PLANNING HOLIDAY PROFITS

Service is the name of the game, especially during the holiday season. And depending on the number and types of services retailers offer their customers, sales can be increased — at times dramatically — while earning loyalty and building repeat business.1198cem1

Cedric Martin, of Martin Wine Cellar in New Orleans, LA, holds one of the nearly 10,000 pre-packaged gift baskets his two-store chain prepares before the holidays. The operation usually ends up selling about 15,000 of them by the conclusion of the holiday season.

Store owners’ choices of which services to offer — or to offer any at all — are determined by a complex mixture of factors that include but are not limited to personal philosophy, location, state laws, size of store and customer demographics. The decisions are key, though, considering many retailers say they do as much as 25% of their annual sales during the holiday season.

Most, for example, will gift wrap year round, others only during the holiday, and still others may sell the wrapping accoutrements and let the customers do it themselves. Many stores offer guides and catalogs, although few publish it themselves, and many are already online or are already online or are planning on getting onto the internet (see sidebar).

Some operators supply gift baskets but don’t make a lot of noise about it. At Applejack Liquors, in Wheatridge, CO, for example, gift baskets are not promoted but are made available to customers who request them. Brown Jug stores, in Anchorage, AK, follow the same basic philosophy. President Lowell Shinn said, “Often it’s a jeweler or someone like that who wants to say thank you to their customers, so they’ll order a special order of gift baskets, sometimes 20 or 30 and use them as special thank-yous.”

At other stores, gift baskets are a mini-industry unto themselves, often selling for as low as $20 to more than $100 per basket. For example, at Schaefer’s Wines, Foods and Spirits, in Skokie, IL, the store sells thousands of custom-made gift baskets during the holiday selling season. At Town Wine & Spirits, in Rumsford, RI, Carol Fishbein, owner Elliott Fishbein’s wife, designs up to 70 different pre-packaged gift items. Examples include packaging an Italian pasta bowl set with gourmet sauces, pastas and Italian wine. And at the two Martin Wine Cellar stores, in New Orleans, LA, the holiday gift business approaches 15,000 gifts, from late November to the end of December.

Many of the stores that focus on gift baskets promote them through holiday catalogs and other advertising vehicles, and many of them feature a combination of both pre-wrapped and custom-made baskets.

Corporate Business

Generating corporate business during the holidays was once considered something akin to shooting fish in a barrel. But somewhere along the line in the 1980s public mores, political correctness and the fear of liability can remove some of the luster.

Irwin Greenbaum, president of Tower Package Stores in Atlanta, said he still picks up corporate sales, “but they don’t give it away like they used to.” He is fortunate in that he has, to some degree, had businesses come to him with their needs. “When you’ve been there so long one tells another, and they drift in. But if anyone ever calls in we follow it up. You usually find out who the buyer is.”

A prime example is Atlanta’s own Coca-Cola Co. The relationship began with a customer who was a Coke executive. “I approached him one day and asked, ‘Who gets your business?’ and he told me. So I said, ‘Can we make a presentation?’ and he agreed. My head wine man made up a presentation, and the people at Coca-Cola liked what they saw– especially the prices. We’ve been doing business with Coca-Cola now for the last three years, all its business, which runs into thousands of dollars a year.”

“Corporate sales had kind of dwindled,” said Jan Jackson, president of Jax Package Store in Atlanta. “But now, it’s starting to come back. The parties and the gift-giving are starting to return.” The business originally went south, he said, for “several reasons. One, you had the liability problem, especially with company parties. If an employee gets drunk and drives home, has a wreck and hurts somebody and he got drunk at a company party, the company is liable for that.”

To counter that, firms are now holding their parties under “controlled circumstances. They usually serve coffee the last hour of a party and they watch employees to see if they’re intoxicated. If they’ve had too much, they send them home in a cab.”

Also contributing to the renewed growth, he added, is that “the companies are probably in better profit modes today than they have been in the past, so therefore they feel it’s a perk for the employees, an incentive for them to look forward to the Christmas party. “As for gift-giving, “they will give their employees a bottle of wine or a gift set or something like that. I’ve seen a resurgence in that over the last couple of years.”

Applejack actively solicits this type of client. “Anyone in Wheatridge, CO, and the Denver Metro area that has a reason to give a gift we call,” said president Alan Freis. While he has never measured the business, he added, “we think we do well with it. We just don’t keep track of it too closely.”

Lance Parkhill, store manager for Parkhill’s Liquor Mart in Tulsa, OK, says corporate clients have proven a plus for his business “because everybody’s having Christmas parties, New Year’s parties and so forth. We do get a lot of corporate business.” Finding it, as with Greenbaum, is relatively easy. “We’re a store that’s been here 35 years, so it finds us.” Overall, corporate business contributes about 25% of his holiday business.

Though several retailers mentioned that acquiring corporate holiday gift business is a difficult proposition for them, others suggested a variety of strategies for adding on some incremental sales.

  • Remember to solicit professionals and smaller concerns for their business. Some doctors give holiday baskets to other doctors as a “thank-you” for referrals. Realtors often give baskets to people who have just bought a home, and companies sometimes send gift baskets to their clients around the holidays.
  • Make sure you offer a selection of different price points for whatever services or gift packages you are offering.
  • Try to make shopping and ordering as easy and painless as possible. You don’t want to keep a potential large client on hold because you can’t keep up with the volume.
  • Track your corporate clients from year to year. Send out reminders to them and be prepared to tell them what they ordered and paid the previous year.

Elaborate Holiday Displays

Splashy, colorful displays work all the time, but especially during the splashiest, most colorful time of year. Brown Jug, for instance, goes heavy on its displays come the holiday season, utilizing all of the materials it receives from the major suppliers, including Christmas trees, moving displays, displays with lights, “and all kinds of stuff. We have one fairly large store with about 15,000 square feet of selling space, so we use quite a few displays.”

Applejack’s holiday displays are generally bigger than the others. Said Freis, “We’ll promote almost anything that’s available to give the customer the variety they want.” The displays go up just after Thanksgiving.

Reuben Kogut, founder of Reuben’s Wines & Spirits in Austin, TX, uses custom-made displays illustrating different themes or holiday ideas. Still, Kogut prefers when suppliers create “unique” materials.”

Of course, Frugal MacDoogal’s, headquartered in Nashville, TN, takes a back seat to no one when it comes to display activity. During the winter months designs can include anything from a snow-covered ski slope with mannequin skier to a “limited number” of what could be called Christmas designs. “We did a display with electric trains, which made it into a real Christmas-sy theme,” president Charles Sonnenberg recalled. “But again, it’s more for ambiance.”

Gift Centers

Pre-wrapping gifts gives customers the ultimate in convenience, allowing them to whiz through a store and not worry about buying paper and bows and taping it all neatly together.

“We’re on gift number 2,000 right now,” said Cedric Martin. “We pre-pack 10,000 gifts in advance so that when you come in, you don’t have to wait.” The work begins in May and for an excellent reason. “We wouldn’t get the people out of here if we didn’t.” The Martin Wine Cellar has been doing it for 15 years.

“We’ll be doing that big-time,” noted Kogut. “We have gift wrapping year round, but what we do during the holiday season is pre-wrap them so you can tell what they are at the display — ready-to-go, pre-wrapped gifts. We put them on tables in different spots in different stores.”

Frugal MacDoogal’s also offers a selection of in-house-prepared gifts, including some composed of miniatures. For example, it stocks a Jack Daniel’s glass with a miniature in it as well as a candy and a little stirrer. Said Sonnenberg, “We keep a limited selection 12 months of the year, and then we put out a larger selection of gifts the week of Thanksgiving. They stay out until New Year’s.”

Some retailers, on the other hand, balk at the labor-intensive nature of preparing so many packages. Jax buys a few pre-wrapped gifts from its wholesalers from time to time, according to Jackson, “but we don’t do it ourselves. That’s another business within itself.” Instead, the stores will display the gift sets together.

“We make up a special gift area for the products with special gift sets,” said Jackson. “Then we’ll have a cognac display section for all the cognacs with gift wrapping; a section for gins and vodkas — anything that has a gift wrapping for the holidays in that section.” The section easy to spot, since it’s located in the front of the store. “It’s a big area. We start right around the first or second week in November. People like to buy gifts for Thanksgiving, too; people don’t just buy Christmas gifts. We do the same thing with wine, although there are not as many wine gift sets.”

Greenbaum prefers not to pre-wrap gifts. Tower stores have a special section on the back wall that they set aside for gift packs during the holiday season. “It just creates business and makes the story look like a holiday.” The back of the store is preferred, Greenbaum stressed, because “people who want gift sets will come in and go through the store. Another thing is that we want them traveling through the store so they pick up something else, too.”

Much Ado About Something

Retailers remain mixed in their assessments of the results of offering these and other services. Whether or not such services ultimately affect the bottom line depends on the type of store you run, said Sonnenberg. “If you are a niche player providing gift wrapping and additional services, then that’s what differentiates you for the consumer who might otherwise be buying in a grocery store. But if you were to ask me if a grocer at a supermarket chain would want to spend all that extra time and energy to provide all that service, I would say no. It would add goodwill, but the expense of that goodwill would exceed the additional business because beverage alcohol is just a department in supermarkets.”

“I think it makes a little difference,” said Parkhill. “A lot of people are going to buy regardless. But I see a lot of people who, during the holidays, want to see who’s got what in what gift pack this year. That’s all they want.” Applejack’s Freis, on the other hands, felt a retailer has “got to help it along. You can’t take anything for granted.” Operators can, however, begin to early. “People don’t want to talk to you about Christmas in September. Start right after Thanksgiving.”

Shinn said such services do, indeed, serve an important function even if only to show customers that the store is committed to providing service and variety, “which I think is important over time.” And that mental impression that customers walk away with may be the single most important reason of all.

“I think it’s about adding excitement in your store,” concluded Sonnenberg, “whether that is giving away hot cider, having a dressed up Santa Claus doorman, or having a pianist playing carols on an elevated piano. It’s just creating a nice air.”

And a “nice air” is, after all, much of what the holiday season is all about.


Howard Riell is a veteran business reporter who is a contributing editor to Beverage & Food Dynamics and Cheers.


Net Profits

Although there are a tangle of laws that affect interstate shipping of beverage alcohol products, an increasing number of retailers are creating web sites for their stores. And as more and more Americans become accustomed to buying things over the internet, beverage alcohol retailers who are there are sure to benefit from the trend. It can be especially helpful during the peak holiday selling season, when commerce is at its most frenetic.

Some retailers, like Schaefer’s Wines, Foods and Spirits, in Skokie, IL, prefer not to sell directly over the internet. Instead, they use their site to secure orders from consumers, who e-mail their order to the store. A staff member then calls them back to confirm the order and explain to the prospective customer the interstate shipping laws, if that is applicable.

Other retailers, like Sam’s Wine Warehouse, located in Chicago, has had a web site for the past five years. The site lists special events happening in the store, provides information on products and sales, including Bordeaux futures, and allows web visitors to order products for delivery, only in situations where legal. The store said it has never had a problem of shipping product to a minor.

Generally speaking, the costs can be fairly modest to maintain a web site. And as more stores go online, there are sure to be many holiday greetings from retailers on the internet in the coming months.


1198cem2Action Checklist:

Gift Baskets

  • Begin with a limited selection of baskets — maybe five or six.
  • Develop price pints for the baskets based upon the character of your store and clientele (for example, baskets selling for $20, $35, $50, $75 and $100).
  • Create a theme for each basket (Tex-Mex, French, Italian, etc.) Utilize food and wine combinations.
  • Presentation is important. Make baskets look plentiful by making all elements complement one another.
  • Include small decorative items, such as dried flowers or small Christmas ornaments. Delegate one staff member to run the gift basket program.
  • Display gift baskets prominently, in store and in advertising.
  • Next year, attend regional gift shows in the summer to find sources for baskets and other interesting gift items.

Do You Offer…?1198cem3

  • GIFT WRAPPING
  • PRE-WRAPPED GIFTS FOR CUSTOMERS IN A RUSH
  • ELABORATE HOLIDAY FLOOR DISPLAYS
  • SPECIAL CORPORATE SERVICE FOR PARTIES
  • AND GIFT-GIVING
  • GIFT BASKETS
  • DELIVERY SERVICE
  • ADDITIONAL STAFFING
  • TARGETED HOLIDAY SALES
  • SPECIAL TASTINGS
  • CATERING SERVICES
  • HOLIDAY GUIDES AND CATALOGS
  • INTERNET SALES AND PROMOTIONS
  • DIRECT MAIL

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