On designing a better wine store

Jen and I have been working on studying the feasibility of designing and opening a wine store based on a curated choice model that drastically limits the number of available SKUs compared to traditional bricks-and-mortar liquor stores, big box grocers, and online retailers. A limited choice model, of course, is not a concept we invented as major brands in many industries have made it work quite profitably (e.g., Raising Cane’s, Costco, and Trader Joe’s), but it’s not been tried much in the alcoholic beverage retail space as best as we can tell.

In the course of investigating, I turned up a pair of studies conducted in 2008 and 2014 that placed 20-25% of wine consumers into a category labeled Overwhelmed, which isn’t really all that surprising considering the sheer number of choices–and very little helpful information–made available to shoppers by retailers. Two other categories, Engaged Newcomers and Image Seekers have also emerged as potentially profitable segments to target by tapping into consumer trends such as in-person experiences and organic/natural selections. All told, these three segments make up half of the total wine market.

I suspect that another underlying factor driving a part of the anxiety in the Overwhelmed segment is that some of the individuals in it have migrated from lower socioeconomic status groups and did not grow up in households where wine was consumed. Prior research has found evidence of class-related anxiety associated with activities such as decorating a home to make it look “middle class” and there’s no reason to think it wouldn’t exist with choosing products like wine.

Considering that wine is a product that is generally regarded as more upscale and that often requires making complex choices about options that often come in packaging with difficult-to-pronouce names (for those of us who don’t also speak French, Italian, German, and Spanish), it’s no wonder that a fourth of the market feels overwhelmed. And since so few of us have the spare time to “learn wine” in order to make more informed choices (sounds like a great idea–maybe I’ll study wine after I learn how to bake, knit, and change my brakes), it seems certain that many people experience real anxiety when it comes time to choosing one. A store that offered fewer choices and communicated pertinent information (e.g., foods to pair, tasting notes, etc.) in a consistent, concise way would be a god-send for these shoppers.

This post would be incomplete if I didn’t pause here to mention the work of both Barry Schwartz (The Paradox of Choice) and Sheena Iyengar (The Art of Choosing), which should be on the shelves of all marketers. These works are necessary for understanding the problems with too much choice, including choice paralysis and decreased satisfaction. Both have been instrumental in shaping my views of inventory, operations, and communication strategy.

Undoubtedly, a market niche exists for a wine retailer that focuses a major part of its business on the Overwhelmed consumer segment. Whether or not such a store could sell enough bottles of a 40% (at best) gross margin product in a small Midwestern city to keep the lights on and make payroll is another question entirely.

Source: https://www.bauerhaus.com/the-6-different-wine-consumers/

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