Derek Rohlffs of Bravium Winery has a high-class problem. A high-class problem, as my mother used to tell me, is the kind of problem lots of folks would like to have. His Chardonnais brand is a top seller on Wine.com.
Derek’s “problem” is that he is about to move the brand into retail in a big way, so he asked us, “If Chardonnais sells well on Wine.com, does that mean it should sell well at retail?”
Comparing Online Versus Retail Store Shopping
Derek’s question is prudent. The sales environment, quality cues, and typical customer of an online retailer are quite different from those of a brick-and-mortar retail store.
Figure 1: Wine.com Chardonnais listing
In a typical online presentation like the Wine.com listing of Chardonnais shown in Figure 1, the wine shopper is presented with several ways to narrow their choice and several types of information to make a final selection.
Shoppers can narrow their choice by selecting the varietal, the price range, ranking by customer ratings, and ranking by sales popularity—all without seeing the label or bottle.
Once the range is narrowed, shoppers can read the wines’ customer ratings and comments, various professional ratings, information about the wineries, and the label to help assist them in making their final decision.
Seeing an image of the full package requires an additional click; so, looking at the full package is one of the final steps in the selection process.
By contrast, wine shopping in a retail store requires a visual scan of the shelf to find a familiar label or to identify a label that catches the shopper’s attention. In short, the label and package are critical in the first steps of the selection process.
Studies(1) show that within a shopper’s usual price range, 91 percent of purchase interest is driven by the look of the label/package.
- Virtual Shelf studies of 70 retail brands across varietals and price ranges conducted among 400 U.S. wine shoppers measured shelf attention, price impression, memorability, purchase interest (both before and after seeing the retail price). Price impression is the price the shopper thinks the wine would sell for based only on the look of the label and package.
A second major consideration is that online shopping and retail stores attract a different set of shoppers. The most obvious difference is the purchase price point. Considerably more online shoppers purchase premium products over $20, while a majority of retail shoppers purchase wine under $20.
Figure 2: Usual Price for Wine.com vs Retail Store shoppers
Among the top-selling 100 white wines on Wine.com, 56 percent are priced at $20 or higher compared to just 16 percent of retail store customers whose reported usual price is over $20.
Let’s return now to Derek’s question, “Does success on Wine.com mean my brand should sell well at retail?”
Our answer is, “Not necessarily.”
Retail store success relies much more on the visual impression of the label and package. Further, since Chardonnais is priced at $19.99, Derek’s sales forecast must take into account that a smaller percentage of retail store customers usually purchase at or above that price point.
A Virtual Shelf Study of Derek’s Chardonnais
To provide Derek a projection of how his Chardonnais brand is likely to perform at retail, we conducted a Real Picture study among 400 wine shoppers across the U.S.
The study presents the brand on a virtual shelf versus a broad range of competitive brands typical of U.S. retail. Shelf appeal, memorability, and purchase interest are measured for gender, generation, and usual price groups among other segments.
Our thanks to Derek for allowing us to share his label study in this article.
The virtual shelf study revealed that:
- Purchase interest for Chardonnais among women is double that for men; and
- Almost half the high purchase interest shoppers are boomers.
Yet, the most relevant findings for projecting the retail store sales success for Chardonnais is the purchase interest by its usual price group, as presented in Figure 3.
Figure 3: Respondent Purchase Interest in Chardonnais by Usual Price Group
The percent shoppers with high purchase interest, next to the bottom row of the table, is our best estimate of who will actually purchase in the store. The bottom row shows the distribution of high interest purchasers across the four usual price groups.
Observations from this Label Study
What does this table tell us about how well Derek’s Chardonnais may perform at retail?
First, looking across the price impression row, wine shopper respondents are reasonably consistent and accurate in their impression of the likely retail price, within about 15 percent of the retail price of $19.99. This is important since price impression contributes to purchase interest and price is perceived as an indicator of product quality.
Looking across the shelf attention row we see some upside opportunity. The highest measure is 47 percentile, below the midpoint of 50 for all brands. The other usual price groups are lower.
Second, with respect to purchase interest among the price groups, we note the following:
- The “over $20” group clearly view this label as in their price range. Their price impression, at $23.10, is the highest of all usual price groups. Their purchase interest before seeing the retail price is 68 percentile. Purchase interest remains high at 66 when they see the $19.99 retail price. Most importantly, the level of high purchase interest is a respectable 17 percent of “over $20” shoppers.
- The surprise in this table is the “$15 to $20” group. When the retail price of $19.99 is revealed, purchase interest jumps up to 41 suggesting that the price reinforces their confidence in the quality of Chardonnais.
What Does All of This Mean for Chardonnais?
Label design: Compared to online wine shoppers, retail store shoppers are more driven by the look of the label/package and fewer of them are inclined to purchase a brand over $20. Since Chardonnais will be new on retail shelves, Derek’s challenge will be to get noticed to get initial trial. The study confirms respondents have a favorable price impression but there is upside potential for grabbing shelf attention. Total shelf attention ranks at only 34 percentile.
Our assessment is that Chardonnais’ strengths have been more attuned to the online sales process than the realities of retail store sales.
Our label recommendation is that Derek challenges his label designer to build on the strengths of his current label to create a range of variations that might improve shelf attention without compromising price impression and communication of quality. If this project improves the label just 5 or 10 percent, the rewards in shopper attention will be well worth the investment. If the designer improves the label up to the average performance of competitive labels, customer attention could be increased by a very positive 40 percent.
Price: Is $19.99 the right price for Chardonnais on a retail store shelf? Retailers must make their determination for the best price bracket for women and boomers on the merits of the brand and their product mix; yet, this study supports that wine shoppers see the brand in the $17.50 to $23.00 range. Further, “$15 to $20” shoppers raised their estimation of the brand and their purchase interest when they saw the $19.99 retail price.
Would a higher price point raise the quality image and purchase interest more? That is a worthy question for a future study.
About the Co-author
John Lawlor is the Co-founder & Chief Executive Officer of Real Picture Research. Lawlor’s business life has been driven by curiosity and creativity starting with a twenty-year career as a globe-trotting advertising photographer based in London (Grants of St. James Wine, British Airways, Deutsche Bank), New York (Nikon, Citibank, Taylor Wine) and Los Angeles (Marlboro, Polaroid, Honda, Sterling Vineyards) as well as a TV commercial director (McDonald’s, PGA Golf Tour, Prodigy Online Service) before co-founding a venture capital-backed dot.com in the mid-nineties. In 2014 Lawlor teamed with his old friend Don White to create Real Picture Research.