Revisiting the range

A focus on “tried and trusted” brands, narrowing the range and emphasising value messaging are among the levers that Aer Rianta International (ARI) is using to nurture sales in the wines & spirits category across its stores as travel resumes.

So says ARI Global Head of Liquor, Tobacco, Confectionery & Souvenirs Paul Hunnisett. Speaking to The Moodie Davitt Report, he says that the strategy today has changed to match new consumer expectations.

Paul Hunnisett: Targeting a -20% reduction in SKUs

“We are learning every day since we reopened,” he says. “We undertook a lot of research into what customers want to see in our stores. The first thing they asked for was reassurance from a health and hygiene point of view. We have done that well and consistently across our stores and airports. Then from a retail point of view, once they are in the store, they were looking for brands that they recognise, in areas that are easy to shop, with our staff on hand if required.

“What that essentially means is big brands at the front of the store, and a good deal on those brands that they know and love.”

The research has played a part in dictating the new-look offer and how it is sold. “In times of uncertainty consumers are less willing to ‘take a chance’ on brands they are less familiar with,” says Hunnisett. “They see many of those established brands in bars, restaurants and supermarkets, and there is a level of trust. Our focus is very much on the top 20 brands, and we place those front and centre.

“That has had an impact on some of the craft, niche brands, those brands that they would buy if they were able to try them. We have made the commercial decision in the short to medium term not to do sampling in our stores for now, until we can do it in a careful and sensitive way. And that does make it more difficult for the niche products to shine. I’m sure their time will come again once travel normalises.”

The emphasis on the top 20, noted above, means amplifying brands such as Drumshanbo Gunpowder gin, Dingle gin, Redbreast 12yo Irish whiskey and the Jameson range, certainly within Ireland.

“These are in our top ten week in, week out, whether promoted or not,” says Hunnisett. “They are the kinds of brands we have upweighted and made it easy to shop in our store. They also touch on something we do well and will continue to focus on, which is Sense of Place. In Ireland that is reflected in the Irish whiskies, gins, cream liqueurs. Today, brands such as Gunpowder gin or Dingle gin are no longer niche, they are mainstream. I’m sure that in future we will make some similarly big bets on other up and coming brands as we did with these, and make them the next must-have mainstream hits.”

Beyond this core, some brands that were previously highly popular and took a hit from the rise of niche products are on the rise once more. “We have sleeping giants that probably had their lunch eaten to some extent by the rise of craft, Tanqueray, Bombay Sapphire or Gordon’s gin among them. Their share of our business did suffer. They have fought back well though with innovative new flavours and even before COVID-19 they had eaten into some of that lost share.”

All of this means that the mix will look different in the months ahead.

“The intelligence is changing so frequently and it is our job to ensure the customers have the best experience we can offer. We’ll continue doing a lot of research to find out how their wants and needs are evolving. What we are planning for next year is to keep things as simple as possible, with big brands front of store and a narrower range.

“We are looking to take out 20% of our liquor SKUs, and the same in confectionery. That means we can over-promote the brands that are selling. This gives us space and nimbleness for next year when we hope passengers return and we can bring newness back to meet growing demand as that happens.

“The crisis has made us review our ranges across the regions. When we opened the new Dublin T2 liquor store we had over 80 gins, with strong support in particular for up and comers, notably from Ireland. But we will have to make a medium-term decision to reshape the range and focus more on those brands the consumers are telling us they want to go for.

“There will be change but we hope in time that we can return to the very comprehensive portfolio that we had before. In Ireland, those distillers that have their own production to back up their story were proving really popular before the crisis and I’m sure their time will come again.”

The value message across the business – big brands at discounted prices – will persist through this opening phase into 2021, says Hunnisett. “We have Christmas virtually signed off now, and are planning for next year, when I can’t see the plan changing too much. We have never wanted to be over-reliant on price promotions but we have stepped things up recently.

“Using Ireland as an example, our promotional mix has increased hugely. Previously we did very little price promotion at Irish airports and instead focused on range, exclusivity, sampling and the great ambassadors that we have in our stores, from whiskey to gin. But now the consumers want to see more price promotions and have really appreciated that.”

In the absence of big brand launches or tastings, HPP sites are being used to promote value within the stores. Hunnisett says: “We will start to use HPPs again to launch things and have some projects we are working on with brands, who overall have been very supportive. We don’t want to delay launches and will continue to encourage and host launches where relevant. But overall we are being more selective on how we are using our spaces.”

Some brands are also reviewing their commitment to a channel that may not deliver returns for some years – is that a concern for investment? “Everyone has to cut their cloth differently today, just as we are doing,” says Hunnisett. “We see suppliers restructure as we speak. It wouldn’t surprise me if some take a different view of the channel. Travel retail is still a window to the world, it’s just a slightly narrower window now and might take a bit longer to come back. Those with a more optimistic long-term view will come out of this best I feel. If you take a short-term view and cut all costs from travel retail it will take longer to bounce back.”

Even without face to face selling, there remain opportunities to engage and here brands are playing a big role, Hunnisett adds.

“We still have brilliant ambassadors at our stores around the world, who are ARI-trained and part of our teams, as well as resource from our supplier partners. They have an important role, whether that is talking from a few feet away to clinch a sales or in other ways. Getting liquid to lips is important but story telling has to evolve.

“In our cases, ARI’s new websites and the ecommerce offer in Ireland, Auckland and most recently Canada play a pivotal role. We are working with suppliers to bring their stories to life online and delivering through our great ecommerce team headed by Sarah Jane Lynch. We are pleased that our suppliers see the benefits and are supportive about providing great content.”

That brand support, alongside the tailored offer and value messaging, has helped deliver solid results so far in wines & spirits, although sales, like travel numbers, are much diminished overall.

“The comeback plan has proved successful, with high levels of penetration, healthy conversion to purchase and strong ATVs. That gives us confidence that what we are doing is right just now.”