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Discounting Drinks: The Importance Of Price In The Specialist Liquor Channel

By
FMCG and Retail | 06-11-2018

A recent Nielsen article found that New Zealand grocery shoppers are some of the most promotionally-driven in the developed world. Almost six in every ten dollars spent on groceries in the supermarket channel are sold on promotion. The estimated retail sales value of discounts applied to products that generate little incremental sales was almost half a billion dollars. For specialist liquor stores, this number is around $160 Million annually.

When it comes to the highly competitive liquor space, price sensitivity varies dramatically. As new products are continuously added on-shelf, it’s essential to know which products move when promoted, which products move regardless of price promotion, and which require alternative strategies to optimise category sales.

PROMOTIONAL DYNAMICS IN LIQUOR

When looking across liquor retail channels, it’s clear that the specialist liquor channel is less reliant on promotions to drive sales than in New Zealand’s grocery channel. Within specialist liquor stores, just two in every ten dollars spent were for products sold on promotion. This varies significantly across categories and in comparison to the grocery channel.

In the latest 52 weeks, both supermarkets (+3.1%) and specialist liquor stores (+5.3%) experienced dollar sales growth. However, Nielsen’s pricing analytics show that there is plenty of headroom for growth by further optimising pricing and promotional strategies within the specialist liquor channel.

WHAT SHOPPERS WANT

Retailers and manufacturers who understand the unique inherent drivers of store choice within the specialist liquor channel will be best placed to tailor their strategies around these growth opportunities. Nielsen shopper research highlights what makes a shopper choose one specialist liquor store over another. The drivers of store choice are summarised in the order below:

1. Convenience. Includes ‘it’s close to home’, ‘convenient to get to’, and ‘a place where it's easy to quickly find what I need’.
2. Value for Money. Includes ‘products being good value for money’ and ‘promotions being well communicated'. Communicating value is increasingly important in the New Zealand market.
3. Store Accessibility. Includes ‘a modern and comfortable store’, ‘a place where I feel safe’, and ‘clean and hygienic store’.
4. Service and Range. Includes ‘having what I want in stock’, ‘better selection of high quality brands’ and ‘well presented product displays’.
5. Programmes and Communication. Includes retailer loyalty card programmes and customer communication materials.
 
Liquor Shopper Trends NZ 2018, Specialist Liquor Pricing story

PRICE PROMOTING WHERE IT COUNTS

Whilst shoppers are generally less price sensitive in specialist liquor stores, Nielsen research demonstrates it is becoming increasingly important to manage shopper perception around value for money. Therefore, it’s essential to make shopper-centric pricing decisions. For Key Value Items (KVIs), where shoppers care most about price and products are more price elastic, sharp pricing is critical to remain competitive. Above all, suppliers and specialist liquor retailers need to look beyond price and promotion and review their whole value proposition to the customer.

For an in-depth analysis on New Zealand’s liquor marketplace and shopper behaviour, including store choice drivers & retailer brand equity, Nielsen Liquor Shopper Trends is now available. Please reach out to your Nielsen account manager or use the contact us form below for further information. 

Tagged:  LOCAL  |  BRAND MARKETING  |  SHOPPER  |  CONSUMER  |  GROCERY  |  REVENUE MANAGEMENT  |  ALCOHOLIC BEVERAGES

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