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What’s the Recipe for Total Wine’s Success?
Total Wine & More recently became the largest alcohol retailer in the U.S., surpassing Costco. Why is the superstore flourishing?
Total Wine is foremost known for its massive selections, with each location including more than 8,000 kinds of wine, over 2,500 types of beer, and more than 3,000 spirits. The stores are also immense in size, averaging 25,000 square feet, with some reaching 50,000 square feet. The stores’ ambiance plays up brightly lit displays, wide aisles, and clear-cut organization around categories.
In a review of a Wichita store opening, a Wichita By E.B. article stated, “I felt like I was walking into a polished and spruced up Lowe’s that just happened to only have adult beverages inside.”
Total Wine also price shops retailers in each area to ensure it has the lowest prices. The company’s website states, “Our tremendous buying power and special relationships with producers, importers and wholesalers bring us considerable savings, which we pass on to our customers.”
The shopping experience includes flat-panel monitors spouting information about products, particularly located near tasting stations. The middle of the store features a high-tech wine education center for events, tastings, and classes. A “Meet the Makers” series enables virtual tastings with producers in places such as Napa Valley.
“I kind of see it as the Barnes & Noble of the industry,” University of Maryland business professor Jie Zhang told The Daily Record. “They have the competitive prices part — that is like Walmart. They have the large assortment like Home Depot, but they also emphasize the customer education part — that is like Barnes & Noble, like how they bring in speakers and authors … to really educate consumers.”
All associates participate in extensive training programs, weekly team wine tastings, and monthly wine-producer seminars. Many travel to winemaking regions to meet producers and learn about their wines firsthand.
Robert Trone, co-owner of Total Wine, told Forbes, “We invest in training, grow our people, and make this a fun place to work. An entry-level floor employee has the opportunity to move into a supervisor role and eventually manage their own store. Some retailers used to offer this to employees, but many have stopped.”
Total Wine has 263 stores in 28 states with plans to add 15 to 20 stores annually, according to Trone. Locations are situated in areas that reach its higher-income target customers.
“We are following more of a Whole Foods strategy, with real estate, but we have low prices,” Trone explained. “In the end our strategy comes down to offering consumers a great selection, with the lowest prices within that market, and knowledgeable people to serve them.”
Discussion Questions
What factors are most responsible for Total Wine’s rise to the top of alcohol retailing?
What competitive or other threats do you see facing the chain?
Poll
Loading …BrainTrust
Cathy Hotka
Principal, Cathy Hotka & Associates
Christopher P. Ramey
President, Affluent Insights & The Home Trust International
Authority is the main underpinning of Total Wine & More’s success. It is a true destination for wine and other alcoholic beverages. It is further aided by the fact it is extremely competitive on price, more so than most supermarkets and liquor stores. From our surveys, it also does very well on the helpfulness and knowledge of staff, which is aided by a very strong training program. Despite the warehouse like format, there is a strong element of experience with wine tastings and some great displays.
Total Wine & More faces numerous challenges in the alcohol retail sector, including competition from traditional and online sellers, regulatory changes, shifting consumer preferences towards health and wellness, economic instability, and supply chain interruptions. To overcome these obstacles, Total Wine must stay attentive, continue to place a strong emphasis on customer satisfaction, adjust its tactics according to market shifts, and prioritize innovation to meet consumer needs.
Typically a retailer can offer one of two things: low prices, or convenience (many locations, extended hours, large selection, etc). Do one of these things, you have a chance of being the market leader, do both and you push that chance almost to cetainty. Their biggest threat – as always with alcoholic beverages – is they’re one health fad or sin tax away from a crisis.
Total Wine certainly wins on variety, service, and price coupled with the experiential elements like tastings. They cover about half of the states so certainly room to continue to expand their base and continue to build share.
It’s hard to beat great prices and expansive selection, and Total Wine has this at scale. Achieving scale is a key element of their success strategy as it will ensure that they have buying power and access to product that others can’t get. I can’t see any immediate barriers that would slow Total Wine’s continued rise other than a potential slow down in overall alcohol consumption due to health concerns since the CDC and WHO came out with strong statements declaring that no level of alcohol consumption is safe.
Price, availability and broad product selection are the keys to Total Wine & More’s success. Add to this their broadening of store growth by encouraging employee store ownership and you create a franchise type of atmosphere that stimulates a community from the bottom up. These varied focuses keep them growing and well-positioned for the future in ways that many other retailers cannot duplicate.
I agree with my BrainTrust colleagues; there isn’t much more to say…except free delivery!
TW&M brings it all together. Relationships with growers allows TW&M to market private label wines that compare to branded wines but at a lower price and higher margin. While a huge assortment can be confusing to the shopper, their in-store staff can cull it down to what the customer might want, or to upsell if the customer doesn’t know. An emphasis on the in-store customer experience on the part of TW&M rounds out the “total” offering. Retailers, pay attention!
The other items I would add to the price-competitiveness, selection and convenience topics already raised in this thread would be: (1) easy to use mobile app, and (2) simple and efficient digital order pickup options (BOPIS, BOPAC or Ship-From-Store).
A well priced, great assortment.
First, they are the only truly national chain focused solely on wine and spirits. That is a big advantage. Second, they provide an excellent experience for such a large format with the programs and education referenced above. Third, they do a great job online and have navigated BOPIS very well – Their CDO, Christina Callas, is a rock star. Finally, they benefitted greatly from COVID as boozing at home was one of the big growth areas and they’ve used it to springboard into tremendous growth.
No one could really build out national scale until pretty recently – the liquor distribution channel was fragmented through Federal and State regulation so that you’d have to deal with different players in every major city. On the one hand that gave us the family-run local liquor store with enough markups to ensure profit; on the other hand it pretty much locked up distribution in favor of the giant distillers and brewers who could afford the byzantine logistics. And often the mob being third hand reaching into everyone’s pockets. Making distribution more transparent and national lowered logistics and transaction costs not only gave Total Wine the shot at scale but also has allowed small-business producers to get into the game with unique beverage offerings. Now the questions become will Walmart try to run out Total Wine, and how will local stores that survive adapt and specialize?
Wine is a category where passion exceeds most customer’s knowledge. If vanity and ego are important, Total Wine makes each customer appear fascinating to their peers.
You go into a Total Wine Store, and you are going to find what you are looking for OR be directed to something else that is appealing. And for someone from a state that forces you to shop for spirits at a state run store (yet another sign of the apocalypse…) the selection on offer of, say, Gin, is enough to keep you coming back, or, driving across state lines to shop there. If that admission makes me guilty of some interstate commerce act, I want to make it clear that I am surmising about a fictional event here….
Price, assortment and great service. Always a winning formula.
The Barnes & Noble analogy is a good one, because Total Wine encourages longer store visits through its vast assortment — but the company’s strengths don’t stop there. It runs with the efficiency of a national big-box store but is also focused on localization. This is critical to the success of its beer business in particular, but each site needs to allocate space based on local preferences for wine varietals, kinds of hard liquor, and so forth.
Total Wine’s focus on competitive pricing and “omnichannel” services like curbside pickup is admirable, but assortment planning is the key. It’s the opposite of Costco’s narrow-and-deep approach, and there is room for both models.
The Trone family runs Total Wine with HEART. That’s impossible to define, but it colors the way associates interact with customers and each other. Customers prefer to shop in happy environments, and Total Wine has that.
Total Wine delights customers and employees with category expertise, variety, affordability and multisensory store experiences. Its fun environment is a competitive advantage.
As for risks, more young adults now forego alcohol or drink less than past generations did at their age. Also, sustained inflation may reduce discretionary spending, affecting sales volume.
Here are words I use to describe Total Wine and its success: price, selection, knowledge (informed employees), and location. This combination creates a great customer experience.