Inside the Mind of the BevAlc Merchant
With the speed of change in shopper behavior and consumer trends, retailers and brands must work effectively together for mutual success or risk falling behind the competition. This statement is especially true in the wine, beer and spirits categories, including ready-to-drink (RTD) cocktails and the growing non-alc and THC beverage footprint. From changing consumer tastes and brand preferences to evolving omnichannel shopper behaviors, it is critical for brands to have a strong retailer partnership.
So, what's it like from the other side of the desk? P2PI collaborated with member company Aperture, an omnicommerce consultancy, to interview retailer merchandisers and buyers in the BevAlc category to learn what they value most from their suppliers and glean the secrets to getting a "yes."
Decoding the Retailer Perspective
You are presenting at a JBP, divisional leadership meeting, or a line review, and the retail team looks back, engaged but poker-faced. What's going on in their collective mind? They are evaluating if your recommendation is right. Here are the top five criteria that emerged during our interview process:
Note: This is especially true for new product sell-in.
Product Fit
- Does the product "belong" on the retailer's shelf?
- Is there data and insights to support that the product fits their shopper and selection?
Incrementality to the Category
- Does it drive topline sales and margin?
- Does the product drive a new trip or attract new shoppers to the category?
What is the marketing activation to drive sell-through?
- What is the marketing investment?
- What does the campaign creative look like?
- Will the brand/product participate in the retailer's marketing ecosystem?
- What does the brand/product do outside of the retailer's ecosystem?
- Are there any promo offers to drive trial (especially for new products)?
- What's the contingency plan if performance isn't there?
Collaboration
- Does the plan allow for collaboration with the retailer?
- Is there a willingness to work with the retailer to mine the data?
Demonstrate Mutual Success
- Does the recommendation offer mutual success for the brand and the retailer?
- Does it align with the retailer's priorities and category KPIs?
A Day in the Life of a Merchant
The bottom line to understand as a brand working with a buyer or merchant is that they have a lot of constraints on their time, and the amount they can devote to thinking about any one brand is extremely limited. Managing their schedule is a key challenge for buyers and merchants who are constantly in meetings and under a lot of pressure to perform and meet KPIs, just like brands.
A common reality among buyers and merchants is that they generally only have the capacity to see around 12-15 brands and distributors on a regular basis — a tiny fraction of the marketplace. Beyond that, they just do not have enough time to meet with everyone.
The good news is that this doesn’t indicate a lack of interest.
In a perfect world, buyers and merchants would have more time to thoroughly assess the complete landscape, not only in terms of all the suppliers in their category but also in terms of what other retailers are up to and what strategies are working for their competitors.
What Merchants Value Most
When it comes to what merchants value from suppliers, several traits come up most often. First and foremost is an open, transparent and honest partnership. In particular, merchants value frank discussions of category and brand performance that include celebrating what is working while simultaneously not shying away from addressing what can be improved.
DO: Honest Performance Assessment: If a brand or product is not performing well, make an honest assessment and pivot to an alternative. It is understood that not everything will work. It is best to be proactive and develop an alternative idea or replacement.
Merchants also highly value suppliers that help inform their knowledge with insights and data that they can’t get on their own. This can include a variety of intelligence: new category and marketplace trends; what is happening in other markets; images from both the retailer’s own stores and competitors’ stores; how the retailer’s prices or other key metrics index against competitors; overall and brand insights and business results.
DO: Deliver trend projections rooted in insights to show where the industry is heading. Think flavors, brands, execution and alternative shopping in a competitive category.
Beyond an honest partnership and competitive intelligence, merchants value all things related to activations, from retail displays and sampling to promotions and social media support.
DO: Focus on Execution: Retailers appreciate the challenge of the three-tier system, but care a lot about in-stock, displays and delivering on "promises made, and promises kept." If displays are supposed to be up for two to four weeks and they are not up and stocked, it doesn't look good on the brand and their department.
Additionally, merchants appreciate seeing some vision of the supplier’s innovation pipeline, and prefer presentations that are interactive and open to collaboration.
DO: Share the Innovation Pipeline. Retailers want to know what's next. They appreciate a peek at what is coming from the category, brand, consumer trends and shopping behavior.
They value a supplier who comes to them with ideas, data and recommendations aligned to their category KPIs.
Best-in-Class Brand Partners
All merchants and buyers have a category captain for beer, wine and spirits. Most will also have a second as a validator. However, they are willing to take product and strategy recommendations from any of their suppliers, especially if the supplier has best-in-class capability or has valuable brands and insights that they don't have.
Several surveyed retailers, including Target and Walmart, hold a supplier day where they share insights into their strategy and execution plans, and what they are looking for from their suppliers. However, typically less than a third of suppliers will come to them with ideas that align with the retailer's priorities.
DON’T: Sell the whole portfolio. Pick the right brands for the retailer and focus on their success.
According to Mike Percic, former general manager of beverage alcohol at Target, “Thirty percent [of suppliers] are really good partners who listen and come back with relevant ideas; 20% are great partners who come back with challenges, clarifying questions, and even better ideas; and 50% come in and share their product portfolio and plans as usual.”
DON’T: Push a brand or line extension until the retailer is ready. Consider a test and learn. Innovative brands, yes, but show the RTB.
To get to “yes” more often, understand your retailer's decision-making process, and present a concise and focused recommendation rooted in mutual success.
E-Commerce and Omnichannel Excellence
Digital sales are expected to grow, but even by 2027 they will still be in the single digits as a percentage of total category sales.
“[It’s] a brave, new space for alcohol. Everyone is learning and trying to figure it out. They are open to trying new stuff, especially around activations for key drive times and events and content for PDPs,” says Percic.
The challenge is not search but digital display space. Since legal restrictions prohibit BevAlc brands from making payments for alcohol advertising to retailers, they tend to lose out to other vendors who can pay for the space. It takes a lot of work to compete against a paying vendor.
Suppliers can argue that alcohol is important to a big, profitable basket. Most merchants are aware of this, yet the case needs to be made with the retail leadership.
Connecting the dots for omnichannel excellence is a work in progress according to all retailers surveyed. There are unique hurdles that need to be overcome for the beverage alcohol category, and silos on their end make it challenging.
Retailers acknowledge that their shopper is omnichannel, but they don’t make it seamless.
“Suppliers should stop waiting for the retailer to fix their cross-function challenges and instead take on the complexity and execute an omnichannel campaign on behalf of the retailer,” says Aperture's Rich Butwinick. “Then, use the performance data to prove the efficacy of an omnichannel campaign. This will accelerate stronger digital and retail cross-function capabilities.”
The Ideal Sell Story
"If you want to stand out from the other suppliers and deepen your relationship with the retailer, simply demonstrate how your brands and marketing recommendations align with their priorities to deliver mutual success,” says Butwinick, who offers up the following recipe for success:
Establish universal truths and pain points. Consider what keeps the retailer up at night. The best insights are those rooted in what is most meaningful to your buyer/merchant and their director in terms of how they measure success (for example: grow the category profit margin or total sales).
Declare a key benefit statement. Emphasize the grand promise that your brand and marketing efforts will deliver for the retailer.
Provide your recommendation. Map out a plan of action built on your data and insights that outlines the details around brand and product, marketing support and operations.
Demonstrate what's in it for the retailer. Establish mutual success and the reason to believe (for example: a case study with sales data to show what the brand has done in other markets or retailers). De-risk your recommendation by showcasing how it is riskier not to accept your plan than to say yes, and address any objections.
- Lay out the ask. Communicate exactly what merchandising and distribution you are seeking, and set collaborative KPIs.