Capital Retailing With A Capital R

PHOTOGRAPHY BY DARREN HIGGINS

For more than two decades, Ed Sands and Aaron Bernstein have been giving Washington, DC metro consumers a reason to shop at Calvert Woodley.

0510crt6Calvert Woodley Discount Wines and Spirits has been serving customers from its Connecticut Avenue location in the nation’s capital since the early days of the Reagan administration, but owners Ed Sands and Aaron Bernstein can trace their retailing pedigrees back even further. Lyndon Johnson was in the White House when Ed Sands and his father-in-law opened Woodley Wine and Liquor a few blocks down Connecticut Avenue from the present location. Calvert Wine and Liquor, which Aaron Bernstein ran with his brother-in-law, opened its doors shortly after Harry Truman was sworn in to his first full term in 1949.

0510crt5Partners for almost a quarter century, Ed Sands (left) and Aaron Bernstein own and operate Calvert Woodley, the highest profile beverage alcohol retail store in Washington, DC.

In the early 1980s, Sands and Bernstein were both faced with potential relocation problems. Sands had a very favorable lease that was soon to expire with little chance of affordable renewal, and Bernstein’s in-laws had received a very favorable offer for the property where his store stood. Ultimately, the two men, who had come to know each other as friendly and respected competitors over the years, decided to join forces and combine their two operations into one and opened Calvert Woodley in 1982. “We thought it would mean we wouldn’t have to work as hard,” said Sands, “but that never happened.”

Explosive Growth

Among the reasons why the partners have continued working as hard as ever has been the explosive growth of the Washington metropolitan area over the last two decades. “This region has burgeoned tremendously and the growth in this area is in the Maryland and Virginia suburbs,” said Sands. “Our biggest challenge, without a doubt, is bringing the customer into Washington, DC. Higgins_050726_1422

Situated within the nation’s capital itself, Calvert Woodley also draws many customers from the surrounding Virginia and Maryland suburbs.

“When we started there was no place for people in the suburbs to buy fine wine and even everyday wine. Everybody would come into Washington to buy wine…and spirits, too.”

With the growth in population and income in the area has also come a serious growth in the competition. Not only are DC-based retailers removed from much of the area’s population, but they have to compete against all the major supermarket chains and discount mass marketers such as Costco and Wal-Mart.

Being located in the nation’s capital makes it pretty hard for the partners to avoid political developments and a recent Supreme Court decision gave them some hope. The ruling which said that states may not prohibit out-of-state wineries to ship wines directly to consumers if they allow in-state wineries to do so doesn’t apply to retailers, but Sands expects that eventually it will be expanded. “My ultimate hope is not to be able to ship around the country, although that would be nice,” he said. “My hope is that we would be able to ship to our two biggest markets, which are Maryland and Virginia. That would be a big shot in the arm for our business.”

Interactive Web Site

calvert_webAlthough Calvert Woodley is prohibited from shipping to consumers in their two biggest markets, that hasn’t kept them from shipping to locations where it is legal. Toward that end they have an interactive web site that has become an increasingly important part of the overall business. “It’s not a large percentage of the business, but it’s been growing steadily for the last several years,” he said. “It’s a real double-edged sword. It’s something that we know that we have to do but in a lot of ways we wish it wasn’t as big as it is. We’d like to get the people in the store.”

Not only does it eliminate the face-to-face contact that is so important in building repeat business and take away the opportunity for impulse purchases which can really boost checkout totals, but Sands notes that it also creates additional costs to process the orders. And while Sands and Bernstein cannot ship to customers in Maryland and Virginia, individuals living in those two states can use the web site (www.calvertwoodley.com) to place an order in advance, although they’ll have to drive into the city and pick it up themselves.

Selling Premium Spirits

Wine sales make up about 60% of the operation’s total sales (Sands estimates spirits at about 28%, beer at 5% and food at 7% to 8%), and it’s the only product category featured on the website. When it comes to newspaper advertising, however, that’s an entirely different story. Calvert Woodley runs ads twice a week in the Washington Post and spirits, particularly in 1.75s, are always prominently featured. “Our spirits business is very important to us,” Sands pointed out. When it comes to spirits prices, DC retailers have an advantage over state stores in Virginia and county stores in Montgomery County, MD, and so Calvert Woodley features prestige brands like Absolut, Bombay Saphhire, Johnnie Walker Black, Wild Turkey, Crown Royal, Cuervo and Captain Morgan. Higgins_050726_1307

The extensive wine selection represents about 60% of the store’s total annual sales.

“People are drinking spirits of a much higher quality,” added Bernstein. “It’s happening all over, but I think it’s best exemplified by our type of operation.”

“They’re all doing well,” Sands noted enthusiastically. “Cognacs, tequilas, every category. I think the marketers of premium spirits do a terrific job.”

Bernstein describes Calvert Woodley’s target clientele as upper-middle-class consumers, many of who entertain regularly. “We try to be a man for all seasons, but our promotions are geared more towards the upper-middle-class and affluent,” he said.

High visibility newspaper ads with great prices on premium spirits is an important weapon in the Calvert Woodley marketing arsenal, but it’s not alone.

Cheese & Deli: Creating Store Traffic

“For the last five or six years we’ve been doing a lot on the Internet with e-mails,” said Sands of recent efforts. “People still have to come into the store, because as I mentioned earlier, we can’t ship to a lot of our customers, but that’s created additional business and additional traffic in the store.”

On Wednesdays, the Calvert Woodley ad appears in the Post’s food section and tends to focus on what’s available from the store’s full-service cheese and deli departments. “We have a very highly regarded cheese department,” explained Sands. “And very few, if any other, stores advertise these types of products. It’s turned out to be quite a draw.”

The store has also produced a successful catalog for more than 20 years as well as conducting an ongoing series of wine tastings and dinners. “We do a lot of events and tastings here in the store,” Sands noted. “We have tastings in the store at least once a week. We try to always have some kind of promotion going on.” With an overall staff of 55, the store is well equipped to handle almost any effort.

A recent promotion involved an Australian wine, the Endangered Species Fund, the National Zoo and a wildlife movie premier. “We try and do as many of those things as possible,” said Sands.

“We also do a lot of direct importing of wine,” he continued. “We’re fortunate here in Washington that we’re able to be importers as well as retailers. It works out very well because it gives us the opportunity to have a greater selection and variety to offer. This helps separate us from other retail outlets in the region. It’s proven successful in drawing customers from the surrounding areas because we have items that are not available there.”

Higgins_050726_1320 Calvert Woodley is also renowned for its full-service cheese and deli departments.

Like many fine wine shops, particularly on the East Coast, Calvert Woodley has a large stake in French wine. “Bordeaux has always been a very big thing for us,” noted Sands. “We’re also very big in Rhone, and Spain is a very big area for us.”

While he does speak very favorably about Australian wine, Sands is of the opinion that the region doesn’t need any more hype than it’s already got. “Certainly there’s a lot of Australian wine available, in fact, there are too many labels. On the other hand, Spain has got the best selection of good wine available at reasonable prices, and it’s one of our top-selling categories today.” Higgins_050726_1300

Sands also noted that he’s seen what he calls a resurgence of moderately priced Italian wines. He also acknowledged the buzz about South Africa, but added that so far that region has not produced significant volume at Calvert Woodley. “We’re also doing well with Chile and Argentina.”

Knowledge Is Power

One of the other things about wine that both partners have noticed change since they opened the store is the consumer.

“The wine consumer today is extremely knowledgeable and extremely sophisticated,” observed Sands. “They know as much or more about the particular product that they’re interested in as our very knowledgeable staff. With the Internet today and the information that’s available, if they’re interested in a product, the depth of knowledge that they have is scary.”

Bernstein agrees that today’s consumers certainly have a lot more information, but their opinions aren’t always their own. “People are so influenced by writers,” he noted, adding, “A writer like Bob Parker has deservedly earned such a great reputation that his words are almost god-like.”

As an example, Bernstein cited an instance where the store had purchased many cases of two white burgundies that Parker scored 96 and 95, respectively. Calvert Woodley advertised them together in its annual catalogue. The wine given a 96 sold out quickly while the other one sat there. He doesn’t believe the customers could discern the difference between them; they just took the “experts” word about which one was “better” to the extreme.

At the same time, “trends come and go like fashion,” he said, noting that sometimes such trends work in the retailer’s favor. When the movie Sideways, a romantic comedy centered on wine geeks, was nominated by Academy Awards, they couldn’t keep pinot noir, a favorite of the film’s protagonists, in stock. “Part of success is staying at least even with trends,” said Bernstein.

Interpreting Data

Of course in the 21st Century, it’s not just consumers who are reaping the benefits of the technology revolution and the information superhighway. “Today, we have very good information and very sophisticated computers,” Bernstein observed. “But it’s not enough to just have the information. You have to read it all. You have to balance what information you have with what you see here in the store.

“Let’s say bourbon is slowing down,” he continued. “There’s a tendency among wholesalers and retailers, myself included, to then cut down on the selection and promotion. But there are still a lot of people out there who drink bourbon. If you can keep that obscure brand in stock, it can give you an advantage. The regular turnover theory of retailing can lead to some bad numbers. You have to be able to interpret them.”

Bernstein noted that the constant release of new spirits brands and line extensions has put pressure on retailers and sometimes he has to make decisions before he has either numbers or experience to go on. In that case he’ll usually give the distributor the benefit of the doubt, but if the product doesn’t perform, it’s got to go. With only 5,000 sq. ft. of retailing space there’s just no extra room.

“I think that in this age of one-stop shopping, you must try to offer as many things as you can within the parameters of space,” explained Bernstein. “It’s made more difficult by the constant introduction of new products, such as flavored vodkas. But if somebody had a great Cosmopolitan and is now looking for a specific raspberry vodka and you have it, you win. It’s a tough battle, but it’s something we must pay attention to.”

The business could certainly use more space (it also includes 5,000 Sq. ft. of basement space plus two outside warehouses), but with the real estate explosion in the Washington market that seems unlikely. “We feel we’ve outgrown the facility here, but being in the city, it’s very difficult to find a larger space,” noted Sands. “Or even to expand where we are.”

Fathers and Sons

Both Sands and Bernstein entered the business through connections with in-laws, but the new family/business bonds are blood ones. Michael Sands and Dave Bernstein, the sons of the partners, have been involved in the business for seven and ten years, respectively, and are learning the ins and outs of the business from their fathers with the long-term goal being a transition to the next generation. “It’s taking a little bit longer than we had figured, but we want to make sure that they’re each prepared. At this point Dave can do many of the things I do, and Michael can do many of the things Ed does,” said Bernstein.

Although each of the original partners started out in the same role over time, as in any good relationship, each gravitated toward areas that better suited their temperament and skills. As Bernstein describes it, “Ed is more involved in the financial end and deals better with banks, vendors, accountants and lawyers, as well as the fine wine and direct importing. I’m more involved in the operations end of the business — the ordering, hiring and firing, displays and day-to-day running of the business.”

What the partners need now is to have their sons learn the other aspects of the enterprise, but as seems the case with so many other things, there just never seems to be enough time. “It’s wonderful to be able to get together and talk about things,” Bernstein says of time spent with his partner and their sons. “With all the pressures and time constraints we just can’t do enough of that.”

Still, the business has been in an upswing for a long time. “Without getting into specific figures, I can tell you that our volume has increased every year since we’ve been here,” said Sands. “Without trying to sound egotistical, we think is a pretty remarkable accomplishment.”

“We were once the biggest competitors in the city,” said Bernstein. “We both respected each other’s abilities and it was a partnership of mutual respect. In a lot of ways, it’s like a marriage. We’ve been married a long time and it’s worked.” With another generation on hand to keep the business going, it’s partnership that’s likely to keep on going for a long time to come. *

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