It’s Retailtainment!

It doesn’€™t sport an in-store ferris wheel, like the Toys ‘€˜R’€™ Us in New York’€™s Times Square. Nor does it have a climbing wall and cycling track like the headquarters showcase of outdoor equipment retailer REI in Seattle. But Michael Binstein has every intention of teaching locals and tourists alike to think of the new outpost of Binny’€™s Beverage Depot in Chicago’€™s South Loop neighborhood as the ‘€œretail as entertainment’€ destination for wine, spirits and beer buying.

It’€™s all in keeping with his credo that, while service and competitive pricing are the cost of entry into the category, you don’€™t survive against low-price behemoths like Costco if you can’€™t find ways to turn what otherwise might be a dreary, traffic-battling errand into an enriching experience. ‘€œIf we ever marginalize ourselves to where we’€™re just about helping people run errands, then we’€™re just a glorified convenience store,’€ he likes to say.

A Brief History

The new store housed in a former printing factory carries significance beyond its own footprint in Chicago’€™s booming Roosevelt Corridor because the innovations that work here are sure to ripple out to other stores in the fast-expanding Binny’€™s empire. The chain was launched by Binstein’€™s father, Harold, in 1949 with a store called Gold Standard and taken over after his death in 1995 by the younger Binstein, now 51, who abandoned a successful career in journalism in Washington in order to return to the family business that he’€™d abandoned after a part-time flirtation at age 16. While he forged a reputation working with investigative reporter Jack Anderson in Washington, his father assembled an expanding empire of stores under the Gold Standard, Chalet Wine Shop and ‘€” starting in 1993 ‘€” Binny’€™s names. (Binny’€™s was the nickname that Anderson had given his younger associate.) Along the way, the older Binstein fostered his share of innovations; a store that he opened in the late 1950s reputedly was the first to allow customers to browse the aisles, rather than placing orders with a clerk.

Facing the prospect of seeing his father’€™s life’€™s work sold off after his death, the younger Binstein made the decision to take over the operation. The son ‘€œdidn’€™t miss a beat’€ from his father, said spirits specialist Brett Pontoni, who’€™d joined the chain a couple of years earlier. Certainly, there has been nothing half-hearted about Michael Binstein’€™s return, and lately he has been on a tear, orchestrating half a dozen openings in a span of 18 months or so.

Last year brought not just the South Loop store, but also a unit in Plainfield, one of the fastest-growing suburbs in the country, and Lake Zurich. Binny’€™s also renovated and expanded a store in Willowbrook that had been purchased from another retailer two years ago. In a few months, it will open a store on the main drag of the northwest suburb of Algonquin. It’€™s planning two more openings before the year is out. That would bring the total store count to 24, far outnumbering the three locations of its powerful regional rival, Sam’€™s. ‘€œUnprecedented growth and expansion’€ is how Binstein described the past year.

Stores Within a Store

But it is South Loop that, to Binstein, represents how far you can take alcoholic beverage retailing in the direction of what some have called ‘€œretailtainment.’€ The store represents a $17 million investment ‘€” $6.7 million to purchase the property, $5.5 million to renovate it and $5 million to stock it with inventory. The multi-level store located at 1132 South Jefferson St. is 57,000 square feet, more than double the average size of Binny’€™s 20 other stores and nearly six times the size of the 11,000-square-foot downtown Chicago store on West Grand Avenue that is still the chain’€™s largest-grossing unit. All told, Binstein estimates South Loop contains more than 20,000 sku’€™s. More noteworthy than its sheer scale, however, is its guiding concept of harnessing multiple boutique areas, if you will, including a 120-person wine bar, gourmet market, spirits emporium, walk-in humidor and walk-in wine cellar, all arrayed at various points along the perimeter of the second-story main floor. Both the wine bar and spirits room are firsts for the chain. Coming soon to a lower level of the building are temperature-controlled wine lockers for customers to rent. Add it all up and you have what Binstein has called the single biggest investment in a wine and spirits store in Chicago since Prohibition. ‘€œEach category of the store is meant to be almost a store within the store,’€ Binstein said. ‘€œIf we were to spin off the beer store or the wine bar they could stand on their own two feet. That’€™s unique.’€

The superstore is in the midst of an area, the Roosevelt Corridor, that’€™s one of the fastest-growing urban districts in the country. Nearby lurks the city’€™s busiest Target store and a recently opened Whole Foods Market. One of the biggest Dominick’€™s supermarkets in that chain draws throngs for a selection that includes an expanded wine selection. A nearby Home Depot store caters to the renovation-frenzied neighborhood. Just across the street from the new Binny’€™s is Manny’€™s Deli, a Chicago tourist draw of the type that the South Loop store aspires to be. Cranes criss-crossing the skyline attest to a high-rise construction boom that will increase the residential base within walking distance, in the South Loop and West Loop areas. The store has been tuned to serve a diverse clientele that ranges from commuting professionals popping in off the nearby Dan Ryan Expressway to college students from the University of Illinois-Chicago campus just to the west. ‘€œWe have some diversity at every store,’€ noted wine co-manager Juan Torres, who has worked in several Binny’€™s stores in his seven years with the chain. ‘€œBut not like here.’€

A Destination Store

Though the residential base is increasing rapidly, Binstein is staking his massive investment on turning South Loop into a destination store that draws from far beyond the immediate area. ‘€œYou can walk from the Ryan to the store,’€ he said of the major traffic artery in Chicago. ‘€œIt builds the case for building a destination store. People will come by planes, trains, automobiles. A three-, four- or five-mile geographic range is what we’€™re reaching.’€

Though he’€™s otherwise reluctant to name retailers who have influenced the store’€™s design and positioning, Binstein doesn’€™t hesitate to cite the example of Toys ‘€˜R’€™ Us, perhaps because he likes to view his customers as frolicking among his wares like kids among the toy purveyor’€™s vast collections. ‘€œWe built the South Loop store to be a Toys ‘€˜R’€™ Us for adults, with a sense of fun, entertainment, wonder and wow. The highest compliment a customer can pay us is to walk into the store and say, ‘€˜Wow!’€™’€ Binstein said. ‘€œWe’€™ve been getting a lot of ‘€˜Wows.’€™ That’€™s a business concept that maybe isn’€™t taught at the Harvard Business School. Nobody’€™s going to walk into here and say it’€™s just another wine store or liquor store. We do own the patent on it.’€ No surprise, then, that the mantra used in the store’€™s radio, TV and print ads is ‘€œseeing is believing.’€

Costco, too, has had an influence, in a kind of negative way. The club store juggernaut assures that Binny’€™s will stay ‘€œvery disciplined’€ on price and cost ‘€” ‘€œbut we totally outflank the price clubs when it comes to selection and service,’€ he said. ‘€œCostco is not in the fine-wine business, it’€™s in the fine-commodity business. If you don’€™t turn in 18 minutes, you’€™re out. That’€™s not a way to be in the craft beer or Bordeaux or single-malt business.’€

Indeed, it’€™s clear that in Binstein’€™s universe, Binny’€™s in most ways is positioned opposite to Costco, where the pleasure principle in shopping often can seem purely incidental to the quest for deals. Binstein frequently likes to say his plan is for shoppers at his stores to ‘€œcome not on an errand, but to enjoy an experience.’€

That said, the added-value elements of the Binny’€™s shopping experience still won’€™t support out-of-line pricing. Too many wine and spirits retailers, he warns, have an unrealistic view of how much of a premium their service, reputation or selection will command. ‘€œYou don’€™t need to worry about the price clubs any more the way you don’€™t need to worry about heart disease if you practice preventive medicine,’€ Binstein said. ‘€œBe on top of your game. Stay sharp on price. Do not let the price clubs undersell you. Look for a point of differentiation. There’€™s an entitlement complex on the part of some retailers, but the way to go broke is by being too greedy.’€

Certainly you can’€™t go far in any direction in the store without explicit reminders that Binny’€™s is in the business of offering deals as well as depth of selection. Prominent along one wall are case stacks of 1.75-liter bottles priced to move: Absolut for $31.99 ($29.99 for Binny’€™s members), Dewar’€™s White Label, $29.99 (members $27.99), Beam, Bacardi, Cuervo. It’€™s easy to be dazzled by the vast selection of imports and craft beers in the beer department, but the center of the section is dominated by stacks of mainstays like Miller Lite, seen in 18-pack bottles priced at $13.99.

Wine Bar Buzz

The most striking innovations at the South Loop store are two features that are unique to the chain: a wine bar and a spirits room. ‘€œWine bar’€ means more than a counter and a set of glasses. Way more.

Far from adopting the austere, even sterile feel of tasting counters in some other wine stores, this one has more of the vibe of a nightclub, right down to the piano parked at the edge of the space. Expansive windows offer a second-story view out toward the industrial streetscape mingled with high-rise construction. The day of Beverage Dynamics’€™ visit, the bar sported 16 beer taps ranging from Brooklyn Lager and Goose Island 312 (both $5) to Great Lakes Christmas Ale and Two Brothers Cane and Ebel ($6) to Pierre Celis Grotten Brown and Rodenbach Grand Cru ($7). The 15-bottle list of ‘€œrare, seasonal and limited-edition’€ selections ranged from Lagunitas Brown Shugga’€™ ($3) from California to Montegioco Demon Hunter, a Belgian-style strong ale from Italy priced at $22 for a 750-ml bottle. Dupont Reserve cider from France’€™s Etienne Dupont commands $20.

Some 75 to 100 wines are available by the glass, with the selection heavily oriented to European wines, including some Dom Perignon and Veuve Clicquot. A couple of dozen European reds ranged from the 2006 Janasse Cotes-du-Rhone ($5) to the 2002 Alion Ribera del Duero ($18). The selection of California wines was highlighted by a $22 Caymus Cabernet Sauvignon. Three Ben Glaetzer Shiraz wines were featured, available in three 2-oz. portions for $18 as a sampler.

Wine manager Torres said the staff is in the process of creating a reserve list of allocated and other coveted wines. Nooks at either end of the back bar displayed a 15-liter bottle of Veuve Cliquot at the left and a bottle of Anderson’€™s Conn Valley Vineyards Cabernet Sauvignon at the right (priced at $2,350). Close to 100 spirits are available ‘€“ but no cocktails are served. Because tasting is the purpose, spirits can only be consumed neat, or with water or ice. The staff tinkers with the menu once or twice a week, Torres said.

Offerings at the wine bar are cross-merchandised with the store. ‘€œFollow me’€ is expected to be a frequent dictate from staffers ready to lead prospective buyers to the wine bar to taste a recommended item. ‘€œEverything at the wine bar is meant to be hand-sold,’€ Torres said. Menu listings carry per-glass and full bottle prices for everything.

Even early this year, it already seemed clear that the bar is taking its place in the social whirl of the city as buzz builds about the outstanding offerings and spectacular night-time vistas through the windows. The other evening, a local bank had 20 employees at the bar, and there have been requests for private events there ranging from 50 up to 150 guests, Binstein said. So now the Binny’€™s staff will have to find a way to more securely segregate the bar from the general traffic of the store. It’€™s also upgrading the menu from a stapled-paper list to leather-boarded menu more characteristic of a sophisticated cocktail lounge.

It’€™s also clear that the bar’€™s future will entail staying open beyond the hours of the store itself. Currently, the bar closes at 8:30 p.m. on Mondays through Saturdays, and 5:30 p.m. on Sundays. ‘€œThe bar eventually will have to stay open after-hours,’€ Torres conceded. Fortunately, the liquor license obtained for its limited hours is a standard one that can accommodate opening until 2 a.m.

Spirits Traffic-Stopper

The other traffic stopper is the spirits alcove run by the chain’€™s longtime spirits specialist, Brett Pontoni, who also runs an increasingly popular whiskey hotline (sidebar). Guiding a visitor, Pontoni, whose 14 years at the chain go back to the first Binny’€™s store, shows a proprietary zeal for the space about the width of a Chicago el car ‘€” never mind that the space initially was to serve as his office, as Binstein chortles. Pontoni shrugs off the slight in his zeal to describe the rare breeds he’€™s managed to snag for his clientele.

The shop offers abundant single-cask items, and ‘€œwe can buy deeper on some things in rarity or demand.’€ Binny’€™s has done private casks of whiskies such as the Highland Park 1971, at $349.99 per bottle. It has brought in as a direct import such rarities as Laberdolive artisanal Armagnac. Pontoni points to a bottle of Balvenie 50-year-old, of which only 83 were produced. Only a handful made it to the States and he managed to snag two, one of them already sold. Price is $6,999.99. Ditto with the Highland Park 1958, at $1999.99, of which he’€™s down to the last two bottles. Of the Louis XIII de Remy Martin in platinum-plated Baccarat Crystal, priced at $8,000, ‘€œmaybe 20 came to the U.S., and I got three,’€ Pontoni said. Two went to Chicago White Sox players. A series of seven Erte-designed Courvoisier decanters is now down to four.

Already, Pontoni said, it’€™s become clear that the shop has become a destination that is drawing its customers from a wide geographic expanse. The selection is heavily oriented toward Scotch whisky and Bourbon, though categories across the board are represented. The assortment, Pontoni said, ‘€œis somewhat alive, depending on how quickly we sell stuff.’€ He estimates that the room contains $100,000 in inventory.

The wine cellar situated along another wall of the store is not so much a departure from the one in the West Grand store three miles north as simply a massive expansion of the concept. It’€™s three times the size, stocking what wine manager Torres estimates to be 4,500 bottles of wine. Even without all the fixturing having arrived yet, it’€™s an impressive experience. A prominently displayed 6-liter bottle of 1995 Dom Perignon, at $10,000, perhaps is the only such bottle available in the Midwest, Torres guessed. A nearby 3-liter bottle is marked sold; and another four bottles were sold the day they came in. Older Bordeaux vintages abound in the space. The additional fixtures should accommodate another 400 to 500 sku’€™s.

For beer geeks, the store’€™s 24-door cold section is astounding, even in a store full of superlatives. Binstein figures it’€™s the biggest beer section in the Midwest, abounding with 1,800 craft beers and imports. The refrigerated coolers are fronted by warm stacks of mainstays like Corona Light and Miller Lite and cases from regional brewers such as Texas’€™ Shiner, Wisconsin’€™s Point and Chicago’€™s own Goose Island. ‘€œThe market will evolve as the area evolves,’€ Binstein said, surveying the vast array of brews. ‘€œBut beer’€™s been very strong here, though wine still leads the way.’€

Other specialized sections include a gourmet section with a wide selection of cheeses and meats ‘€” capped by the coveted Jamon Pata Negra Bellota ham, at $99.99 per pound ‘€“ along with a custom and corporate gifts area. The downstairs area, still a work in progress, houses warehouse space and, soon, the rental wine lockers.

Spotting Talent

Wine manager Juan Torres is typical of the company’€™s penchant for harnessing talent wherever it spots it and promoting aggressively. Chicago native Torres came from a rival retailer that Binny’€™s purchased, and spent the first four of his seven years with the chain at the flagship West Grand Avenue store, the smallest but busiest in the chain. After a year in suburban Orland Park, it was on to the Willowbrook store, which was purchased from rival retailer Carl DiCarlo, who was retiring. That was more of a baptism by fire. The store, serving residents of affluent areas like Oak Brook, undertook what Torres, with some understatement, called a ‘€œfacelift’€ that succeeded in doubling the store’€™s size even while it continued to serve its clientele. Once an addition was completed that doubled the store’€™s size, inventory was moved to the new side and a renovation of the old store commenced. A wine cellar and other accoutrements were added. ‘€œIt’€™s a gorgeous store,’€ Torres said. And since the renovation, ‘€œit’€™s been rocking.’€

Torres noted that his assignment to the South Loop store puts him in hailing distance of the Pilsen neighborhood where he grew up, then a tough Latino enclave, now a gentrifying magnet for urban elites. In some ways, that epitomizes the assumptions behind selecting the area for the mammoth investment that is South Loop.

At the time Beverage Dynamics visited in late January, the store had been open a scant two months ‘€” too early to draw any firm conclusions about sustainable traffic flows. ‘€œNow it’€™s all about getting as many first dates as possible,’€ said Binstein. ‘€œWe have to meet a lot of new people. Get acquainted. Introduce ourselves. Unveil this enormous store. That’€™s the marketing challenge.’€

Reassuringly, he said, many of those pioneers have been returning for a second date. ‘€œThe second date is not about marketing. It’€™s put-up-or-shut-up time. If you get a second date, it means you delivered on what you promised. Customers vote with their feet and our traffic has been very strong and climbing weekly, even hourly. It’€™s been very heartening to see.’€

It’€™s interesting to contrast South Loop to West Grand, just three miles and a five-minute drive north. The pair are like ‘€œnight and day,’€ said Torres, who noted that he’€™s already had visits from wine customers who had previously followed him from the West Grand to the Orland Park to the Willowbrook stores. ‘€œEverything here is on a larger scale ‘€” including the larger-format section,’€ Torres noted.

Comparing the Old and the New

Though it has a pleasing clutter to it, the older store makes limited concessions to the sensual aspects of the shopping experience: the aisles are navigable but by no means expansive, the lighting is fluorescent and bright, it’€™s hard to detect much about ‘€œfinishes’€ in a store dominated by signage and massive sku assortment. South Loop offers a more spacious feel and lush fixturing in the standalone shops, though one would never describe the feel there as genteel or precious. Strikingly, there is little in the way of specific style elements or motifs that are carried over from one store to the other in the manner that makes a new Barnes & Noble or Starbucks, for instance, instantly recognizable as a sibling to the others. That’€™s fine with Binstein, who defines the Binny’€™s ‘€œexperience’€ more by intangibles like smart selection and service than by the visual or tactile elements of the bricks and mortar.

‘€œYou would not think they’€™re owned by the same person,’€ he said of West Grand and South Loop. ‘€œWe’€™re not in the cookie-cutter business. Every new store has to be an improvement over the one that preceded it.’€ Thus, in layouts, design elements and merchandising, ‘€œwe’€™re not rigid, not formulaic, except about a few core values (mostly about service). We’€™ll bring this concept to new and expanding markets. We’€™re really in the business of selling our concept.’€ It’€™s mentioned that many other retailers see no conflict between evolving their concepts and maintaining a basic visual template for their stores, but Binstein is not buying it. Asked whether he aspires to maintain at least a basic look and feel for the stores, he replies: ‘€œNot necessarily. If we find a better color or design, we do it. We don’€™t say, wait, this doesn’€™t comport with what we did.’€

Frequent Events

To get new customers to see ‘€” and therefore to believe, per the store’€™s credo ‘€” the company has been stoking interest with frequent events, with the Binny’€™s Web site suggesting that South Loop takes such activities an order of magnitude further than other stores in the chain. Though the store had opened barely a month earlier, a late-December Champagne event drew about 250 visitors. ‘€œWe could probably do an event for 300 and feel very comfortable,’€ Torres said of the wide aisles and open feel of the new store. February was slated to be Italian Month, starting off with a tasting of more than 100 wines on Feb. 1 and followed by other events highlighting specific vintners and food pairings.

Also on the slate for the month were events featuring Peller icewines, meads and ciders, and ‘€œclassic beer styles of Germany’€ and ‘€œthe new Italian beers.’€ As always, the retailer isn’€™t forgetting the diversity of its customer base in planning such events. Late last year, for instance, an event featuring former Chicago Bears coach Mike Ditka pouring the wine he produces with Mendocino Wine was followed the next night by a Bordeaux tasting. Mention that and it takes Binstein back to his preferred subject of being a broad-based retailer in an era of niche suppliers. The Ditka-Bordeaux sequence ‘€œpersonifies who we are, and the big, broad reach we have,’€ he declared.

Binstein’€™s political background is not far distant when you listen to the stream of soundbites he emits during an election season that was just heating up. Keying one to the top-of-mind primary battles that were raging early this year, Binstein proclaimed: ‘€œRunning a retail store is a lot like running for president: you need to build a big and diverse coalition of voters, or in our case customers. White collar, blue collar, old, young, rich, poor. We appeal to everyone from Carlo Rossi [shoppers] to Chateau Lafite, and I spend as much time on the low end as on the high end.’€

Building up a head of steam, Binstein thunders: ‘€œThere’€™s a vast realm in the middle. No customer is left behind at Binny’€™s.’€

Spirits Hotline

Many who encounter Brett Pontoni for the first time at Binny’€™s are likely to see him striding vigorously along the broad aisles of the South Loop store, speaking without interruption into a phone headset as he attends to his more routine duties as spirits

specialist for the chain and mastermind for South Loop’€™s lushly stocked spirits room. Likely as not, he’€™s on the line with a spirits geek, from anywhere around the world, who’€™s phoned the Binny’€™s Whiskey Hotline at 888-817-5898 to gab about some obscure passion. In his position at the fulcrum of a spirits network, he’€™s able to connect customers to customers, or steer them to a local tasting group.

The hotline started when a local spirits authority with a worldwide following, Joe Conguisti, came to the chain from a rival about five years ago. Joe C, as he was known, quickly became the public face of Binny’€™s spirits department. Sadly, he was stricken by illness and ‘€œwe lost him after one and a half years,’€ Pontoni said. So he picked up the role himself, found it was one he was comfortable playing and, soon enough, Michael Binstein said, ‘€œwhat the hell, let’€™s get an 800 number,’€ as Pontoni recalled. ‘€œNow, it’€™s one of the great informational resources. It works ‘€” sometimes too well.’€ He said there is no specific mandate to use the customer contact to move product, but rather to ‘€œadvance the passion for the product.’€

That it seems to do, but it does move

product, too. The boss, Binstein, calls the hotline ‘€œa phenomenon.’€ He boasts that Pontoni runs the hotline out of an office the size of a broom closet ‘€” yet produces the same volume as a 30,000-square-foot store as he talks about the segment, tracks down hard-to-find items and places the order. ‘€œI love it because you’€™re never going to find this anywhere else,’€ Binstein said. Any edge helps, as the whiskey business ‘€œis not cheap to be in because we’€™re buying a lot of product that does not move like Smirnoff and Dewar’€™s,’€ he said.

During a constantly interrupted conversation with a visitor to Binny’€™s new South Loop store, Pontoni readily acknowledged that, operating as a one-man show with other, not inconsequential, duties to attend to, he may soon enough find himself a victim of the hotline’€™s success. ‘€œI’€™ll never be able to measure the ROI’€ on the

activity, he acknowledged. ‘€œAnd I find that I’€™m absolutely getting buried. But it’€™s a good

problem to have.’€

Meanwhile, Binstein is thinking of replicating the hotline for other segments, via a Cellar Master Hotline for shoppers seeking expert tips on wine and a ‘€œCraft Beer Hotline,’€ which he said is already in the works. ‘€œIf we can do it in whiskey, there’€™s no reason we can’€™t do it in other categories,’€ Pontoni agreed.

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