2004 RETAILER OF THE YEAR:Twenty Years of Retailing Showmanship

Twenty Years of Retailing Showmanship

Charles Sonnenberg and Frugal MacDoogal
turned the Nashville market upside down by giving customers good prices,
great selection and a bit of entertainment to boot.

By Robert Keane
PHOTOGRAPHY BY JERRY HALL

A penchant for innovation, a flair for the dramatic and an eye on opportunity have been key ingredients in the recipe for success of Charles Sonnenberg and his bi-state Frugal MacDoogal operation and for recognition as Beverage Dynamics‘ 2004 Retailer of the Year. 0402roy5

Amid the hundreds of case stackings in the Nashville Frugal MacDoogal wine department are Jeff Warzynski (left), wine manager, and Charles Sonnenberg, president of the three-store chain.

The original Frugal MacDoogal Beverage Warehouse opened in 1983 in Nashville, TN. The retailing environment in the city at the time has been described as extremely closed and conservative. The same could probably be said for the country music industry headquartered there, but neither is true anymore. As artists like Shania Twain and Faith Hill have brought a more cosmopolitan sound to country, and conglomerates have bought up all the record labels and music publishers, Nashville has become more of a world-class city and Frugal MacDoogal has been at the forefront of supplying a wide array of adult beverages to an increasingly knowledgeable and sophisticated audience.

“In ’83 when we came in, we built a large, 18,000-square-foot store and really turned the market upside down,” recalled Sonnenberg. “It revolutionized things.”

The birth of Frugal MacDoogal may have revolutionized beverage alcohol retailing in Tennessee, but like every other such retailer in America, Sonnenberg still faced the myriad restrictions and regulations imposed by state and local authorities. Like a number of other states, Tennessee does not permit the sale of wine and spirits in supermarkets and convenience stores or the sale of beer in liquor stores. As a result, the Nashville store is actually two separate businesses in one building — Frugal MacDoogal Wine and Liquor Warehouse and an adjacent party store that sells beer, soft drinks, glassware and snacks. “They are separate businesses by law,” Sonnenberg pointed out.

Opening New Stores

The limitations of Tennessee law, which prohibits package store chains, meant that, after several years of success in Nashville, when Sonnenberg sought to expand, he needed to look out of state. He chose Ft. Mill, S.C. “I was involved in a restaurant in the Carolinas and I saw an opportunity to open a store in the area that was expanding” he explained. “It’s a destination store and has been successful.”

Opened in 1990, the 21,000-square-foot store sells liquor, wine, beer and party supplies under one roof. (A second South Carolina Frugal MacDoogal store, in Columbia, just opened in late November.) “South Carolina is a wide open market,” Sonnenberg enthusiastically explained. “The grocery stores sell wine, as do Sam’s, Costco and convenience stores. There’s a full array of competition.”

In front of one of the typically large floor displays at Frugal MacDoogalÕs Ft. Mill store are liquor department manager, Jeanette Boatwright (a 14-year veteran of Frugal MacDoogal), and general manager, Steve Morgan.

Like many retailers in this highly competitive business, Sonnenberg is reluctant to discuss actual dollar sales volumes. He did note, however, that “each of the stores has the largest sales volume in their respective states.”

Distilled spirits sales count for about half the dollar volume of each operation. In the more restrictive environment of Nashville, wine accounts for about 40% of total sales and beer and other products only about 10%. In South Carolina, the wine volume drops to around 30% and the beer and miscellaneous volume get bumped up to 20%.

“We are attempting to have the lowest prices in our markets with the greatest selection of everything from the obvious to the esoteric in all beer, wine and spirits,” Sonnenberg said in explaining the Frugal MacDoogal philosophy. “In addition, we feel strongly that we create an environment that is a pleasurable experience. So, we spend a lot of time and effort creating our own merchandising displays. We don’t rely exclusively on those available from the wholesalers and suppliers.”

Extreme Merchandising

It’s in the area of creative merchandising and promotion that Sonnenberg has probably most set himself apart from the competition. He’s staged so many events at his stores that when asked, he has a hard time remembering them all. “We’ve had a live elephant,” he recalled. “We have had mimes up near the registers to entertain people waiting on the long lines during the holidays. We’ve had a full winter scene, with a carriage and horse. We’ve got a water wheel and a waterfall in the store. We’ve done a lot of things of that nature” — not to mention the sport fishing boat made of cases of Bacardi Rum, complete with deep sea rods (pictured in this magazine in October 1992), the Jack Daniel’s old-time store, the swimming pool size aquarium with fake fish, hot air balloons or sailboats. BO01COV05

Also with the Ft. Mill store since it opened 14 years ago is wine department manager, Ariel Kegresse.

“NASCAR racing is very popular in our neck of the woods. We’ve had a NASCAR vehicle in the store,” he continued, warming to the subject. “We’ve had a traditional port boat — which they use to bring the port down the Douro River — in our parking lot.

“We want our consumers, of all genders and all ages, to come in and have an interactive experience,” he explained. “It’s somewhat like the old days of department stores, but instead of just setting a window, we make it part of the merchandising and create some excitement.”

Going that extra step and taking what suppliers have to offer and turning it into something bigger and more unique certainly has helped set Frugal MacDoogal apart. But does it get results?

“There are two ways of measuring,” noted Sonnenberg. “First, we try and generate this excitement and a pleasant shopping experience. The other way is looking at what sells based on it. That’s a little difficult because if you’re doing some esoteric product, like Licor 43, you can only expect to sell 10 or 15 cases. If it’s Bacardi, you’re trying to sell a thousand.”

Sonnenberg also tries to raise Frugal MacDoogal’s profile in the community by becoming involved with local charities. “The Shriners come in on a regular basis,” he said. “Most recently they had this old iron pot that must have been, no exaggeration, four or five feet wide and high. I’ve never seen anything as big. They were boiling peanuts, which is very popular in the South, and popping popcorn. They give that away to customers and a lot of customers then choose to make a donation.

“All these kinds of activities work to raise awareness and goodwill within the community and, bottom line, they help promote our products.”

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