News

INTERVIEW: All on its own

01 October 2008 By db staff writer

With Sainsbury’s due to launch a new and improved own-label wine series, Patrick Schmitt meets Warren Anderson to find out how the supermarket formulated the range revamp and where it plans to take it

Why do we buy by brand? Simple. Because it’s safe. Be it Chablis or Hardy’s, there is a stylistic and quality expectation with names we know. But what if your brand encompasses a vast array of flavours? How can you provide security, as well as confidence to experiment. It’s much harder. Yet that is the challenge for supermarket own-label. The retailer must stake its reputation on a wide range of expressions, offer a lower-priced alternative, and enthuse consumers. Can it be done simply, clearly and attractively? Sainsbury’s thinks so.

The retailer has taken its entire own-label offering and revamped its appearance to provide a three-part portfolio for whites as well as reds, organised by style. “It is the greatest own-label challenge that the beers, wines and spirits section of Sainsbury’s has undergone in the last 10 years,” says Warren Anderson, category manager for beers, wines and spirits, stressing the enormity of the task.

Having repackaged its range, Sainsbury’s believes it has found an answer to encouraging consumer trial, within a preferred style, without the support of staff – a visual solution in place of the salesman.

To achieve this, the supermarket has shoe-horned its 156 own-label wine lines into a series of colour-coded categories. In red, the wines are either light & elegant; smooth & mellow or rich & complex. In white, they are crisp & delicate; soft & fruity and complex & elegant. Then there is new labelling for rosé, and an orange colour scheme for sweet wines. In short, it is hoped consumers will move among a range of own-label wines within their preferred style, as indicated by colour, as well as description.

“Over 80% of our customers don’t know an awful lot about wine and what we’ve decided to do is embark on a programme with the working title, ‘Choosing wine made easy’,” explains Anderson. At the heart of this is the question: “When customers are faced with a wall of wine, how do they move away from buying the same product all the time?”

Anderson now expects, with colour as a signature of wine style, “That the customer who loves Sainsbury’s Soave, a ‘crisp & delicate’ wine style, will look for that colour across our own-label range and can pick out, for example, Orvieto. On the other hand, the person who usually buys Barossa Shiraz might now be tempted to try Taste the Difference Douro.”

SUPPLIER CONSOLIDATION

Anderson’s plan for own-label is to increase its share of sales in Sainsbury’s. “I’d like to achieve 10% growth in the next two years,” he says, noting that today, own-label accounts for less than 20% of wine sales in the supermarket.

“How we achieve this won’t just be through the redesign,” he explains, “but the ways we work with our supply base.”
Presently, according to Anderson, Sainsbury’s has almost one supplier for each own-label line. As he says, “The element of complexity is tremendous.”

“So, what we’ve got to do, and are doing, is make sure we work better with our supply base and one route to improve efficiency is through amalgamation.”

In practice, the supermarket is hoping to work with a core of five or six suppliers for the majority of its own label wines. It is currently deciding who these will be, but as Sainsbury’s wine buyer Julian Dyer, explains, “We want to get away from a transactional typical trading relationship and identify a handful of suppliers who should be our own-label champions – those that could benefit us through better costs and new product development. We want to increase collaboration, and see these suppliers as, in effect, an extension of Sainsbury’s buying team.”

Educating the consumer
It’s an applaudable scheme, and one with sound commercial implications because in effect, it reduces Sainsbury’s dependency on regional or varietal brands. As Anderson says, referring to Italy’s Pinot Grigio alternative, “If we launch a Fiano in own-label then we will be able to educate the customer in the style it is.”

And this is only possible, believes Anderson, within own-label. “I can converse with my customers and educate them in a way no brand can, because own-label covers all of wine – countries and price points,” he explains, adding, “What we have designed is a unique proposition in the marketplace, and it is all about giving customers the confidence to buy wine.”

Interestingly, it’s not the Sainsbury’s brand that takes centre-stage in the new-look line-up. In fact, the repackage has reduced the supermarket’s bottle presence. “We have made the Sainsbury’s branding recessive,” says Anderson, “Because while our customers take comfort in knowing it is Sainsbury’s, they might want to take the wine to a dinner party.” Now the supermarket’s brand is featured on the capsule, back label, and most prominently, on collarettes – these will only be used at certain times in the year and are, of course, a removable part of the design.

But why not just arrange all wine by style? Or group all own-label? Anderson is not convinced by either of these options, quite simply because “our customers consistently tell us that the way we merchandise in store is appropriate for today’s world”. Having said that, Anderson does concede that the retailer may use “secondary space [gondola ends] to sell our own-label. And we can change the fixture so it is segmented into the six wine styles. For example, all crisp & delicate whites could be temporarily together.”

This could give customers that initial nudge to experiment, because as Anderson sums up on the redesign by style, “Our qualitative information shows that they would like the confidence to try different wines, ways to move from one product to the next.”

Fortuitously, the timing of the relaunch couldn’t have been better, explains Anderson. “In the current climate, we are noticing a significant switch to own-label because of its price point and because there is a huge degree of loyalty to own-label in Sainsbury’s. I’d like to say the timing of the new look was planned, but really it is good fortune, and we had to update the own-label because quite honestly, it was a complicated mess.”

However, the economic climate is having a polarising effect on customer purchasing habits. For example, within the own-label range, Anderson reports “a growing proportion of sales” for the “Basics” wine range. This lowest tier, comprising a Spanish white, red and rosé, hasn’t been included in the own-label packaging overhaul, but is “growing faster than the average own-label category growth and the entire wine category”, records Anderson. At the other end of the scale, Taste the Difference “is a small but growing proportion of sales”.

Explaining this phenomenon, Anderson says, “Customers perform something we at Sainsbury’s call top and bottom shopping. So within a trolley they might have Basics mushrooms but Taste the Difference wine. Customers are clearly still treating themselves, and with the on-trade declining, we are seeing our customers staying in and giving themselves a treat by spending a bit more on wine. Inevitably too, some customers will fall out of the category at times like these – they might switch to another retailer or move into other alcohol categories like beer or indeed spirits.”

And it is this divergence that explains further change at Sainsbury’s – Anderson is thinning out the supermarket’s mid-priced wine range. “There is too much wine in our middle section,” he says. “We are taking out the noise here to allow our customers to see the value in our range at entry price points while giving us the opportunity to put in more range, where relevant, in £6-7 and plus price points, because that’s where we have some growth, albeit small.”

In essence, Anderson’s aim is to avoid what he refers to as “overcomplicating the offer”. “Yes it is always in supplier’s interests to launch more lines because it gives more brand coverage and helps their mix of sales but when customers have less money in their wallets, we need to make choices much simpler for them.

“And to make buying wine easier for them, rather than having a huge amount of clutter between £4 and £7, we are evening out the spread a little more to remove the duplication.”

WARREN ANDERSON AND SAINSBURY’S

> Warren Anderson has worked for Sainsbury’s for more than 14 years in a number of buying and business planning roles

> He was appointed beers, wines and spirits senior manager in September 2006

> Sainsbury’s has a total of 650 wine SKUs

> Over the last two years, around 100 SKUs have been removed

> The own-label range totals 156 lines and accounts for less than 20% of the wine range in volume sales

> Anderson is planning to achieve 10% growth in own-label sales in the next two years

Value message
Anderson is also keen to emphasise Sainsbury’s particular ability to cater for both “the value end” of the market, as well as the consumer of fine wine – all too aware of the challenge posed by an aggressive and emerging discount retailer and strengthening independent sector. “We have around 80 wines sub-£4 and using point of sale, we are spreading a really powerful value message. But, until now, we haven’t been very good at making these visible.” At the more upmarket end of the vinous scale, Anderson has also instigated change. “In the last 18 months we have installed a unique fixture with a concentrated range of 60 lines, ensuring each product has at least four facings.

“I have to be aware, that at any point in time, they [other retailers] could be taking pound notes off my customers. So what are they doing that appeals to those customers that I’m not doing?”

As for fast-approaching Christmas, Anderson appears slightly paler when the undeniable prospect of an even more competitive retailing environment is discussed. He may have a newly packaged own-label offering, less duplication on shelf, and a more prominent entry-level range, but he knows every pound will be hard fought. “There is an element of concern but we are confident in our approach. The reason we are confident is because we have a well-grounded plan which is right for Sainsbury’s. But, yes, it will be tough, very, very tough, and I’m going into that period with my eyes open but my sleeves rolled.”