Retail Innovators


When Best Cellars burst upon the scene in 1996 with a shop on Manhattan’s Upper East Side, it came as a thumb in the eye to what had long seemed to be the natural order of wine selling: stores stocked with a mind-numbing variety of items for every taste and occasion, often displayed in a cluttered manner and staffed mostly by oenophiles who didn’t hesitate to flaunt their mastery of vinous details.


The executive leadership at Best Cellars: Dan Dickson (left), president and CEO, and Joshua Wesson, chairman and executive wine director.

Instead, Best Cellars offered up a sleek retail environment designed by restaurant “star-chitect” David Rockwell that was supremely edited – with just 100 SKUs – and banged home the notion that terrific wines were there for the taking at $10 or less a bottle. (Today the price threshold is $15, with a small “Beyond the Best” section devoted to wines priced higher than that.) The wines were displayed in a backlit honeycomb of bottle slots – dubbed “The Wall” – that were grouped under eight broad style descriptors such as “Big,” “Luscious,” “Smooth” and “Sweet.” The instore music tended toward rock and pop rather than mellow jazz, the staff consisted of everyday sorts with bright personalities, and the store’s compact footprint ensured that even a trickle of shopper traffic would create an inviting bustle to lure pedestrians hurtling by on the sidewalk outside. The very location spoke volumes: not tony Park Avenue or Madison Avenue, but democratic Lexington Avenue, the crowded province of office supply stores, bagelries and shoe repair shops. The store, just below 87th Street, was situated steps away from one of New York’s most crowded intersections and busiest subway stations.

Be assured, though, that this was no naïve vision. Best Cellars’ creator, Joshua Wesson, had long boasted impeccable credentials as a sommelier and wine educator: named Best French Wine Sommelier in America in 1984, one of the top five sommeliers in the world two years later (after representing the U.S. in an international competition) and operating a food and beverage consulting firm whose clients included many top New York financial services firms like Citigroup and American Express.


View of part of the interior of Best Cellars, highlighted by “The Wall,” the backlit honeycomb of bottle slots grouped under eight broad style descriptors.

That resume, though, had made Wesson familiar with the bewilderment and intimidation faced even by affluent, well-traveled American wine consumers and led him to a straightforward concept: to open a store that would match consumers up with the right wine quickly, inexpensively and without requiring a mastery of obscure varietal names, vintages or appellations. The shop would appeal to everyone “from slurpers to sippers,” as Wesson likes to put it – “serving, in essence, as a kind and wine-wise friend. Best Cellars’ tone and demeanor are very similar to a living, breathing person speaking to you in a conversational way, the better to lead you to a bottle that would make you happy.” That is, if you can imagine a conversation with an impossibly clever companion, via shelf-talkers whose mix of complicated puns, arcane references and wild alliterations has developed a cult following among regular patrons. “Bruiser from Abruzzo” headlines one, referring to “a multi-tasking tipple” from Italy. “Asti la Vista,” says another. “Oh My Oloroso!” exclaims another, for Pedro Romero Oloroso Cream Sherry, “the ideal sipper for post-supper banter.” At times, the distilled wine descriptions read as though the snarky commentators on TV’s Mystery Science Theater 3000 had turned their overeducated sensibilities toward fair-priced wines rather than Hollywood bombs. Though Best Cellars reduces a complex world of wine to barely 100 SKUs, “we never dumb it down,” insists Wesson. “At the end of the day, we always honor the juice.”

THE CHAIN’S INFLUENCE

“Though we’ve not changed our core values in 10 years, we’ve continued to raise the bar in delivering a greater value proposition to our customers. We’ve greatly enhanced the
quality and breadth of our selection without charging a premium for that improvement.”
– JOSHUA WESSON
Chairman and Executive Wine Director BEST CELLARS

Looking back at that opening from the perspective of a decade later, it would be hard to overestimate the chain’s impact, even though in all this time it has grown to just a handful of stores. Though Best Cellars from the start has positioned itself as an “anti-wine store,” there may not be so much to rebel against any more now that so many other retailers have adopted aspects of the company’s concept. It’s inspired a raft of wine boutiques, a few of whom have had to be dissuaded by legal action from parroting the exact look and feel of BC stores, and encouraged even superstores to experiment with novel wine groupings in an effort to reengineer the wine-buying experience. Its influence has extended onpremise to white-tablecloth restaurants that have undertaken demystifying reclassifications of their wine lists, which echo BC’s shelf talkers with their pungent sound bites on each wine’s qualities along with guidance on what foods it pairs with best. Alumni of Best Cellars stores have begun to move on to key roles elsewhere in the business, from running the wine program at Tribeca Grill to directing the Walla Walla Wine Alliance in Washington State, taking with them the zeal to instill in Americans a comfortable familiarity with wine. The sum of these influences handily qualifies Best Cellars, and its co-founder Wesson, as first in a series of Retail Innovators who will be celebrated by Beverage Dynamics in coming issues.

In a recent interview, Wesson acknowledged his influence with a characteristic blend of assertiveness and modesty, taking credit for blazing a new retail trail but also implying that changing conditions would have impelled someone, if not him, to create a similar concept. “There are many reasons why the innovations at Best Cellars have trickled down to other retailers and restaurateurs,” he said. “It was an idea whose time had come when we launched 10 years ago.”

Yet for all this outsize influence, the chain has remained modest in size. It has grown to seven stores, mainly on the East Coast, and actually experienced store closings in Seattle and Houston. Through all the course corrections, though, it has continued to hone its operating strategy in what its execs view as an extended preparation for the concept’s eventual rollout. The company has experimented with store size, wine selections and staffing strategies, all while navigating a shifting regulatory landscape that has seen many states change their laws on Sunday openings, free sampling and out-of-state shipping reciprocity. Best Cellars also has begun to establish intriguing alliances with simpatico brands like Crate and Barrel and JetBlue, though it continues to grope toward how to best leverage these partnerships. Not least, it continues to explore new ways to express Joshua Wesson as a key component of the Best Cellars brand.

ESTABLISHING STRUCTURE

Perhaps the most significant evolution has occurred not in the stores themselves, but on the executive front, where an important changing of the guard has been under way. Wesson’s co-founder, Richard Marmet, a wine-loving attorney whose wife was an editor at Food & Wine magazine, recently departed his board seat, though he still holds an equity stake. (The biggest stakes are held by early investor Palo Alto Groupand Wesson himself.)


The clean, uncluttered look of the shop is complemented by a staff of personable folks, who can make customers feel comfortable while developing their wine expertise under Best Cellars’ training program.

Marmet’s founding role has been taken and augmented by two key hires recruited by the board to serve as a yin to Wesson’s yang in setting the company’s future direction. Best Cellars’ president and CEO, Dan Dickson, brought a resume honed at General Electric Co.’s varied operations, from plastics to consumer electronics, as well as a West Coast stint as a Mr. Fix-It for troubled California firms. He was recruited for his ability to routinize the company’s often seat-of-the- pants processes and figure out how much Best Cellars could expand, and how to go about doing that. The other key hire, filling the role of vice president of merchandising operations, was Steve Yacker, an 18-year veteran of Gap, with stints at Club Monaco and Tommy Hilfiger as well. In a nutshell, you might say that while Wesson, as chairman and executive wine director, remains the public face and guiding spirit of Best Cellars, Dickson is there to establish the behind-the-scenes infrastructure that can support BC’s growth, while Yacker focuses on the elements that are visible to consumers in their visits to the stores.

Reflecting the roll-up-the-sleeves ethos of Wesson and his lieutenants, the three operate out of a headquarters office in an old printer’s building in lower Manhattan that is a stark contrast to the design-y, supremely uncluttered look of the stores themselves. Instead, it’s a warren of desks, tilting piles of paperwork and half-opened cases of wine.

“After seven years of operation, we realized it was time to professionalize our management structure and create a platform that could scale the business,” said Wesson. “At some point, scaling becomes an exercise in applying a formula to reproduce the indicia of success. That wisdom and those skills weren’t resident among the core group that started the company. We’ve now downloaded that wisdom and turned it into the formula that is Best Cellars today.”

Scalability issues include not just how many stores can realistically retain the luster and uniqueness of the Best Cellars brand, but how far Wesson, as the brand’s visible emblem, can be stretched. As things stand, he still tastes every wine before it is green-lighted for the stores and writes most of the shelf-talkers that keep patrons lingering at The Wall. Throughout the stores’ existence, he has also proved to be the go-to guy for journalists on deadline, playing an avuncular role as Great Explicator of confusing wine issues. The not inconsequential result has been millions of consumer impressions for Wesson and for the stores, giving them a presence in the business that far outstrips their actual clout in dollar sales.

By now, the trio has succeeded in establishing a good rhythm for its little network of stores, though there are still frontiers to conquer. Its flagship East Side store in New York was recently buttressed by a (licensed) West Side flanker, and it operates a pair of stores in the Boston area and another pair in the Washington, DC, area. There is also a franchised store in Dallas. Another store operates in Barrington, MA, under the Grape Finds name. Though franchised Best Cellars stores like the one in Texas have had a bumpier ride, the company-owned units have smoothed out their inconsistencies. “Though we’ve not changed our core values in 10 years, we’ve continued to raise the bar in delivering a greater value proposition to our customers,” said Wesson. “We’ve greatly enhanced the quality and breadth of our selection without charging a premium for that improvement. We’ve become much more adept at training our team members to communicate the passion that surrounds and, ultimately, powers the brand.”

HONED MODEL

“The consumer has to believe that the wines in our store offer the best bang for the buck.There are a lot of exclusives in Best Cellars, and the credibility behind them is Joshua Wesson: His credibility is the key point of differentiation
between us and everyone else selling value priced wine.”
– DAN DICKSON
PRESIDENT AND CEO
BEST CELLARS

It all pretty much starts with The Wall, fabricated from polished wood and topped with outsize signs signaling the eight flavor groups, from “fizzy” all the way to “sweet.” At the company’s inception, the bulk of items were priced under $10; now the ceiling’s $15. The “Beyond the Best” section started at $16; now it begins at $20. Those wines, still good values, have a higher profile and tend to be purchased for special occasions. Recently, they included items like a Brock Sancerre at $20 and Steltzner Cabernet Sauvignon at $36, capped at the high end with a Champagne Krug Grand Cuvee at $130.

Crucial to building consumer loyalty is the notion that most of what shoppers find there – despite the welter of labels – is unique to the chain, whether through narrow allocation or because they’ve been produced exclusively for Best Cellars. Its recent offerings, for example, include a Vine Street Cabernet Sauvignon “made exclusively for Best Cellars by Gary Eberle,” the well-regarded Paso Robles, CA, vintner.

“Wesson has not only helped to make wine more approachable and less intimidating for the consumer but has re-developed the concept of a wine retailer by making it not only consumer friendly, but hip and trendy for the modern wine consumer. The look and feel of any Best Cellars across the country is going to catch the attention of the broad wine consumer, from the novice to the connoisseur, with wines for everyone to enjoy, including private labels such as Vine Street,” said Jason Edwards, sales and marketing director for Eberle Winery.

Many BC wines come from emerging growers, often in emerging wine-making regions. That helps the chain negotiate exclusives, while the wines’ unfamiliarity is no problem given the BC imprimatur. “If we’re presented with a wine that’s too widely available, we’ll look for something less commoditized,” Yacker declared, acknowledging that Best Cellars occasionally will make an exception for a coveted item such as Grgich Hills Chardonnay (at $29).

Generally, about 50% of Best Cellars’ wines can only be found at retail in Best Cellars. Significantly, none of them are actually branded as “Best Cellars” – that would lend too much of a sameness to the offerings and, besides, Wesson and his colleagues regard the store itself as the brand. Some limited allocation entries may also be available in local restaurants – no problem, Yacker says, since the elevated on-premise price only emphasizes the value to be had in the BC store. Though Best Cellars doesn’t guarantee to have the lowest price in town, it’s usually pretty close. Of course, because so many of its items are unique, it is able to dodge onerous comparisons against the pile-them-high-and-watch-them-fly chains.

With the relatively focused number of offerings per store, Best Cellars is at the opposite end of the spectrum from, say, a Sherry- Lehmann (about 20 blocks further south in Manhattan), whose 5,000 SKUs creates a much larger need among customers for expert assistance. True, the well-edited selection – combined with the guidance offered by the shelf talkers – greatly eases the self-serve aspect of shopping Best Cellars. Even so, properly staffing the stores is crucial.

Given wine’s ever-growing allure, finding interested workers isn’t difficult. Wine snobs need not apply. Mainly, Best Cellars looks for personable folks who can make customers feel comfortable and pick up the necessary wine expertise as they go, with a healthy dollop of Best Cellars training. “In the U.S., a majority of wine is purchased by women, and we staff accordingly,” Dickson said. “Our employees look a lot like our customers. But our customer demographic is pretty broad.”

REFINING STORE GEOGRAPHY

Also broad has been the range of store sizes that Best Cellars has tried. There has been some significant learning there. While successful retailers often are tempted to expand the size of their stores to pack in more of the things that consumers have demonstrated they like – think, for example, the Old Navy stores at Yacker’s old employer, Gap – that can be counterproductive for a store whose identity hinges on its tight editing. Just as Old Navy seems to have proved that a tightly edited selection works better in a tighter space, Best Cellars’ own tinkering has led it to a similar conclusion.


The newest Best Cellars on Manhattan’s Upper West Side is managed by Karen Rozansky.

As it is, the chain’s two most spacious stores are those in Brookline, MA, and Arlington, VA. “Our two biggest footprints are in the least urban areas,” observed Yacker. “But we’ve found that we don’t gain anything by doing that, because, per our business model, we don’t add more SKUs just to fill space. Going forward, we’ve made the decision to limit our selling space to between 600 and 900 square feet, with a roughly equal amount of space devoted to back-of-the-house operations.” The jury is still out on whether operating a wine bar, as the store in Dallas does, will be a future component of its business model.

The execs have made other refinements to their store geography. While a refrigerated space is needed for whites and roses, they’ve learned to position it so as not to detract from the defining element of the store – The Wall – or impede floor traffic. And with fully half of a store’s business occurring during the prime tasting hours from 5 p.m. to 8 p.m., nothing can be allowed to interfere with the traffic patterns surrounding that activity, Yacker said.

Another gnarly issue is that of variability among the stores. How much freedom should each store be given in tailoring its selection to local tastes and seasonal differences, before it starts jeopardizing the unity of the Best Cellars brand? As things have settled out, about two-thirds of SKUs are common to all the stores, leaving store managers with a fair amount of freedom to tinker with the rest of the mix, though every wine still must be approved by Wesson, wine director Alex Joerger and Yacker (who modestly describes his opinions as reflecting the taste of the chain’s less sophisticated consumers). To take a particularly bald example, the product mix in the Dallas store is more heavily weighted to the new world than it is in Best Cellars’ other stores. “Texans like to face west,” Dickson wryly observed.

CONTENDING WITH IMITATORS

The chain has decided to limit its selling space to 600 to 900 square feet in any future outlets.

One issue the Best Cellars brain trust does not seem unduly concerned about is that of its many imitators. It’s no surprise that, over the years, the simplicity of the Best Cellars concept has inspired frequent imitators, some of them quite blatant. Wesson professes to be unfazed by those efforts. “We’ve seen all kinds of copycatters come and go over the years. Fortunately for us, most of them end up looking like a copy of a copy of a copy of our store – the outlines are there, but the details are missing,” Wesson asserted. “With some, it’s like entering a Bizarro Best Cellars world where everything is the opposite of what it should be.”

Even so, the company has twice moved to defend its intellectual property in Federal Court when it deemed the copying to be particularly egregious: first, against a company called Grape Finds, then against another called Bacchus-Wines Made Simple. While the company’s notion of merchandising wine by taste was not protectable, Best Cellars was able to win protection for its unique “look-and-feel” expressed through distinctive design cues such as its backlit wall of wines. In the case of Bacchus, the chain agreed to change its fixturing to displays that no longer resembled those found in Best Cellars. It further agreed not to open any more Bacchus stores.

THE WESSON FACTOR

“Wesson has not only helped to make wine more approachable and less intimidating for the consumer but has redeveloped the concept of a wine retailer by making it not only consumer friendly, but hip and trendy for the modern wine consumer.”
– JASON EDWARDS
Sales and Marketing Director
EBERLE WINERY

Meanwhile, the constant threat of imitators has kept the pressure on Best Cellars to play the Joshua Wesson card for all its worth, and to continually improve its execution. “Anybody can take inexpensive wines and group them by taste,” Dickson acknowledged. “Six of our eight taste categories are trademarked, but the basic concept of merchandising wine by taste is not (legally) defensible. So, our value proposition has to be peerless, and the consumer has to believe that the wines in our store offer the best bang for the buck. There are a lot of exclusives in Best Cellars, and the credibility behind them is Joshua Wesson: His credibility is the key point of differentiation between us and everyone else selling value-priced wine.”

To enhance that cult of personality, the company’s cofounder is extremely active in building the Wesson “brand.” He’s become a regular on CBS’s “The Early Show” and National Public Radio’s “The Splendid Table.” And he’s constantly being interviewed by the media. Wesson just signed a book deal with Weldon Owens, the San Francisco publisher of Williams-Sonoma’s books on entertaining, to author a Williams-Sonoma book on food and wine, with the author’s credit to include both Wesson’s name and his relationship to Best Cellars. “His national exposure has continued to grow every year,” Dickson said.

Crucially, this exposure is “organic” – the company does not have an internal press officer or outside public relations firm; reporters find Joshua on their own. Though Wesson is a master of the sound byte, his on-air wit is underpinned by his serious credentials as a sommelier. It’s a rare combination that only a few – Jim Koch of Sam Adams beer comes to mind – have been able to master.

SUPERIOR EXECUTION

The other key protection against copycats is superior execution. “Anyone can try to reproduce a retail concept,” said Yacker. “But there are a lot of intricacies that go into making Best Cellars successful. To effectively copy us someone would have to deconstruct and then reassemble our business from the staff to the wines. Even then, you still have to find a soul. You can’t Xerox passion.”

With Best Cellars owning credibility in its markets, an obvious area of future development is CRM, a discipline in which Dickson is deep in experience. It’s not a possibility on Best Cellars’ current hardware platform, but the next upgrade should allow the company to take a logical step toward what’s called “collaborative filtering” – mining the purchasing history of repeat customers, the way Amazon.com does with books or music CDs, to make educated “suggestions” about what other wines they might like. BC execs are quick to emphasize that this would in no way be intended to supplant the one-on-one staff relationships that currently proffer advice to regular customers.

Another major undertaking has been the forging and development of promotional partnerships with like-minded brands such as the lifestyle retailer Crate and Barrel, innovative air carrier JetBlue and New York food e-tailer FreshDirect. “We’re very selective about our partners,” Wesson said. “We look for co-marketers who can extend the Best Cellars brand and for whom we can provide an equal benefit.” They should share a similar demographic with the BC brand – whether locally, regionally or nationally – and be able in a position to help drive store traffic as well as increase awareness. JetBlue, which serves Best Cellars wines aboard its flights, is a perfect example. “They’re totally complementary to us: approachable, value-oriented and focused on the customer experience,” said Yacker. Perhaps the alliance’s biggest limitation is that fliers often disembark in cities where they can’t follow up their first experience with the Best Cellars brand with a visit to an actual store. Indeed, considerations like that will be crucial in plotting the chain’s expansion strategy. “We’ve only just begun to leverage our brand’s potential,” Wesson said of the alliances. “We’ve been saying “no” a lot, because there’s got to be reciprocity in what the two brands can do for one another.”

THE EXPANSION CONUNDRUM

What looms now as the biggest challenge is the right way to expand. Right now, BC’s stores are scattered among four widely separated areas – New York, Boston, Washington, DC, and Texas – with the locations dictated in part by whether a state’s regulations are conducive to setting up shop.


Best Cellars is known for its shelf-talkers that mix puns with crazy alliterations and arcane references, but in the end offer real, worthwhile guidance to customers.

One obvious route to expansion – and the one taken by several rivals – is to franchise units. That allows a concept owner to bang out numerous stores at minimal investment, while reaping a lucrative royalty stream that can support the opening of company-owned units. Among rivals that have adopted that model, though, one can spot a lot of variability, and that’s something Best Cellars is determined to avoid. Unfortunately, Seattle and Houston, both markets where the company pursued a franchising model, succumbed to similar problems. Even with constant communications with New York headquarters, consistency had been difficult to maintain.

With experiences like that in mind, the company has decided to adopt a go-slow model on expansion so that it can emphasize company-owned units. “The board made a decision not to pursue the franchise model. It’s the faster, less expensive way to expand, but you do lose control. Our intent is to take a page out of the hotel model and retain management control,” Dickson said. Thus, “right now, our primary strategy is to build company-owned stores where we can, and license where we can’t.” Often that “can’t” stems from archaic laws such as those in New York limiting the number of stores a single owner can operate to just one. To comply with that restriction, the company’s new West Side store in Manhattan pays Best Callers a consulting fee.

The trade-off from the go-slow approach has been that BC has been beaten to lots of potential markets by others offering wine-simplification concepts. Wesson professes to be unfazed by the trade-off. “At the end of the day, you have to compete for people’s hearts and minds – and tongues – with the experience you offer.” To the extent that BC is abl

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