‘This is a tremendously exciting time in the history of wine, spirits and beer.’ That quote from Total Wine & More’s Guide to Wine might as well be the company motto. That is, if you rewrote it as, ‘This is a tremendously exciting time in the history of retailing wine, spirits and beer.’ Especially since Total Wine, the Maryland-based beverage alcohol chain, which until now has been an East Coast-focused operation, is in the midst of launching the first of a series of 25,000-square-foot mega-stores in the highly competitive and key marketplaces of California and Arizona.
It will be another step in what now seems an inevitable march to the top of the list of beverage alcohol retail powerhouses. Already considered the country’s largest independent fine wine retailer, moving more than 24 million bottles of wine per year through the doors of their 49 shops, Total Wine & More is making a bid in this expansion to join the list of the most important national beverage alcohol retailers. Costco, BJ’s, Target and other big box beverage sellers may have more stores, but when it comes to sheer SKU level, there’s no comparison.
For those who have been paying attention, this expansion isn’t a total surprise. Total Wine & More, privately owned by brothers David and Robert Trone, has grown quickly from one 12,000-square-foot store, then called Liquor World, which opened in 1991 in Wilmington, DE.
‘Our plan from the beginning was to try and create a national footprint, but it was important for us to grow slowly and contiguously,’ said David Trone. The company entered its eighth state (Georgia) last year, and expanded its unit count in Florida to 11 (new stores opened in Boynton Beach and Naples last fall). Total’s 50th and 51st stores, both 25,000-square-foot units in Glendale, AZ, and Sacramento, CA, are set to open their doors this month, with four more stores currently under construction in the Phoenix, Tucson and Los Angeles areas.
Recruitment Is Key
One of the keys to such meteoric growth ‘ the chain adds an average of about five stores annually, with 10 in 2008 under construction ‘ has been the Trones’ recruitment of experienced retailers to manage the different disciplines such a large enterprise demands.
‘My brother and I are entrepreneurs, but we needed people from bigger organizations to bring us to the next level,’ David said. So from other big box retailers came human resource vice president Steven Mills (Blockbuster), marketing and advertising vice president Jeff Bartlett (Home Depot), construction vice president Tom Buser (Kmart and Sears), area vice president Susan Reardon, and executive vice president of finance and administration Larry Solberg (CVS). Even brother Thomas Trone, who joined the company as executive vice president of store support in 2003, only came on board after 22 years at a major drug retailer (CVS).
Adding veteran hands experienced in multi-unit management has allowed Total’s beverage alcohol staff to focus on their areas of expertise ‘ sourcing, buying, selling and educating customers about their products. Because, after all, it’s the broad selection of products that has really driven Total to the top among its customers.
With more than 8,000 wines, 2,000 spirits and 1,000 beers in stock in each store, Total can claim primacy in selection for all but the fussiest shopper. And selection isn’t limited to best sellers. ‘Our strong cash position allows us to carry heavy inventories, which we believe is an advantage in the market as we can invest in products with lower returns,’ said Trone. ‘Not only first and second growth Bordeaux, and high-end Tuscan and Super Tuscan wines, but also vertical vintages of some of the best wines available.’
That’s important, as the Total customer skews toward an income of $75,000 and up, primarily white collar, with education and income a key factor in each market. That doesn’t mean Total doesn’t compete at all levels. ‘We’ll sell a lot of Bud and Miller, of course, but we’re stronger in proportion on imports and microbrews.’ The same is true with hot new wine or spirits products, said Trone. ‘We need to be on top of those products as soon as they’re available and let our customers know we’re on the cutting edge of new items.’ But he emphasizes that an investment in items with long term and successful track records are equally important to their strategy.
Selection, though, is only one weapon in Total’s three-part arsenal. ‘Our mantra is service, selection and price,’ said Steven Faith, vice president of wine operations. ‘We try to have the best prices in the marketplace across the board. We work on an ‘every day, low price’ philosophy, so instead of having the typical grocery store style of prices going up and down ‘ for example, a sale one week and the product goes up five dollars the next week ‘ we try to keep the price at a very sharp price point and only change that three times a year.’
‘The top Nielsen items we carry are priced at Costco prices,’ said Trone. ‘That’s a tremendous value for the top products, and because we sell so many other products, we are able to get a better blended margin.’
But it’s service that Total execs believe is their most powerful retail weapon. ‘That’s really got to be our differentiation,’ said Trone. ‘When we get to California and Arizona and our customers see that we have team members in white shirts and ties who are really trained in how to match the customer to the right wine at the right price with their meals, that’s got to be the key for us.’
‘When walking into a large retailer like us, customers are already expecting a large selection,’ said Faith. ‘Through past experience with big box retailers they know they’ll get a good price, but I don’t think they expect to get service. That’s where we try to come in and ‘wow’ them on what we know about wine, help them find their way through all these bottles in our stores and make a great recommendation that will give them a reason to come back.’
‘People are our strongest asset and we need to make sure we set ourselves up for success,’ said Steven Mills, Total’s vice president of human resources. ‘We’re not going to fail because of the business model or our relationship with producers or our training ‘ it will be because we didn’t have the right people in the right place at the right time.’
As Total expands, it has an advantage in staffing new stores, as some established East Coast employees have volunteered to be modern day pioneers and go west with the company.
The chain will hire between 20 to 40 employees for each new store, with a goal of 75% full-time staffers ‘ a competitive advantage that reverses the full-time/part-time balance of most other big box retailers. ‘We want people who are looking for long term careers with us,’ said Mills.
Total uses a variety of tools to find new employees ‘ in-store recruiting kits, an internal referral program that pays staffers a bonus when a referred hire stays 90 days, newspaper and online advertising, plus the newest wrinkle, job listings by location to be found on their website (www.totalwine.com).
Mills looks not only for wine, beer and spirit knowledge in a potential hire. In addition to the initial screening interview and a background check, applicants are formally interviewed and undergo a behavioral survey. Wine team candidates take two wine knowledge tests. In addition to the intensive wine course team members undergo in the multi-week training program (see sidebar) there are sections and days devoted to beer, spirits and cigars.
‘The challenge we have is managing the brand and getting people to know who we are and what we’re about, and why they would want to work for us as opposed to another specialty retailer,’ said Mills.
And at the managerial level, trainees need to show ability to run a high-volume retail facility, first putting in five 50-hour weeks in a dedicated training store, a ‘very intense operational and wine education training program,’ says Mills.
With more than 1,500 employees, keeping a solid staff on-board Total Wine & More’s 50 stores takes a plan.
‘When we devote so much time to hiring and training employees we want to make sure we retain our best,’ said Mills. To do that, Total rewards new high-performing hourly employees with performance increases at 90 days, six months and one year. Store and district managers work on a retention bonus plan that measures employee turnover, employee satisfaction and employee development.
As for promotions, Total created job segmentation that allows new employees to take a step toward management positions in customer service or merchandising, for instance. For wine team members, employees are encouraged to enter the Master of Wine certification program. ‘We want to be able to grow employees and not have to jump them from a position without supervisory experience straight to an assistant manager of a multimillion dollar big box store,’ said Mills. Total’s goal is to develop at least 60% of their management team up through the ranks.
Total also strives to keep wages as high as possible through making overtime available to hourly employees. ‘We want to work on a schedule that works for our people. If they want to work 50 hours a week, we don’t guarantee that they will be able to but we try.’ As Mills points out, this is a significantly different retail approach at a time when some big box retailers find themselves in court for forcing employees to work overtime without pay.
Total’s commitment to service, selection and price is easily tested by a visit to one of their stores. Floor staff waste no time before greeting every new customer; signs invite visitors to apply for employment, pick up copies of the massive and free Total Wine Guide (see sidebar) or the periodical price lists to help them make sense of the product selection. The aisles are wide and spotless, the organization obvious, the shelves well filled. Wine aisles are prevalent throughout the store, though various spirits and seasonal beer displays are well crafted and also prominent.
There’s an enormous amount of in-store merchandising visible. About half of the wines displayed are tagged with brief notes, mostly composed at Total’s home office, concentrating on the taste characteristics of the wines with some facts about the producer, region or vintage. Most frequent are wines tagged with ‘Winery Direct’ notes, signaling Total’s favored relationship with a supplier.
In addition to carrying wine notes generated at company headquarters, crafted by the buyers from each category for favorites or value wines, each store wine team members also compose notes about their own favorite wines each month, which are then gathered in a special section complete with pictures of each store team member.
‘It personalizes the selections,’ said Faith, ‘and customers see that it’s not just advice coming down from headquarters but recommendations based on the experience of store members they might know already.
‘Taste characteristics are a key component in every review sign we do at the shelf,’ said Faith. Also important is tying uniqueness of place to a wine’s value and price; Total’s sales staff are taught to help customers understand why a chardonnay from one California area is worth $3 or $5 more than one simply labeled ‘California.’ ‘It helps customers feel comfortable with their purchase,’ Faith said.
Understanding the differences in varietals from region to region and style to style is essential among wine team members. ‘Some people may like a lush, full-bodied chardonnay with a touch of oak, while our wine team member might like a crisper or more Burundian chardonnay. Our staff is trained to be careful when they let our customers know what kind of wines they like and not to downgrade a well-made wine just because it’s not the style they prefer,’ said Faith.
Another section for ‘New Arrivals’ is updated monthly to appeal to customers on the lookout for the next new thing. Best sellers in each store are also highlighted separately. Different secondary shelf sets concentrate on selections garnering high ratings in national publications. Another section highlights the branded picks made by Alfio Moriconi, the long-time wine importer in charge of Total’s European imports and sales, which concentrate on small family producers whose wines might otherwise not have made it to the U.S., either due to small production or distribution issues.
The same sort of detailed merchandising technique is being spread into the spirit and beer departments, Trone said Total is also in the midst of expanding its ultra-premium and superpremium spirits selections, especially in single malt Scotches, small batch bourbons and high-end tequilas. ‘It’s not just the wine consumer who’s more discriminating today,’ said Trone.
End caps tend to be set with signage based on country or appellation, focusing on an Italian region or Champagne, to double down on wines Total has acquired through favorable pricing deals. They also employ many tried-and-true merchandising methods, such as connecting with various themed holidays. For Thanksgiving, they focused on a food with wine strategy, putting pinot noir, gewÃ¼rztraminer and riesling front and center. For the year-end holidays, the stores ‘ heavily organized and plannogrammed ‘ feature various drinks like eggnog made with cordials and spirits, whose sales spike when consumers are shopping for gifts.
In their merchandising approach, Total goes where the money is. ‘We work with various national brand companies to create win-win merchandising opportunities,’ said Trone, citing various promotions, point-of-sale and display promotions with Corona and Crown Imports (Cinco de Mayo), Miller and Anheuser-Busch (tailgating and summer BBQ), and Baileys and Kahlua (year-end holidays). ‘We meet with all our major suppliers on an ongoing basis to verify that we are carrying all their new products and maintain the most up-to-date list out there.’
When Total Wine and More enters a new market, it seeks to make a local connection, particularly with area officials and by contributing to charities. Citing Target as a model, Trone said making a local store-community connection helps make good neighbors.
‘We work with the non-profits in each area ‘ the heart association, the symphony or the opera ‘ and make ourselves available for events like silent auctions,’ said Trone.
When a new store is opened, Total invites the local mayor to participate in the ribbon-cutting ceremony and offers to make a $10,000 donation to the charity of the mayor’s choice. In addition, the first 100 people to enter the store receive a gift card.
Store Design Improvements
As the look of the stores has been refined ‘ in the last few years, new stores have been improved with better lighting, a more inviting color design palette, more contemporary fixtures and an all-around upgraded ambience ‘ the marketing, too, has been matched to the demographics of each market.
For example, with bourbon selling better in the south, or sweeter wines finding favor in the North Carolina market, crafting circulars and other advertising material to highlight those categories makes sense, Trone said.
‘We look at the Nielsen numbers on a state-by-state basis to help us in our direct mail pieces and run of paper print media ads,’ said Trone. Total produces all marketing and advertising material in-house, with the majority of ad dollars spent on 16- to 20-page, eight-color local newspaper inserts for the Sunday newspapers. Direct mail, billboard and radio round out the ad spend.
The newspaper ads are designed for Total’s regular customer looking for specials or seasonal products. In most markets, the ad strategy also employs coupons for purchases in particular categories or at certain price points.
With newspaper readership dipping dramatically across the country, contemporary marketing like email blasts to customers who have signed up and are interested in keeping up-to-date on Total’s special offers ‘ such as wine classes (see sidebar), tastings, product specials and new items ‘ is taking on new import.
But changing with the times is something Total’s leadership is obviously familiar with. In fact, it seems bred into the company’s bones to change as the beverage alcohol marketplace and the consumer evolve. Vast selection, well-trained staff, email blasts, upgraded store design, everyday low prices, frequent in-store tastings and wine classes are just a few examples of how Total has become the model for the thoroughly modern retailer.
Have a Cigar!
While cigar smoking may not be as hot a trend as it was 10 years ago, for Total Wine & More, the growing prevalence of smoking restrictions as well as a softening retail industry offers an opportunity.
‘The cigar customer is destined to be buying his cigars in wine and spirits stores,’ said Total Wine & More’s co-owner David Trone. ‘The stand-alone store can’t get enough critical mass, and can’t bring enough traffic into their stores.’ Not only are smoking restrictions making it tougher for stand-alone retailers; as legal restrictions make it more important for retailers to restrict access to minors, beverage alcohol retailers are already well positioned to manage that part of the business, he said.
So as a result, all the newer Total Wine & More stores have been designed to include walk-in humidors as standard equipment. These stores stock from 200 to 250 cigars and cigar accessories, while older, smaller stores still use reach-in cigar display cases.
Total stores also offer up to 600 gift items, including glassware, decanters, openers, and other wine and spirits accessories. New stores are constructed with fully differentiated gift sections, using faux wood flooring to create a more upscale feeling and to help differentiate it from other parts of the stores.
Total Wine & More Fast Facts
‘¢ Total Wine & More owns and operates stores in 10 states as of January 2008.
‘¢ Stores range from 9,000 to 50,000 square feet.
‘¢ Company owners: Founded in 1991 by David and Robert Trone with two Liquor World shops in Delaware.
‘¢ Current store total: 49 (50th opening this month).
‘¢ Store locations: 14 stores in Virginia, 12 in North Carolina, 11 in Florida, 4 in New Jersey, 3 in South Carolina, 2 in Delaware, 2 in Maryland, 1 in Georgia.
‘¢ Latest openings: Glendale, AZ #50, Sacramento, CA #51, January, 2008; four more stores to follow in 2008 in Arizona and California.
‘¢ Total Wine & More Products: More than 8,000 different wines, about 2,000 spirits brands and more than 1,000 different beers.
‘¢ Size of Operations: Largest independent wine retailer in the U.S., selling more than 24 million bottles of wine per year.
‘¢ Imported wine: Accounts for 45% of wine sales.
‘¢ Employees: More than 1,500, including 500 wine professionals.
By the Book
If customers find it difficult to make sense of the 8,000-plus bottles of wine sold in a Total Wine & More unit, then Total Wine & More’s Guide to Wine provides them with an opportunity to do some homework.
A massive, 440-plus page tome, the guide makes a bold attempt to do what many in the beverage alcohol on- and off-premise business promise ‘ to demystify wine for the average consumer while also explaining many basic facts about distilled spirits and beer. A major portion of the book (300,000 copies are published each year and are distributed for free in stores) is dedicated to explaining in elemental terms the basics of wine, spirits and beer, with information about grapes, regions, fermentation, aging, distilling, food pairings, storage, service, glassware, vintages, diagrams of stills, explanations of beer styles ‘ everything, in short, that a novice or even an experienced buyer can use on a regular basis.
The majority of the book organizes the wines Total sells by nation and region, with brief growing information, tasting notes and ratings from various sources included. For instance, the Bordeaux region gets 50 pages, with the differences between each sub-region explored, including maps of each region.
Steven Faith, vp wine operations, said the guide is meant not only for the regular customer. It’s also the core curriculum for Total’s in-house training program, an intensive schedule of classes that all wine team members go through and that is an essential ingredient in the chain’s philosophy of service, selection and price.
The Wine Guide is backed up by its more modest cousin, the company’s Buying Guide, published three times a year, a line-by-line account of what’s actually available in every store and current prices for each.
This stripped down buyer’s guide acknowledges that shoppers buy based not only on varietals and categories but regions as well, with notes for most of the current wines. For example, this one for the Chateau Tour de l’Ange Macon Villages 2005 reads, ‘Estate bottled, this white has an inviting pear-like nose that gives way to the flavor of crisp green apples, with an underlying hint of lime. This 100% Chardonnay is ideal as an aperitif, or with delicately seasoned chicken or grilled fish. [Crisp, Apple, Lime, Pear, Medium-bodied.] $11.99.’
Wine Class Program
Total Wine & More prides itself on providing customer education, so it comes as no surprise that the current store model is not only more attractive, but also often includes classroom space to create an upscale home for each unit’s educational program.
The 15 regularly scheduled consumer classes follow a general educational curriculum, starting with the first class, called ‘Enhance Your Enjoyment of Wine,’ which includes an explanation of how to taste wine, exploring the purpose of swirling, sniffing and spitting, discussing the basics of wine talk and why wine writers and wine labels describe wine as tasting like raspberries or cherries, for instance.