Many cellar door operators worry that sales of merchandise may detract from sales of wine. Whether they do or not depends more on the way you present the merchandise, what you stock and who your visitors are.
Previous cellar door research has identified that almost 50% of the people coming to your Cellar Door are not really very interested in wine, but are travelling with someone who is. What do you offer in your Cellar door to entice these non-wine focused visitors into spending money in your outlet? Effective merchandising should result in sales of both wine and product.
Like everything else you invest in at cellar door, your merchandise range needs to reflect your brand image effectively.
What percentage of sales is likely to come from merchandise? The answer to this varies considerably depending on your level of brand awareness in the market place, the range and quantity of merchandise you stock, your visitor profile, your location and even your proximity to the visitor's usual place of residence.
Branded merchandise works particularly well if you already have a well-known brand, while for others branding things like clothing prominently with the region's brand might work better. A broad product range and plenty of stock can equate to a higher percentage of sales because you are likely to have "something for everyone."
And if your visitors are from overseas, they may prefer to take small items with them as a memento because carrying or shipping wine is too difficult or price prohibitive.
Research suggests that the percentage of merchandise to wine sales at cellar door can vary from as little as below 5% to as high as 40% in some overseas cellar doors. You need to decide what percentage of sales you are aiming for and build a strategy around that. Most wineries that are serious about merchandise aim for between 10 and 25%. The margin can vary from a low 20% on higher ticket items to more than 100% on high-turnover low-cost impulse buys.
Building a successful portfolio of products is not a “set and forget” exercise. The market is constantly changing and what sells really well one year may flop the next. Slow moving and obsolete stock is money wasted in inventory that's not generating revenue.
Turnover and cash flow are critical to ensuring your merchandise provides a positive income stream and contributes to the bottom line - while enhancing your brand.
Getting it right
Promoting and displaying items in the most appealing way to encourage sales is a skill that takes time to develop like any other. That's why retailers employ dedicated merchandisers to professionally position and display their products.
Most cellar door operators are not trained in the art of merchandising, so it pays to get professional help in the early stages of designing your cellar door if you intend to incorporate merchandise in the product mix. Even if merchandise is going to be a relatively small part of your business, there are still some fundamental elements to consider.
The right merchandise
This means that goods are appropriate for your business and your existing and potential customers. For example, a high profile internationally recognised winery might stock a large range of branded wine accessories and clothing, knowing that international visitors, in particular, will be inclined to take non-wine products home with them as mementos of their trip.
A small winery in an area known for its local art culture might stock a range of arts and crafts made by local artisans that don't have retail outlets, knowing that their visitors search for unusual hard-to-find items.
The right time
This takes into account seasonal, promotional and normal demand cycles. Prime selling times for gifts occur in the lead up to Mother’s Day, Father’s Day and Christmas, so stocking products that suit the market at these times makes sense.
Seasonal promotions can be reflected through lifestyle products- picnic ware for the summer months; pottery products for winter. Attend trade fairs featuring giftware and lifestyle products to get a feel for what consumers are looking for and identify upcoming trends.
The right place
This refers to your location and the location of the product in the cellar door. High visitor numbers are essential if you intend to incorporate a significant merchandise range, so a prominent location is essential.
Within Cellar Door certain areas can be regarded as "hot" and others as "cold". You need to identify these areas and position products accordingly. For example, high turnover impulse purchases (such as small tasting guides) need to be highly visible to customers (placed in "hot" areas near cash register, tasting bar, etc). Planned purchases are those that visitors expect to find in a cellar door and will seek out, often before they even arrive, and can be placed in less visible areas.
The right quantity
This means having enough stock to cover normal and peak period demands. Nothing looks worse than a sparse product display with tired looking items covered in dust. Go for an "abundant" look so that people feel compelled to pick things up and make a purchase.
Ensure you have sufficient stocks of popular products on hand at all times and consider lead times for delivery in the run up to peak periods. Clothing is a particularly sensitive area: if someone has made a decision to buy a shirt and you don't have their size, they'll be disappointed (and avoid the tendency of saying they look great in the extra large when they clearly don't).
The right price
This relates to the selling price of the goods, which must also reflect the market. The price takes into consideration value for money, quality and competition pricing policy. For example, if all the cellar doors in your area sell waiters friends for $10, you will need to closely reflect that price too- unless you can somehow demonstrate that your $30 waiters friend is exceptional quality and therefore value for money at the higher price.
Supermarket research reveals that the most profitable sales occur when products are displayed at just below eye level. Most of your merchandise can be broken down into components, which can then be laid out accordingly.