Handling closeouts and discontinua- tions, then, is a key part of handling in- ventory management.
To begin, it is important not to give up too quickly on a product that is relatively new to the store. Ask rst whether it just needs a second chance. “If the wine has not sold well or just is not working, we will often look to move it at tastings,” says Larry Kaplan, owner of The Wine Cellar in Palatine, IL. “The distributor can help out with sample bottles for the tastings, and we can try and nd an audience for the wine. And we do everything in our power to not ruin a brand by advertising a below-wholesale price.”
Sometimes it may need just a promo- tional nudge.
“I will discount bottles of a slow brand like, by a dollar,” says Dean Cesario, owner of Deer eld Fine Wines in Newark, DE, “But I offer a contest with those brands, such as, ‘Buy this wine and be eligible for a private tasting or a basket of different items.’”
Tasting of different bottles comparable to a closeout bottle can get them hooked on something new.
Sudden Shift, Calm Response
Of course, there are discontinuations be- yond the retailer’s control, such as when a foreign winery loses its importer or a do- mestic producer parts with its distributor. Here, resupply is limited to what remains in the distributor’s warehouse. “If we know in advance that a wine is going away for good, we try and inform our customers as soon as possible,” Kaplan says. An elec- tronic system that links regular customer with purchases helps in these cases. Once informed of the situation, customers have the opportunity to buy any remaining stock of a favorite wine, hopefully without the retailer having to discount the wine.
It is also important that the store keeps the customer coming back by nd- ing an alternative to what is being dis- continued, hopefully before a favorite brand disappears. “I will have a special tasting of different bottles comparable to that closeout bottle to get them hooked on something new with the same taste and same price point,” Cesario says. Dis- tributors, of course, can help with offer- ing substitute selections.
However, if a customer has started moving up the value chain—being more selective and developing more-expensive tastes—a closeout can provide a good opportunity to go up the selection ladder a rung or two to something more expensive and with better margins—but still a value to the buyer.
In cases where the brand is not being discontinued, but has so few customers that the shop can’t justify continuing to give it shelf space, an option is to offer to special- order it once in-store stock disappears for those brand-loyal customers who don’t want to substitute. This way, the customer is not tempted to look elsewhere and buy the wine at a competitor’s store.
Of course, it is also prudent to try not to get into an overstocked situation to begin with. Test new brands or new categories early by buying limited amounts, featuring them at in-store tastings and then ordering more if the response is good. Don’t be tempted by volume discount offers from distributors if sales gures tell you that a category or a brand seems to have peaked.
In the end, creative promotions that don’t involve deep discounting are the best options for discontinued and closeout stock. Just because a brand is leaving your store doesn’t mean that it should go with a fat severance package. ■
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AUGUST 2017 HAWAII BEVERAGE GUIDE A-9