Lone Star Success

It’€™s hard to underestimate the shock value of the first Central Market store when it opened in Austin, TX, in 1994. Generally regarded as HEB’€™s response to the supermarket-redefining momentum developing at Austin-based Whole Foods Market, the gourmet-oriented extension of Texas’€™ homegrown HE Butt grocery chain offered drop-dead assortments of cheeses, artisan breads and prepared foods. The store also turned the geography of grocery stores upside-down, ditching the conventional arrangement of parallel aisles of dry goods ringed by perishables in favor of discrete ‘€œneighborhoods’€ composed of 14 separate markets under one roof. It was meant to offer a contemporary update on the open-air market that has defined food shopping for millennia. Indeed, with in-store cafes or courtyards boasting ambitious music schedules, the stores ‘€” just like the markets on which they’€™re based ‘€” have become local institutions that transcend their core function as a food store.

At Central Market, self-sampling was taken to extremes, with shoppers led to understand that they were free to pop open a bottled smoothie or flatbread pack to sample nearly at will. On the beverage side, the retailer committed the heresy of including not even a token offering of Coke or Diet Coke among its endless array of boutique soda brands. It was no different on the beer side: no Bud or Miller Lite was to be found amid what for those times was an exhaustive ‘€” and for some consumers possibly exhausting ‘€” array of obscure imports, craft beers and other specialty brews. (Consumers who needed a suitcase of Bud Light were referred to a nearby store.)

It may have been a radical tack, but it proved an instant hit with Austin’€™s legions of foodies, both the homegrown variety and people from other cities who’€™d been drawn to employment engines like the University of Texas and PC maker Dell and other technology firms. Despite striking a chord with an affluent base of consumers, though, HEB has taken a very deliberate tack since then. Some 14 years later, it still operates just eight Central Market units, though it has also opened about 50 HEB Plus stores that incorporate items from Central Market into an HEB grocery footprint. (The branding can be blurred ‘€” a Plus unit in San Antonio, for instance, will be referred to by some locals as ‘€œThe Market on Blanco,’€ although those stores are run entirely separately from the Central Market units.) At least as envisioned now, the pace of expansion will continue to be sedate. ‘€œWe’€™ve been very methodical in where we place stores,’€ said the chain’€™s wine and beer business development manager, Chris Potestio. ‘€œWe’€™re a large Texas company and we’€™ve kept our roots in Texas. We’€™re looking to expand this year with a couple of stores.’€

With beer and wine accounting for 9% of an overall store’€™s volume ‘€” and, it’€™s safe to assume, an even greater share of its profits ‘€” Potestio’€™s job is a significant one at the chain. No surprise, then, that he has continued to augment and refine Central Market’€™s approach on the beverage alcohol side by finding ways to increase the loyalty and visit frequency of wine and beer enthusiasts while also pulling more in the way of impulse purchases from more casual Central Market shoppers. That job got much easier last fall, when the chain’€™s penchant for putting its products into consumers’€™ hands ‘€” and mouths ‘€” was extended to alcohol after Texas liberalized its laws to permit sampling of beverage alcohol. Certainly, suppliers like beer marketer Gambrinus, based in San Antonio, have found the liberalized sampling rules to be helpful when offering tastings of exotica like its Shiner Black Lager and the brand’€™s special anniversary brews right in the beer aisle. ‘€œThat has a huge impact on consumers’€™ impulse buys,’€ said marketing manager Stacy Williams. And while constant rotation of products is a fact of life in retailing, ‘€œif it’€™s a product you believe in and it sells, they’€™ll keep it on,’€ she said. At a retailer that has made an art of stimulating impulse buying, the value of the new law is self-evident.

These days, the typical Central Market store carries 3,000 wine SKUs and several hundred beer SKUs. (There is some variation, though: the newest store, in South Lake, has a smaller footprint, allowing it to carry about 2,200 wine SKUs and a couple of hundred beer SKUs.) And it has not compromised its initial stance of offering no Coke, no Bud or Coors Light. (And, in other departments, generally no Cheerios or Pampers.) The rhetoric from Potestio makes it clear the chain won’€™t be hedging on that stance any time soon. ‘€œThis is one of the things we stand by,’€ he proclaimed. ‘€œIt has allowed us to continue to differentiate ourselves in this market. We’€™ve been proactive, not reactive. We’€™ve stuck with the values of 15 years ago, when the concept started.’€

Store Configuration

So how are the stores set up? Typical is Central Market’€™s 70,000-square-foot location at Hulen Street and Interstate 30, a moderate-to-upscale area of Fort Worth. The store has an almost unavoidable beer and wine section located right in its center, so that shoppers at the end of the fresh fruit and butcher shop area find themselves confronting eight aisles of wine selections, a tasting area and a 50-foot wall of wines segmented by taste and designed to engage novice wine drinkers. That wall of wine does its best to demystify the genre by grouping its offerings by various sensations ‘€” bold, lush, delicious, succulent, silky and zesty ‘€” with additional descriptions of what types of food go with the various wines, a technique popularized by such purveyors as Best Cellars (Beverage Dynamics profile, March/April 2006). One large endcap is devoted entirely to Texas wines, with more than 40 varieties on display from around the Lone Star State. (That would not have been possible when the first Central Market store opened, and Texas’€™ cadre of homegrown vintners and brewers was exceedingly modest.)

The wine aisles are arranged by type of wine and country of origin, with two aisles devoted to French wines, two to German wines, two to American wines, two to Italian wines, one to Spanish and one for New World wine. While that serves as a destination for wine geeks, it’€™s hard to avoid displays of beverage alcohol products in other parts of the store, too. ‘€œWine is a huge part of our overall business,’€ said Potestio. ‘€œWe cross-merchandise it in almost every department.’€ Throughout, the emphasis is on positioning wine as a pleasurable part of everyday living rather than a luxury reserved for fancy dinners and special occasions. Thus, a cooler full of chilled wines is placed next to the meals-to-go that dominate one side of the store. A lot of them are 375 ml half bottles, catering to the large number of urban singles who patronize the store. By no means are these only value-oriented wines. Even champagnes are represented for this demographic.

Devoted to Customer Sampling

Sampling product is an activity of almost cult-like devotion. Just as the Central Market struck an immediate chord through its policy of being willing to offer free samples of virtually everything in the store on the food side, ‘€œmost everything is open’€ in his department, Potestio said.

The wine department offers demos every weekend, starting at noon, as a result of the recently relaxed laws. That applies to entry-level wines and the better stuff, too. ‘€œI’€™m a firm believer in sampling wine, especially those above the average price,’€ Potestio offered. ‘€œIf a customer can taste a $20 wine first, they’€™ll feel a lot more comfortable’€ making the actual purchase.

The idea is to appeal to the full range of wine drinkers and potential wine drinkers, from those just getting their palates wet to connoisseurs and collectors, Potestio said. That means accomplishing the difficult feat of carrying ‘€œthe latest and greatest, and the best values out there,’€ he said. To keep consumers’€™ interest piqued while differentiating Central Market, the store’€™s buyers work hard to cultivate small vineyards that haven’€™t yet earned a broad representation in the U.S. Though Texas has a reputation ‘€” deserved or not ‘€” for being relatively inhospitable to imports, particularly those from France, Potestio believes his chain has the best import business in the state. That’€™s partly reflected in the relative importance of key wine categories. Italy holds the number one spot, while French wines are third; cabernets across the board are second, while domestic chardonnay is fourth.

At the same time, ‘€œI’€™m trying to challenge my wine managers,’€ Potestio said, so that if a customer comes in asking for a $9 bottle of California chardonnay, the staffers are expected to show them other options in that general taste profile ‘€” ‘€œthe stuff we worked so hard to buy.’€ An alliance with an East Coast retailer, Wegmans, has also yielded benefits to building an interesting, yet affordable, wine selection (see sidebar).

The various stores’€™ performance also reflects regional differences. The Central Market unit in San Antonio, for instance, sells the most German wines in the state, reflecting the area’€™s ample presence of military people who may have done a rotation at bases in Germany. Overall, the high transient population of every major city in Texas makes it risky to assume too much about local preferences, Potestio warned.

Maintaining Strong Floor Presence

Like any good wine retailer, Central Market maintains a strong floor presence of what it calls ‘€œwine stewards’€ to offer assistance and recommendations to customers. To keep them up to snuff, they’€™re called in once every six weeks to review the wine business as a whole and to preview new offerings. They generally get to visit overseas vintners twice a year. That expertise is put to demonstrable use in the wine managers’€™ picks carrying their signatures on the selling floor. Word on intriguing new arrivals and specials is disseminated to the rest of the staff through a ‘€œFoodie Find’€ internal flier produced every two weeks.

Though Texas wines were prominently featured during the visit to the Fort Worth store, floor displays will run the gamut from Italian prosecco to wines from Greece. ‘€œWe don’€™t pigeonhole ourselves on the floor, and our sales show it,’€ Potestio maintained. While the store moves its share of Kendall-Jackson wines, lately it has counted as one of its top 25 sellers a pinot grigio from Hungary that’€™s priced at $9.99. ‘€œIt doesn’€™t look out of place in our environment,’€ Potestio said, adding quickly: ‘€œThey can’€™t be just off the beaten path. The quality’€™s got to be there.’€

Key to the presentation is a near absence of conventional point-of-purchase materials, on both the wine and beer sides. ‘€œWe control our environment completely,’€ Potestio said. ‘€œEvery store has its own art department.’€

Because maintaining a high level of service is considered crucial in winning over new customers who may still be intimidated by wine, the wine stewards are recruited on a separate track from staffers in other categories in the store. One fertile source of new employees, Potestio confided, is the restaurant trade, which offers a pool of well-trained sommeliers who may be tiring of the grind of a typical restaurant schedule.

The effectiveness of this overall approach at Central Market is evident from satisfied customers like Victor and Susan Medina, self-described wine aficionados who were recently encountered shopping the Fort Worth store. In what surely would be music to Potestio’€™s ears, they said it was not just the location and selection but the overall service levels that draw them frequently to Central Market. ‘€œVictor and I have found their staff to be knowledgeable and helpful regarding their wines,’€ said Susan. ‘€œMost of the time we know what we want, but we are always open to suggestions of new or boutique wines and the staff typically don’€™t disappoint.’€ While the Medinas also shop other places, such as Wine Styles, they find Central Market’€™s prices to be in line with or better than those of rival wine retailers, they added.

Approach To Beer

Given Texas’€™ long-held identity as a state of ardent beer drinkers, it’€™s important that Central Market execute well here, too. Of course, until fairly recently, the state’€™s famous enthusiasm for beer meant adherence to light-beer styles rather than fuller-bodied craft beers and imports. (Texas has perennially held a place among the top handful of states in per-capita consumption of light beer.) Conveniently for Central Market, its Austin base was an early exception, supporting on-premise retailers like Ginger Man, with its scores of draft handles, and import-friendly high-end restaurants. That enthusiasm for local craft brewers and intriguing brands from other parts of the country or the world has since broadened to all the markets in which Central Market now operates. ‘€œOn the beer side, there’€™s a huge following for what’€™s the next microbrewery that’€™s going to be available in Texas,’€ said Potestio. ‘€œBeer’€™s hot.’€ To keep the effort focused, all eight stores have an ‘€œin-house beer geek,’€ as Potestio put it, assigned by the wine steward to take ownership of the section. Just as with wine, staffers make an effort to meet craft brewers and orchestrate a full range of beer-and-food pairings, courses at the in-store cooking school facilities and classes for the staff. A recent tasting themed to the Beers of Texas drew 40 to one of the stores. Charismatic craft brewers such as Dogfish Head’€™s Sam Calagione or Avery Brewing’€™s Adam Avery proved crowd pleasers during store visits.

Interest is stoked with biweekly email blasts. Though the store offers no loyalty cards, shoppers get 10% off a six-pack and can mix-and-match six-packs with any bottle in the store. The stores also run semi-annual case sales.

While the beer section still eschews such mass-market mainstays, the major brewers are not excluded altogether from the store’€™s shelves and coolers. They are represented by their own burgeoning specialty offerings, from Anheuser-Busch’€™s Ziegenbock bock beer, which counted Central Market as among its initial retail accounts when it launched in 1994, to Miller’€™s new Chill chelada-style brand. Still, more attention is paid to specialties like Brother Thelonious Belgian Style Abbey Ale from North Coast Brewing in Fort Bragg, CA, the iconic Texas beers of Gambrinus’€™ Shiner brand and local brews like those from Rahr & Sons, of Fort Worth. Intriguing imports, including a range of Belgian beers, are also included.

The 50-foot-long beer cooler contains six-packs, individual bottled beers, some 12-packs and a few small kegs. As with the wine, most of the beer is arranged by country of origin. Across from the cooler, in a prominent spot atop the wine endcaps, fast-moving specialty beers get pride of place, ranging from Miller Chill to Stella Artois, Sierra Nevada, Dogfish Head and Shiner. In keeping with Central Market’€™s desire to minimize the intrusions of mass-manufactured POS, no company displays were in view during a recent visit to the Fort Worth store over the Memorial Day weekend.

Empty six-pack containers and boxes are available so that customers can mix and match bottles. As with the oenophiles in the customer base, beer connoisseurs seem to find competitive prices and solid service, along with the abundant variety that is Central Market’€™s hallmark.

‘€œIn terms of beer and wine, they carry a broad selection, and you can definitely find things there that you won’€™t elsewhere,’€ said Eben Atwater, a self-described beer connoisseur who also shops for wine at the store. ‘€œIn terms of overall meal planning, when I shop Central Market, I will invariably find the proper accompaniment to the food I choose. They show they know what they’€™re doing.’€

Like the Medinas, Atwater doesn’€™t limit his beer and wine shopping to Central Market.

‘€œThere are several great liquor stores locally, such as Kings (Liquor) or Liq-o-Rama,’€ he said. But the price, selection and service are what keep drawing him back to Central Market.

Great Price-Quality

‘€œThe prices are as good as anywhere else, often better,’€ he said. ‘€œThey also find small-batch things that you may never see again, which is a treat. For everyday buying, I am cheap; I want the $8-and-under bottle wine that’€™s worth having and they’€™re consistently as good or better in this regard as anywhere, for quality to price considerations.’€ Atwater says the relationship he has developed with one of Central Market’€™s stewards has made a real difference in his purchasing activity at the store.

‘€œOnce their wine staff knows your predilections, it makes things very easy,’€ he said. ‘€œI find that ‘€˜my guy’€™ at Central Market will consistently see me, remember what I prefer and have a few things in mind, which is always nice.’€ Like so many aspects of Central Market, that harkens back to the kind of customer-retailer relationship that once generally prevailed among the specialized shops that populated Main Street and that Central Market is trying in many ways to reprise.

Asked about Central Market’€™s inspiration and closest rival, Whole Foods Market, Potestio sounds aware of what they’€™re up to and respectful, but not in the least abashed. Central Market’€™s larger assortments allow the retailer to carry a deeper array of wine, right up to back vintages of Bordeaux and other fine wines, Potestio argues. ‘€œWe do overlap,’€ he acknowledged, ‘€œbut we stress products we can scoop up in limited quantities.’€ From his perspective, Central Market clearly is happy to play its own hand, steadily, as it taps into the beer or wine geek residing in all of us.

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