Yesterday, Coles Liquor announced a pilot program that will see select Vintage Cellars and First Choice Liquor Markets converted into Liquorland branded retailers. To begin with, the pilot will be launched across all South Australian and select Victorian and Queensland stores this November.
The pilot follows on from Coles Liquor’s February acquisition of Tasmania’s 9/11 Bottle Shop Chain, which it has since started converting into Liquorland banners. It also follows on from Coles Group’s recently released end of year results, which saw liquor lag behind a strong overall Group performance.
Following the news, Drinks Trade caught up with Michael Courtney, CEO at Coles Liquor, to discuss what the pilot program means for Coles Liquor and what it will change in store.
Drinks Trade: What is Coles Liquor hoping to achieve through the new pilot program?
Michael Courtney: The main thing we’re hoping to achieve is that we want to bring the best elements of our current Liquorland, First Choice Liquor Market and Vintage Cellars offer together under one brand to make sure that our value proposition in the market is as simple and as compelling for customers as possible. That’s ultimately what we’re trying to achieve here.
The next and very important step will be to pilot that in the market before then looking at further rollout and expanding.
DT: Why have you chosen Liquorland out of the three?
MC: We know from customer research that Liquorland has by far the strongest brand awareness of our three banners; and then we also know – from the research that we’ve done in recent months as we’ve been planning for this change – that this change is something that customers are supportive of, so that work gives us confidence that this is the right strategic direction for the business.
DT: What does Coles Liquor view as the biggest challenges to rolling out this pilot program?
MC: I think it’s always important to be starting with the customer when we’re considering these changes, as you allude to, because with the offer that we do have in the market (those offers in terms of First Choice Liquor Market and in terms of Vintage Cellars are offers that get very strong customer feedback for customers who shop them) we think that what they lack is brand awareness, and so we think that bringing the Liquorland brand will strengthen the appeal of those individual locations.
We have polled customers on how they would feel about this change and the results have been very positive. In terms of asking First Choice Liquor market customers how they would feel about the change to Liquorland Warehouse, at a high level when we’ve asked would this cause you to shop more, shop the same amount or shop less we had 55% of customers saying they would shop more either slightly more or a lot more, and we only had 5% of customers saying that as a result of this change they would shop less. With Vintage Cellars customers, that was 61% of customers saying that they would shop more as a result of this and only 11% of customers saying they would shop less.
Those numbers aren’t to say that there won’t be some customers who would prefer to stay with the existing brands but I think what that customer research does is we expect the net impact of it to be positive. Also, that’s part of the reason the customer research is part of the reason why rather than just converting all 992 of our stores to Liquorland which is our strongest brand, the customer research also did say that, you know, introducing some format signifiers in Liquorland Warehouse to let customers know which of our locations have our largest range to offer or introducing Liquorland Cellars so that customers still have an indication across our network of what is our most premium range. Those were things that customers felt would be helpful and that’s the reason why we’re doing it.
DT: Can you explain the difference between Liquorland, Liquorland Cellars, Liquorland Warehouse, and the current three banner groups?
MC: As you know, our current brand portfolio is that we’ve got Liquorland, which of our 992 stores is about 800 of our stores; we’ve then got we’ve got First Choice Liquor Market and we’ve got Vintage Cellars so each of those are between 90 and 100 locations across the network. So what we’re doing as part of the pilot is that the First Choice Liquor Market stores will be rebranded to Liquorland Warehouse and the Vintage Cellars stores will be rebranded to Liquorland Cellars, and so whilst we’ll have Liquorland as the umbrella brand across the network there will be those format signifiers for in terms of using the term Warehouse and Cellars for what is either our largest and broadest range offer or our most premium offer.
Your next question is probably likely to be, well, how’s that any different to what you’ve got now because don’t you have three offers in the market now and you’ll continue to have three offers? Aside from the fact that the umbrella brand will be the same in terms of Liquorland across all of those locations, it allows us to simplify our offer across the whole network and make it more compelling for customers. One example of that is on price and value. At the moment, whilst we have a strong value offer across our network currently, we have three different price files [and] we’ve got three different promotional programs. This will allow us to have one simpler/more compelling offer for customers. It will allow us to go from different loyalty programs down to one loyalty program, it will enable us to go from three different websites down to one website, [and] it will enable us to look at range through a different lens across the network where we focus more on our individual locations – [for example] what is the range that those customers in that store want to shop – rather than having range largely dictated to by what is the sign above the store at the front.
DT: To tie in the bigger picture, you’ve spoken recently about Coles Liquor’s focus on growing its omnichannel presence and you’ve recently expanded your presence in Tasmania… How important is this banner group consolidation to growing, and unifying, Coles Liquor’s national presence?
MC: Firstly, in terms of strengthening the national presence, the Tasmanian acquisition is a fantastic fit for that because that acquisition allows us to get our market share in Tasmania broadly on par with where it is around the rest of the nation, and that’s a great outcome when you think if you went back three years Coles Liquor had never opened a single store in Tasmania, So it’s great that we’ve been able to get a really strong network down there. All those stores that we acquired have been rebranded to Liquorlands so I think that that fits really well with what we’re announcing here today in terms of bringing more scale to our strongest brand.
I think in terms of the omni-channel presence that you think about I think having that one umbrella brand whether that’s across our physical store network or whether that is across our digital channels is something that will make our offer simpler for customers easier to recognize and easier to shop.
