Business (Not) As Usual in the Big Easy ~


Business (Not) As Usual in the Big Easy ~ – Complimentary Feature –
Dorignac’s, which re-opened shortly after the devastation wrought in New Orleans by Hurricane Katrina, is seeing more beverage alcohol business than ever.
By Richard Brandes

Dorignac’s Food Center is New Orleans’ traditional Cajun/Creole supermarket, not to mention one of its largest sellers of beverage alcohol products, but it has weathered big changes over the past few years wrought by both man and nature. After a planned major renovation and refocusing of the business a few years ago, the supermarket had to deal with the unplanned devastation left in the wake of Hurricane Katrina.

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Butch Steadman, Dorignac’s wine and spirits director, has seen lots of changes since he began working there in the mid-1970s.

Dorignac’s got lucky during Hurricane Katrina, if such a thing can be said. It only suffered some wind damage when the storm rampaged through New Orleans, despite the fact it is located near Lake Pontchartrain in Metarie. Fortunately, one of the canals that are raised above ground in below-sea-level New Orleans blocked floodwaters emanating from lake breaches, effectively defending the store against greater damage. Indeed, a year later, the operation has emerged as a stronger beverage operator than ever before, according to Butch Steadman, Dorignac’s long-time wine and spirits director.

Steadman has been around Dorignac’s long enough to know. He started working there straight out of high school and was made spirits and wine buyer in 1975. He took a break from Dorignac’s between 1984 and 1986, but returned just after a 1985 store remodeling significantly recast the space devoted to beverage alcohol. After the remodeling, the store carried more than 5,000 wines, and consumers gradually caught on to Dorignac’s as a significant wine retailer. “In 1987, 1988, it took off,” Steadman said. “Then it really picked up in the early 1990s when the Internet stocks got hot.”

Around then, Steadman and his department also took over beer, soft drinks and water. “We went from two people in the department to now, when I have 11 people working for me.”

A Major Remodeling
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Dorignac’s is still seeking to fill staff positions (as the sign indicates) a year after Katrina hit.

Two and a half years ago, Dorignac’s went through its first major remodeling since the refurbishment accomplished in the mid-1980s. The store was due, Steadman said. Not only was it time for an update of paint, fixtures and signage, but the direction of the store needed to be updated as well. The kinds of food and beverages consumers look for in a store change over time and, critically, how they want what they’re looking for changes as well.

Today’s consumer is more attracted to time-saving conveniences, and that was reflected in the new store layout. Dorignac’s cut back grocery space by about 40% as it reworked the floor plan with prepared food and service areas gaining territory. As a result, store sales gained about 25% with bakery up even more, in the 30% to 40% range. Some services have benefited more still, with catering up 300%, for example. Reconfiguring the store also gave Dorignac’s space and resources that it could devote to new initiatives, and the store added a gift basket and wrapping program, as well as new Internet elements and a first-ever gift catalog effort launching this fall.

Beverage sales as a percentage of store volume actually fell after the remodeling to 22% from 28%. “That’s good, though, because that means the rest of the store is catching up,” Steadman said. He could be happy about the results because his overall beverage sales are up significantly in real terms.

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Dorignac’s features 11 aisles of wine & spirits in the front of the store.

A s for the remodel’s impact, it brought beverage alcohol more to the fore in the store. Now, wine tops off the adult beverage section, occupying a space at the extreme of the checkout stands beginning just behind the front wall, continuing past the checkout and proceeding back into the front main traffic aisle. It’s just about impossible to miss the wine department in Dorignac’s. In the past, a soft drink partition wall separated the main store from adult beverages. No more.

“I have 11 aisles of wine and liquor in front of the store right next to the deli,” Steadman said. “The wine sales took off even more when we put it out there.”

In Dorignac’s present layout, about 20% of the floor space is devoted to beverages. That’s about the same amount of space that beverage gets in Dorignac’s circular as well. Every week, 10 wines and spirits are featured in the circular with various beer promotions being highlighted as well. Steadman said he rotates headlines with the produce and meat departments.

Driving wine sales is important in part because Dorignac’s no longer sells as many of the over-$50 bottles that commonly moved during the height of the 1990s stock market boom, although it still carries a number of ultra-premium wines selling above $100. Yet, Steadman isn’t complaining. “My cost per item is averaging about $13, which is high for a grocery store, but average for a wine shop. I sell a lot of wine between $10 and $25, but not that much over $50 anymore. Traffic in the store is about 3,000 to 4,000 customers a day.”

Of course, Dorignac’s is subject to the general trends in the marketplace. “Yellowtail is still our number-one seller at $4.99,” he said. “I do around 3,000 cases a year.”

Dorignac’s does differ in some particulars from the overall trends, however, specifically in the spirits department, where his customers express their own preferences. For example, the top-selling brown spirits outperform the top-selling white spirits.

While vodka sales may lead overall, Jack Daniels is the best-selling spirits brand in Dorgnac’s, doing about 1,000 cases a year. Crown Royal is in second place, while Smirnoff’s follows with about 800 cases sold annually.

Lately, craft and import brews have been showing strong growth in Dorignac’s beer sales, although they only have been gradually coming back. The softness and the resurgence have a lot to do with the event that has dominated Dorignac’s business environment over the past year, and that’s the effects of Hurricane Katrina.

After Katrina Hit

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For the upcoming holidays, Steadman said he plans to promote spirits by buying “just about every gift set available on the market.”

The disaster that struck New Orleans has impacted every facet of Dorignac’s business. Steadman himself evacuated to San Antonio for awhile. Yet, Dorignac’s managed to open 23 days after the storm ended and was, to the best of Steadman’s knowledge, the second store to reopen in New Orleans after Katrina struck. Dorignac’s opened with 45 of its 260 employees. To this day, the store only is 90% staffed, as some former employees have failed to return to the city. In addition, the entire labor pool has diminished, impacted by housing prices that remain too high for many people to afford.

Dorignac’s business was obviously changed by the crisis. Initially, for example, Steadman said several distributors held off purchasing any craft and imported beers – they concentrated mainly on the major brands with large volumes – because they were concerned about the city coming back at all. Upscale beer sales have now recovered in part because distributors have gained some confidence in New Orleans’ renewal and in part because some affluent pockets of the city have been among the first to revive in the aftermath of the Katrina crisis. Upscale areas including the Garden District and the French Quarter were spared the worst results of levee failures.

Steadman returned to New Orleans on last October 7 after waiting to see how Hurricane Rita, which followed Katrina, would affect the city.

“Business Has Been Unbelievable”

Since then, “business has been unbelievable,” he said. “We thought it would drop in January and February, but it did not. It was lower in March, but it was still up 20% to 25% from the previous year. I’m up 12% for the year. Right now [September 2006], I’m [beverages] doing about 25% of the store’s volume,” Steadman said.

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Wine and spirits director Steadman has placed wine displays throughout the store. “Wherever you look, you see wine,” he said .

Sales have gained, but Katrina and its aftermath didn’t affect sales in a uniform manner. Immediately afterwards, beer and bottled water were flying. “Beer has been up 30% consistently since the storm,” he noted, pointing out that many New Orleans residents have been concerned about the quality of the city’s tap water. On the other hand, initially spirits sales were down. “Nobody wanted to drink anything with ice or with water added,” he said.

As was the case with upscale beer, Katrina affected wine availability and continues to do so. When floodwaters rose in New Orleans, wine cellars were wrecked and so were the inventories of many of the city’s wine distributors. “With the collectables and reserves, a lot of local wholesalers and retailers threw millions of dollars of wine away,” Steadman said.

Given the situation, the business is coming back gradually. One reason high-end wine has been slow to recover, Steadman said, is that many important companies, which gave wine as gifts during the holidays particularly, still aren’t fully staffed, so the corporate business has remained slow. Otherwise, wine volume has essentially returned.

One reason Dorignac’s enjoyed such success in the aftermath of the storm was the reluctance of some retailers to open again after it had passed. Many hesitated, wanting to see if an investment in damaged property would pay off. Of course, in the days immediately after Katrina struck, while evacuation stalled and social unrest built, that might have seemed an exercise in reasonable caution. Still, Dorignac’s stayed open and acted when confronted with the disaster. The supermarket gave out free sandwiches for the first 90 days after re-opening, and it continues to hold fundraisers and contribute to charitable events.

Dorignac’s also was an important source of the most important staple needed in the wake of a flood: water. To ensure they were getting safe drinking water, Dorignac’s customers purchased about 1,500 cases of bottled water a week, post-Katrina. “Before, we did 500 or 600 cases,” Steadman said.

Dorignac’s is the top water seller in the Crescent City, Steadman noted, and has proven itself to be a top retailer in the life of New Orleans. As the joie de vivre returns to the city, Dorignac’s intends to be there for the long haul.

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