SETTING STANDARDS


6812BERT5BURT NOTARIUS, THE 1999 BEVERAGE DYNAMICS RETAILER OF THE YEAR, HAS BEEN AN INDUSTRY LEADER FOR DECADES.REATAILER OF THE YEAR copy

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BY HOWARD RIELL

As analytical and exacting as Burt Notarius is — he holds an MBA in accounting and finance — one would assume his decision to go into the beverage alcohol business 30 years ago had to have been based on rigorous research, painstaking statistical comparisons and excruciatingly detailed sales and profit projections.

Not exactly.

“My father had retired a year earlier and was driving my mother crazy,” he recalled. “She said, ‘Find some small business for him to do.'” And the rest, as they say, has been history.

And historic it has been. Since purchasing a then 26-year-old store called Premier Liquor in 1969 together with other investors, Notarius, whose store is now called Prime Wines & Spirits, has set a standard for professionalism, innovation and customer service that few have equaled.

Premier was one of the first stores in New York State to discount distilled spirits or wine, advertise exact prices and carry a huge selection of imported wines. The store, located in Kenmore, NY, a suburb of Buffalo, became one of the first wine and spirits superstores in the U.S. when it expanded its original location into a 20,000-sq.-ft. store in 1972. It has also earned distinction with its innovative use of target marketing, trend forecasting and grass-roots customer service and education. The mix has worked: Today, it notches annual sales of close to $11.5 million.

His sons have followed him into the business in nearby Amherst, NY, using what they learned growing up to begin writing their own chapter of retailing history. And their writing is going quite well, too: their Premium Wine & Liquors, which debuted in October 1995, will record sales this year of more than $7 million, up from $6.4 million in 1997.

But at age 55, the man who began it all, Burt Notarius, has earned a special place in the hearts and minds of colleagues throughout the industry — as well as recognition as the 1999 Beverage Dynamics Retailer of the Year.

His father has earned that distinction, noted Mark Notarius, because “he’s created something that is still unique, and certainly was unique for its time — the superstore concept for fine wines.”

What’s In A Name?

Known as Premier Liquor for almost three decades, Burt Notarius officially changed his store’s name to Prime Wines & Spirits in the fall of 1995. At about the same time, his sons’ store, which is independently owned and operated by them, opened under the name Premium Wine & Spirits.

Meanwhile, both stores are part of an independently owned advertising agency called Premier Group, and ads for the stores appear under that heading. And to help reinforce this identity, both of the plazas in which the stores are located carry the name Premier (Burt’s is Premier Center, the boys’ Premier Place).

The 42,000-sq.-ft. Prime includes 19,000 sq. ft. of retail space, 3,000 sq. ft. of office space upstairs, and 20,000 sq. ft. of warehouse space. Notarius no longer owns the gourmet store next door, Premier Gourmet, which he sold in spring 1996. As he explained, “We had a lot of competition in gourmet foods and it became very difficult. We tried an expansion but that didn’t work out well, so we just decided we would focus on the liquor; we had enough activity going on with that.” He simply remains the 20,000-sq.-ft. store’s landlord.

IN THE BEGINNING

Having graduated from the State University of New York at Buffalo in 1965, earned his MBA in 1967, and completed his course work for a doctorate, Notarius was trying to write his dissertation when he undertook a project to soothe his mother’s jangled nerves. When an acquaintance suggested the liquor store business, he recalled, “I laughed. I said, ‘They all look like places of ill repute; it’s crazy, [my father] doesn’t drink.'” The acquaintance persisted, however, long enough for Burt to spot an opportunity.

6812BER3A The extensive product selection and attractive product presentation are just two of the many elements that keep Prime Wines & Spirits among the top beverage alcohol operations in the country.

“Back then, liquor stores were not in line with modern retailing methods,” he pointed out. “Registers were in the back, not the front. The stores were dark and dingy. They weren’t women-friendly; they weren’t informationally friendly.”

The store opened for business in Kenmore in 1969 with just 1,400 sq. ft. The business moved to a larger location — 12,500 feet on the ground floor and the same a floor above — three years later. It moved once more, to its present location, in 1982. A remodel in 1991 added 6,000 sq. ft. of retail space and 10,000 sq. ft. to storage. Today, it measures a total of about 42,000 sq. ft., 20,000 of which is in its adjacent warehouse. His sons’ store covers about 30,000 sq. ft., which includes about 15,000 sq. ft. of warehouse space and an inventory worth about $2 million.

Notarius surmised that had he not gone into the beverage alcohol business, he would “probably be worrying about the financial service industry and doing research for brokerage firms.”

6812BER2 Prime Wines & Spirits features an upscale atmosphere throughout the store.

COMPARING DESIGNS

Notarius said he views his sons’ store as “much different” than his own. “When Mark and the architect designed it, they used a much different approach, which is more current.” Premium’s ceiling drops in the middle, gets higher, then higher still at the perimeter. The graded ceiling is a benefit, said Burt, because “it defines different space. When you come in you get an idea almost of a stadium.”

The design gives customers “a whole different feel, a feeling of openness. It’s a younger feel — a little bit of a warehouse feel, but elegant at the same time,” said Burt. “It’s not concrete floors, it’s vinyl floors. It’s not an all-metal ceiling because then sounds are hard to hear. It’s not just sodium lights, but also track lights. When you come in it looks a little dim for overall light, but there’s not as much reflected, bouncing light, and the products are well lit.” The track lighting runs around the perimeter of the drop-down center structure to target and highlight shelved products. A slat wall around the store allows the use of light boxes displaying a variety of colorful signs and pictures.

Talking of his store, Mark said, “There’s no compromise. The place does not look like a run-down warehouse. It looks really nice, with a big selection, and yet you still have service that’s as good as the selection. We think we’re nowhere without the service. Selection is really a downside unless you have the service there to go ahead and show people why we have so many chardonnays. Unless you have that, it’s really not worth anything.”

The store, owned and operated independently by Mark, 26, and Jonathan, 24, sits 10 miles from their father’s. Premium features cutting-edge design and state-of-the-art fixtures and equipment. Their product selection is similar to Prime Wines, though it does reflect the differences in taste of their wine staff. Mark serves as president, Jonathan as vice president.

Burt’s store, on the other hand, lacks the high ceilings of his sons’ location, “and the layout isn’t quite as ideal,” noted Mark. “Even though the interior of the store is the way he wants it, the warehouse isn’t quite as efficient. Here we were able to start from scratch. We had the high ceilings we wanted, which allows us to create larger mass displays and go with track lighting and a dropped ceiling in the middle. It’s more open and spacious. Even though our store overall is about 10,000 sq. ft. smaller, customers think it’s bigger.”

Prime has a ceiling height of just 10 ft. “We’re cozy,” said Burt. “Our store is actually bigger, but it looks smaller because we don’t have the cubic feet.” The lower ceiling means signage must sit at a lower level, and take different proportions. Displays must also be more compact. “Once you put up a case stacking that’s 5 1/2 feet high, you only have another 4 1/2 feet to the ceiling, and if you block it completely people can’t see through. It makes it very claustrophobic and messy.”

DIFFERENCES IN STRATEGY

In addition to his store’s nine cash registers, Mark has added a kiosk for the holiday season, exclusively for people using coupons or needing gift packaging, a move his father calls “interesting. He thinks this is going to be faster. A lot of people don’t care about the coupons, but they’re held up by everybody who does.” Burt admitted he doesn’t “particularly like two lines,” but credits his boys for trying new things.

Another point of difference is their overall approach to serving the customer. “They try to go ahead and have more planning on what they’re going to sell than we do,” Burt explained. “We’re more trying to listen to what the customer wants. They try to talk about things they’ve tasted so that they’re more top of mind. They’re more likely to walk up to a customer and say, ‘I tasted a really great red wine,’ and start telling them all about it. They won’t necessarily say, ‘Hi, how are you doing? Look around, and if you have any questions just ask.’ They’ll start with the information before that, try to engage the customer in a conversation.” Burt apparently sees some merit in that, noting, “I think we probably should be doing more of that, too.”

Mark said there’s “not too much” on which he and his father disagree. Though, Mark said, “he [Burt] was surprised that when we opened, we were able to put $9 to $12 bottles of wine up front and they actually sold well. At his store he always thought it was better to put the Sutter Home, in the $4 to $5 range, up front.”

Kenmore residents “don’t make as much, but they’re older and they don’t have to send their kids through school,” said Mark. “It’s kind of an interesting thing. Here [Amherst] you’ve got the newer, bigger houses, but you’re talking about 35-year-olds with kids, and they’re just getting into wine. They drink Kendall-Jackson, and obviously a lot of them are getting into more esoteric stuff, which, of course, we specialize in.”

MERCHANDISING THAT CATERS

Mark calls his store’s strategy basically the same as his father’s, although he pointed out that the types of displays found in his operation cater more to his specific customers. “In terms of the basic, fundamental concepts, we’re very similar — large selection, service, that kind of thing. The way in which we are different is that we try and cater to our customers, who are younger by a good amount and very brand loyal.”

Playing to a different audience has, of course, meant taking a slightly different approach, particularly when it comes to the store’s large selection.

“It didn’t mean that much at Prime, because the people there are more used to a large selection. At this store, people at first didn’t know what to make of it. All the big brands were here, along with the type of products you find at a country club, or that the wine people buy. So there was a little bit of a difference in that way.”

Innovation has also come in the form of merchandising. It was Notarius, for example, who invented a wine rack that is used commonly today — black wire with the top bottles on display and the others in rows. “It very efficiently allows you to see what’s merchandised in the display.”

Notarius’s sales floor has always included what he calls “free-flowing areas” in which a wide variety of display styles can be used. His latest merchandising approach, which he called “really very successful,” involves round cardboard tubes used in the construction industry to pour pillars. The 2-ft. in diameter pillars (called “sonitubes” and available at building supply stores) are wrapped and used to highlight articles, posters, and other point-of-sale pieces, a method used commonly in the streets of Paris, France.

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Notarius has been successful with his latest merchandising strategy, which utilizes pillars (called “sonitubes”) that are used to highlight a variety of displays.

LOVER OF TECHNOLOGY

Burt called his overall approach “very innovative and very measured, and we really think outside the box.” Indeed, his store was one of the first anywhere to be computerized way back in 1977, a sign of Notarius’ love of technology.

“We use technology a lot,” he admitted, calling it “a way to differentiate yourself and yet not increase your costs. It’s a way to give better customer service. It’s a way to multiply your own people’s talents. It’s just a great way to operate. We started to scan around 1985 or 1986, and then we began information gathering.

“I can’t emphasize enough how much we try to use technology,” Burt continued, noting with a mixture of surprise and sadness that too many of his colleagues may not yet realize its benefits. “I recently went into one of the largest retailers in the U.S., who doesn’t necessarily have a way of finding a product other than hunting in the warehouse. There are no locations, no slotting.”

All In The Family

“You know, it’s a funny thing,” said Mark. “For me, going into this business wasn’t a foregone conclusion. I always said I was going to do something else first. What actually happened was this: My father was going to open up a gourmet food store about 10 miles from where the current Premier Gourmet is located, and since he had had success with a liquor store next door, we decided to also go into the liquor business.” The gourmet store no longer exists, but Premium Wine & Spirits is doing just fine.

Mark used the phrase “tough love” to describe Burt’s parenting style. “He always spent time with us even though he was busy. But he didn’t let us screw around or do anything we weren’t supposed to do. He definitely laid down the law.” That same mature approach to life translated into his business, as well.

“What people say about him is that he’s a gentleman to do business with. He’s very fair, and that’s how he was as a parent, too. A lot of (sales) people are surprised that he gives them time to try and sell him stuff. He’s willing to listen, and that’s the way he is. He won’t let a personal dislike of anyone stop him from doing business provided it’s a good decision. He’s always interested in new products.”

The brothers, neither of whom are married, did odd jobs in their father’s store starting at age six or seven. They started working there “in a serious way, on payroll,” when they turned 18. “During the summers, when we weren’t in school, we were working there.” Mark earned a Bachelor’s Degree in marketing at the University of Dayton in Ohio. Jonathan attended Mercyhurst College in Erie, PA.

Burt’s wife of 31 years, Patricia, worked in the family business for a while, doing data entry back in the late ’70s. She eventually went back to school, however, earning her Ph.D in clinical psychology.

Mark said his future is in the liquor business, a fact that makes him happy. “Obviously, things can radically change in this business.” Government regulation and the influx of new competitors, such as supermarkets, are ever-present possibilities. “But provided things keep going well, I’m enjoying it.” The most enjoyable parts of his job, he added, are traveling — he and his brother logged air miles to such exotic locales as Spain, Australia, Italy, France and Chile — and “basically selling a product that is part of people’s celebrations.”

Notarius is clearly pleased that his sons have followed in his footsteps. “They really enjoy the business, and it’s great to see them grow up with something that they enjoy and that I’ve enjoyed, and that they’re actually getting to be pretty good at.”

There is also a decidedly practical reason. “It’s hard in Buffalo to have opportunities for young people, because there’s not a lot of growth here right now; it’s a stagnant economy. One of the great issues is that parents often don’t see their children stay in Buffalo because there’s no opportunity for them to grow in their field. It’s just great that they were able to find something here.”

In Prime’s warehouse, on the other hand, every product has a location. “In the computer everyone can look it up and then go to a location that puts them within five feet of it. If it’s located at a different level of shelving, it tells you what level it’s at. If the customer orders three different cases, we can go in, pull them up, find them and get it to them in less than four or five minutes.

“That’s customer service. If I have only one or two people who remember where everything is, or if I have to do it by hunt and peck, how do we get the customer service level up high?”

6812SON1

Both Prime Wines & Spirits and Premium Wine & Spirits (shown here) pride themselves on providing customers with as much helpful product information as possible.

REACHING OUT

“Because of the nature of New York State,” said Notarius, “where you can only have one store, we’ve always tried to focus on doing things to bring more people to one location.” Perhaps the primary way he has done that has been through the use of target marketing. He began building his direct mail list back at the very beginning in 1969. Back then it contained 1,500 names. Today, it has grown to 67,000.

The Premier Card is free, and entitles customers to product discounts. Indeed, about 55% of sales come from users of the card, which has proven an invaluable sales tool. “When a supplier comes to us and says, ‘I’ve got a new tequila,’ I can query our database and find our tequila buyers, buyers in different price ranges, and check to see if I have an e-mail address for them. If I do, I then can e-mail them concerning the new product.”

The approach “puts micro-marketing at our fingertips, and we’re just starting to really get better at it as we’re using more e-mail. The problem with micro-marketing is you have to do a separate printing and mailing. That becomes expensive. But the wonderful thing with e-mail is that it’ so reasonable and a great way to reach people.” About 2,000 customers have thus far signed up to receive e-mails from the store. Prime’s print run on its catalogs is about 45,000, although certain issues can go to the full 67,000 customer list.

Who Needs Hobbies?

When he is away from the store, Burt “pretty much likes talking shop,” said his son. “The business is something he loves. If you ask him what his hobby is, he’ll probably say, ‘The store.'”

Having business double as a hobby “may not be good,” Notarius conceded, “but I love this business. It has everything in it. It has the weather in it, it has people, it has farmers, it has places around the world. It involves a worldwide fraternity. I can go into any city in the United States and go into a store and talk to the person.”

He recently visited the store of an old friend in Chicago and beamed, “I just love doing that. I love going to wineries in California. For our 30th anniversary my wife and I went to visit about 20 wineries in California. So I really do love the business.”

Notarius does have outside interests, spending a good deal of time on community matters. For example:

  • He is a current board member of both the Studio Arena Theatre and the New York Wine and Grape Foundation.
  • He is a past president of the Wine and Spirits Guild of America.
  • He is also past president of the University at Buffalo School of Management Alumni Association, and was named the management school’s Outstanding Alumnus for 1989.
  • He has also served on the boards of the Buffalo Philharmonic Orchestra, D’Youville College and Kenmore Mercy Hospital.

“I do have a lot of outside interests,” he added, “but I don’t have ‘hobbies’ such as golfing like most people.”

“I’m not looking to expand the business with more stores, but we’ll look to grow our volume at this location,” said Burt. One way he will accomplish that is on the internet. While he does not ship product out of state — he sees the legalities of doing so as “questionable” — he does plan to step up shipments throughout New York. He has no desire to open another store in a neighboring state.

He will also rely more heavily on segmented marketing, making direct contact with customers and offering the regulars more than ever before. “It’s the 80/20 rule. A very small portion of our customers, maybe 20%, account for 76% of our volume.” He promised he will “absolutely try to do more with them, try to keep more of their dollars with us by doing more marketing to them instead of chasing around for business that really may not be there.”

Retailers sometimes overlook their steadiest customers, he suggested, and may not reward them for all their business. Prime recently delineated its best customers and mailed them coupons for a free bottle of wine as a way of saying thank you. The response has been “really great,” although there have also been “some unintended consequences. Some of those people’s friends or relatives who didn’t get the coupon wondered why. When you explain that the other people spent more you get into a ticklish issue.”

Mark said he feels the discount card builds customer loyalty. “The first time you see what you actually save with the card, which is shown at the bottom of the receipt, you realize it has value.” Discounts can range as high as 20%, and are shown in dollar amounts.

“That’s another thing we’ve changed over the last few years,” he added. “We used to have ‘15% off,’ but we said, ‘You know what, we should do dollars because then you can see it.’ It’s hard to calculate what 15% is. So now, if it’s a $20 bottle, it will be marked $3 that you saved.”

Targeting current, loyal customers is “just a smarter strategy,” said Notarius. “I just think it’s easier to do that. Too often we ignore the person next door because you think you’re doing all the business with him but he forgets about you every now and then and goes elsewhere.”

EDUCATING CONSUMERS

Educating customers about beverage alcohol is almost a sacred duty for the Notariuses, and begins with the sales staff. Prime’s consists of about a dozen people, including cashiers, with a “core group” who “are knowledgeable about every type of product,” said Burt. “At any one time, we might have three of those people on the floor.” The others have a “general familiarity, but are not experts.”

“We have a tremendous amount of information for the consumer,” Burt continued. “Sometimes, consumers of wines and spirits really don’t know where to start. As they start with you they gain more confidence in being able to go further, like almost any relationship. If you have unbiased information available –information that comes from a number of different sources other than your store — it helps make the customer feel at ease because they have enough information to make a decision.”

Premium is operated by a staff of 30, with “pretty low turnover” among the key positions. Jeff Vignaux serves as its general manager, and Dave Cleveland as wine manager.

Lax Customs

Sales to Canadian customers “used to” be a source of revenue, said Notarius, “but right now it’s just the reverse. Our area has a tremendous problem; it’s called duty-free.” What is happening, he maintained, is this: Americans are crossing the border, buying large amounts of alcohol in duty-free shops, then returning home without being stopped by customs agents at the border.

“The customs agents are doing very lax, if any, enforcement,” he charged. “A person from customs may see the case (of alcohol) and say ‘You’re only allowed to bring back 40 oz.,’ but they wave the person through because they don’t want to do that paperwork and slow down the crowds. It costs a huge amount of taxes, and it’s a very big issue.”

Notarius said he doesn’t believe his Canadian business will ever return in any significant volume, in part due to currency differences, “but that’s okay. I just would like to make sure we’re competing on an even footing and not having duty-free illegally taking advantage of us. There’s a whole bunch of us concerned in the liquor industry, and we’re trying to deal with the issue in a collective way and get more fairness into it.”

In October, the Notariuses introduced an informational booklet called “Wine Made Easy,” which is distributed free to customers. The idea for it came from Mark, who had begun planning it in June. As Burt explained, “The concept is that wine has become so intimidating that the average person just doesn’t have time to get into it.”

“Wine Made Easy ” is a full-color, 20-page education in wine. “It’s basically a breakdown of all the grape varieties,” said Mark, “something we figure answers all the questions customers have when they are first getting into wine. It describes everything from storage to glassware on one page, and then a page for each of the eight major varietals, etc.”

Improving The Industry’s Image

Interestingly, Notarius said he doesn’t believe alcohol is being vilified across America as much today as it has in the past, due in some part to the growing body of evidence that points to its health benefits.

“Some of the health issues concerning wine and other alcohol consumption should give some balance to the situation for the average person,” he suggested. “It’s almost like, ‘It’s not all negative. There is some good under some circumstances, so it’s a personal decision.'”

Nor does he agree with those who believe the liquor business, like tobacco, is soon to be hit with an avalanche of liability lawsuits. “I really think liquor is different. Liquor used in moderation can be part of a lifestyle that is healthy.”

“Of course, there’s a lot of new information on wine and health,” Mark added. “Wine’s really as healthy a beverage as you can consume right now. And that’s one of the things we try and let people know. If you consume it moderately, it’s a healthy product. All the research points to the fact that moderate drinkers live longer than non-drinkers.”

One of the things the industry could do to “really be taken more seriously,” Burt claimed, is to depend less on marketing programs aimed at younger consumers — especially in bars, nightclubs and restaurants — that are designed to “get people to drink amounts of liquor that are excessive. When you have these $1 Shot Nights and women dressed in scanty clothes walking around trying to get people who are 21 to 25 to drink in bunches, that’s not good.”

“My wife is a doctor of psychology,” he continued. “She was doing an internship at one of the local universities, and it really woke me up when she told me how high the percentage is of people who drink and go ahead and get drunk.”

Education is clearly one answer, he noted, but the question remains: from where will this education come, and what will it consist of? “Who’s supposed to educate people about alcohol?” He believes education about the consumption of alcohol should be taught “in a fair way at some point in the education system. They teach sex education, and they should teach about dealing with other life issues that can be threatening or not. It may be part of what you want in your lifestyle or it may be part of what you don’t want. But deal with it in a more real way, so it can be taken seriously.”

Mark said he was “the one who kind of pushed for going through all the major grape varieties, because we have so many customers at this point in time who are just not sure what to do. They come in with Consumer Reports in their hands. When I saw them with Consumer Reports, buying whatever it says, I realized an introductory guide would be worth something.”

“Wine Made Easy” covers the basics of wine — from types to flavors, origins, food, cheese and pate matches, serving tips, information on accessories and how to find discounts. It also guides customers around the stores for more efficient s

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