A brief case analysis for Bevmo( wine store)

CASE:

Introduction

"The truth of the matter is that you always know the right thing to do. The hard part is doing it." General H. Norman Schwarzkopf

After reviewing the wine departments sales figures, the BevMo store manager, John Clayton, saw several opportunities for improvement. In the wine department, one particular area of concern was the decreasing sales in the rose wine section. John challenged Jennifer Nelson, the supervisor, to increase rose wine sales by the end of the quarter. Jennifer accepted the task. She saw this as a perfect opportunity to showcase her skills and capabilities as a competent leader. Jennifer relied heavily on Caitlin Lee, a part-time associate, to achieve success. However, Jennifers manager believed all the ideas originated from Jennifer herself. John credited her as a genius. Jennifer needed to decide between giving credit to her subordinate or going along with John Claytons misperception, that is, taking recognition for Caitlins contribution.

Company Background

Beverages & More! (BevMo) was founded in January 1994 and opened six stores in the San Francisco Bay Area that year. It was the leading alcoholic beverage-lifestyle specialty retailer in the western United States and among the largest in the country, located throughout California, Arizona and Washington. BevMo provided a uniquely friendly and welcoming environment for competitively priced alcoholic and non-alcoholic beverages in addition to products such as specialty foods and snacks. BevMo also offered wine and beer tasting every Saturday which allowed consumers to sample new products.

BevMo had earned several prestigious awards including the Wine Enthusiast Wine Star Award for Retailer of the Year (2006), the Tasting Panel Lifetime Achievement Award (2008), and two American Business Awards for executive of the year and company of the year (2012).

1. We work as a team

2. We turn ideas into action fast

3. We make fact based decisions

4. We win

5. We do the harder right

6. We have as much fun as you think

BevMo Values

Industry Overview

The Beer, Wine and Liquor Store industry was comprised of specialty shops specifically licensed that sold alcoholic beverages for off-premises consumption. Industry operators had remained in high spirits, and many establishments had experienced strong sales of high-margin and imported beverages, which were typically less available at alternative retailers. Consumer preferences shifted away from popular global beer brands and moved towards local craft styles that boast high-quality ingredients and a variety of unique flavors.

Wine and liquor were becoming increasingly accessible in some states due to loosening regulation. As competitors such as supermarkets and wholesale clubs leveraged their large operations to secure low prices from alcohol suppliers, some industry operators had to reduce their prices to remain competitive. The retail sales of beer in the alcohol industry had slightly decreased by 1% annually since 2010, whereas sales of wine and spirits exhibited growth, which climbed from 2010 to 2018 by 1% annually. The revenue growth of wine and spirits in the

industry increased 39% annually from 2006 to 2016 (See Exhibit 2). The rising per capita disposable income enabled shoppers to be more flexible with their discretionary spending which boosted the revenue growth.

The competition in this industry was high and the trend was increasing. Supermarkets, convenience stores and gas stations were increasingly participating in the sale of alcohol. Although many states prohibited non-specialty stores from selling beer, wine and liquor, these regulations were gradually being relaxed. Additionally, wholesale clubs competed with stores in the industry, not only on the basis of convenience but also on price.

Spirits

Spirits category was a major part of the beverage alcohol market with rising sales leading to gained market share in 2018. This category was particularly favorable among the millennial community who preferred diverse and authentic experiences. Wine

U.S. was the largest wine-consuming country in the world. The wine category had been growing over the past year. With the combined total of domestic and imported wine, $70.5 billion value was added in the U.S. wine market. Five most popular wines in the U.S. market included Chardonnay, Cabernet Sauvignon, Red Blends, Pinot Grigio and Pinot Noir.

Beer

Beer production in the U.S. had slightly declined from 192.56 million barrels in 2014 to 182.74 million barrels in 2018. Although U.S. beer production was decreasing, beer had always been the preferred beverage of choice among all the alcoholic beverages. Gallup Poll had shown that 42% of the consumers preferred beer compared to wine and spirits in 2018.

Key Success Factors

Industry analysts identified a few successful factors, including the following:

• Close Competition. Industry players ensured their prices and offerings appropriately served customers by monitoring other alcohol retailers.

• Strategy. An offer of appropriate mix of high turnover and slightly more expensive products were ensured by the companies due to the low industry profit margins.

• Level of Stock. Industry operators had the ability to regularly monitor levels of stock to guarantee steady sales of all brands with little overstock.

• Reliable Shipments. Ongoing and reliable shipments were always available from the wholesaler in order to keep stock levels in line with demand.

• Product Awareness. Product tasting and promotions were conducted by the owners to further increase interest in their store and raised awareness in their products.

• Product Presentation. Retail store displays often built by owners to appeal to buyers and encourage customer recognition of major brands.

  The People John Clayton, age 35, attended community college. He was BevMos Store Manager. He

  oversaw operations for the entire store. His duties were to ensure the store met company standards, trained and supervised staff, as well as developed strategies to reach sales goals. Jennifer Nelson was 28 years old. She had graduated from California State University, Long Beach with a degree in Criminal Justice. She was BevMos head clerk (floor supervisor). She had many responsibilities such as enforcing the companys procedures and policies, managing and controlling inventory, and ensuring the store and its associates were meeting company standards.

  Caitlin Lee was 21 years old, working as a part time BevMo sales associate. She was attending California State University, Dominguez Hills and majoring in History. She was characterized as a brilliant and creative individual. Her duties included stocking the shelves, providing customer services, and operating the stores weekly wine tastings.

  Dilemma Background

  Jennifer Nelson was a supervisor at BevMo, and she loved the company where she envisioned herself building her future career. Jennifer was hoping to work her way up to become a store manager. John Clayton, the store manager had assigned Jennifer the task of improving the stores declining rose wine sales, and she gladly accepted it as it was a perfect opportunity to show her marketing skills.

  Although Jennifer was trying to find ways to improve sales, she came up with only one idea, which was to contact her vendor to order more rose wines and build a display at the front of the store. Jennifer believed that she needed more ideas, and decided to get her team involved. Caitlin Lee was a part-time associate who worked in the wine department under the direct

  supervision of Jennifer. Caitlin also loved the company and desired to advance within the company. Caitlin suggested a few ideas to Jennifer such as enhancing rose wines visibility by relocating them to the front of the store and adding more roses to the weekly wine tasting. Caitlin also wanted to dedicate one whole refrigerator door solely for roses in the wine section. Jennifer loved all these ideas and implemented them in this BevMo location.

  Jennifer had a private meeting with John when the quarter was over to discuss the results of the implemented ideas. Jennifer was informed that all the ideas were successful and the sales of rose wine had improved by 11 percent. John believed all the ideas were originated from Jennifer. John mentioned a possible raise at the end of the year and that he would relay these successes to the regional manager. Jennifer was faced with the dilemma of admitting the truth which would result in a decreased raise or continuing to take all the recognition to pursue her goal to become a regional manager.

  Jennifers Decision

  Jennifer was unsure about what she should say to her manager, John Clayton. Should she admit that Caitlin had come up with the ideas that raised rose wine sales? What other alternatives did Jennifer have? How should Jennifer make an ethical decision for this issue and arrive at a win-win situation?