Pop’s On Top

Much like today, 1975 was not a great year to be job-hunting. A two-year recession was winding down, but unemployment remained high, inflation was rearing its head and the economy was stagnant and going nowhere. With all that, there weren’€™t a lot of opportunities in the marketplace for a newly minted engineer.

So, recent University of Bridgeport graduate Nick Poulos tucked his diploma under his arm and headed home to Long Island to work for his father Peter at their modest family liquor shop in a sleepy corner of the South Shore, a store that at the time grossed perhaps $150,000 in a good year. He’€™d been helping out there since he’€™d turned 16, but running the store was not at the top of his list of things to do.

Working in the store may have seemed an inauspicious career move then, but today, after 30+ years of innovation, savvy positioning and dedication to providing the broadest selection of wine and spirits possible, Poulos has turned Pop’€™s Wine and Spirits into one of the East Coast’€™s most successful independent wine and spirits retail shops, one that rings up an annual volume well into eight figures. And at a time when many businesses are belt-tightening to ward off the effects of the current economic turmoil, Pop’€™s is poised to take another giant leap forward, as Poulos in June signed a deal to take over an adjacent property that will allow him to double the enterprise’€™s current 12,000 square-foot headquarters.

Expanding and Growing

The latest expansion of Pop’€™s, the sixth since Poulos took over from his father in 1976, will provide much needed room to grow for both the selling floor and inventory space. With the Atlantic Ocean only a mile away, the sort of cellar many wine shops require is out of the question, so Pop’€™s must stash all inventory above ground; right now, the case stacks on the second floor are crammed up to the ceiling, and the retail aisles are shelved high and barely navigable. To reach the shelves against the store’€™s walls, staffers must scamper up sliding library ladders. The temperature-controlled fine wine room where many older vintages and verticals are stored is a tight squeeze for the smallest customer.

Expanding will also allow some sprucing up of the aging selling area ‘€“ the green and white checked linoleum floor itself dates to the 1960s ‘€“ and provide Poulos with an opportunity to modernize Pop’€™s displays. As he says, ‘€œWith the room we have, we don’€™t get an A+ in merchandising.’€

From the outside, it’€™s hard to tell that Pop’€™s is bursting at the seams, or that it is more than a slightly larger version of the sort of long-established wine and spirit shops common to the New York metropolitan area. A plain, mansard-roof style building on the quiet commercial main street in Island Park, with a parking lot that holds perhaps a dozen vehicles, Pop’€™s presence doesn’€™t cry out ‘€œwine and spirits superstore!’€ But growing in terms of space to match the store’€™s potential volume is almost a necessity, driven by the retail philosophy behind its success: In an era of specialization, Pop’€™s loyal clientele is drawn by an approach that proclaims: ‘€œWhatever the customers want, we carry.’€

A near-comprehensive wine and spirit selection was part of the store’€™s premise starting soon after Poulos took over from his father. ‘€œGiven the location we were in, we needed to attract customers. Our goal was to do it better and have what nobody else carries. If I had my way about it, our inventory would be twice the 7,000 skus we stock now. I’€™ve seen my colleagues in the business go just the opposite way, saying, ‘€˜We need to cut our expenses; we don’€™t need to have all these items; it’€™s too expensive’€™ ‘€“ I love to hear it because that’€™s not the way we’€™re going to go.’€

Competing Against Large Chains

As the pressure builds in New York State to allow supermarkets to start selling wine and spirits, and as other Big Box chain operations are presumed to be waiting in the wings, Poulos says growing is his only intelligent option. ‘€œPeople often say to me, ‘€˜We’€™ll back you – why don’€™t you open more stores?’€™ For me, that wouldn’€™t be a smart way to go. I believe if you put all your eggs in one basket, you’€™ll do just fine. It’€™s tough to manage a chain in this business. With one large store, we can react to a trend very quickly, and can compete with any chain.’€

And while stores in densely populated urban areas can specialize their inventory and target specific types of wine and spirits customer, that option isn’€™t open to Pop’€™s, as a one-stop wine and spirits shop. Nor does his area of Long Island provide the sort of luxury customer base needed that can support an operation focused solely on ultra-premium spirits and hard-to-source wine: Island Park’€™s average adjusted gross income may be well above the national average at around $60,000, but a mere 23 miles away, on the more fashionable North Shore of Long Island, such towns as Port Washington boast an average more than twice that, according to 2006 tax data.

Trying to attract customers from well outside his little town, even from all the way on the North Shore, seemed right to Poulos then, and the results bear out his plan; he estimates that the store draws most of its customers from within a 30-mile radius, with many buyers detouring to stock up as they head from the Big Apple out east to New York City’€™s most prestigious summer playground in the Hamptons. His largest single customer base doesn’€™t even come from Island Park; the more populous town of Long Beach, across a narrow channel right on the Atlantic Ocean, sends him a plurality of his clientele.

Internet a Major Factor

The plans for establishing the store’€™s new footprint are keeping him busy (by July, bids were out on the expansion and Poulos hoped to break ground by summer’€™s end), but Poulos also is maintaining a close watch on Pop’€™s internet business, which he now estimates accounting for about a third of the store’€™s total revenue. As one of the early adapters among beverage alcohol retailers of the Web as a business tool (Pop’€™s first put up a static page around 1994, followed a few years later with a more sophisticated site that included a complete list of the store’€™s inventory), Poulos relies on e-marketing for both internet and in-store sales and promotion.

The internet seemed to explode as a source of business for Pop’€™s around 2000, he says, with much of their phone order activity migrating there, and its volume has been increasing at a rate between 2% and 5% each year. (He expects the internet rate of growth to be flat when FY 2009 is toted up, though he’€™s predicting about a 7% increase in in-store sales.) While some stores try to keep customers tethered to their internet store through constant emails, even daily, Pop’€™s sticks with one notice per week, promoting six wines that are featured as their weekly special. ‘€œIf you start sending customers email every day, you are going to start annoying them,’€ Poulos says. ‘€œOne email tickles them, and we find that we get a lot of response from them.’€

The items are also listed on the Pop’€™s website (www.popswine.com) and are usually discounted heavily ‘€“ one recent email featured post reads, ‘€œThey say $13 (Wine Spectator), we say $6.67 per bottle!!’€ For the same 2007 Sebastiani Sonoma County Chardonnay, the website proclaimed, ‘€œYep…. this is too good to be true. We made a huge purchase of this wine at a rather incredible price…. and we’€™re not talking old, distressed no-name merchandise with a built-in huge profit.’€

Passing along such a major discount is key to Pop’€™s sales philosophy. ‘€œIf I get 20% on 50 cases, and the net price is a 25% markup, I look good and make a profit.’€

Internet sales have changed the beverage alcohol retail business in numerous ways, says Poulos. He believes it’€™s stripped out much of the profitability from selling fine wine, for instance, as smart shoppers are increasingly establishing to the penny the best prices for once-lucrative vintage Bordeaux and Burgundy, and instead of committing all their purchases to one store, they are just as likely to order chateau by chateau, from store to store.

‘€œThe fine wine buyer can search and find the best prices very efficiently on the internet now. It’€™s almost a game to them, one we can’€™t win. You can’€™t focus on specialty wines that make up 1%of your business. We used to be a very big Bordeaux store, selling two or three thousand cases per vintage when this was a much smaller place. But the market has changed completely, as prices rose and the internet came along. It’€™s a commodity now and you can’€™t put too much energy in it; it’€™s just not worth it. With the way people shop, you can have only a 10% margin on [fine wine] and still lose the sale.’€

‘€œIt’€™s too easy to fall into the fine wine trap and we’€™ve been there. Burgundy was a passion of mine and one day we looked at out numbers and it turned out that 20% of our dollars in inventory were in red Burgundy ‘€“ you can’€™t do that and still provide people with what they want,’€ he says.

Lately, Poulos sees spirit sales gaining share in his store, which has traditionally split about 80% wine to 20% spirits. While customers are avoiding high-end wines for those in the $20 sweet spot, they are still willing to spend $50 or so on a bottle of whiskey, experiment with the latest flavored vodka or respond to Pop’€™s deals on new items, like the four stack cases recently displayed of lemon-lime flavored liqueur Cryptonic. He was quick to jump on the St.- Germain Elderflower liqueur bandwagon, even though it seemed an unlikely product for his store, and he now sells two cases a month.

Vodka Is Retail King

Vodka of course is retail king by far, and Pop’€™s lists more than 350 vodka skus online. Flavors are big and getting bigger, with even vegetable-flavored bands selling. ‘€œIf a new vodka comes out, or if there’€™s a new flavor for Smirnoff or Absolut, we have it in every size.’€

With a top-notch selection of single malt Scotches and American whiskies, Pop’€™s doesn’€™t just depend on the trend-influenced customer. And if fine wine isn’€™t your thing, or the latest imports from Spain or Chile (two area Poulos sees growing) then perhaps one of the emerging quality box wines, or just a king size jug of Carlo Rossi will do. Pop’€™s has them all.

Poulos believes many of his competitors are playing right into his hands by ignoring customer requests for unusual or unstocked items ‘€“ recently, a shopper asked about a case of a certain pinot noir that she couldn’€™t locate, one that two other retailers refused to order for her. ‘€œI couldn’€™t understand that, and, of course, we got it for her. It was an easy profit. We succeed because our competitors don’€™t make the effort or don’€™t care. It’€™s all common sense, about giving people what they want.’€

While the internet may have subtracted some profitability from more traditional fine wine selling, at the same time stores like Pop’€™s that carry a broad selection see a strong response from similar internet shoppers looking for specialty items not easily found in their home market, whether they are in distant part of New York, hundreds of miles away, or closer. ‘€œWhen they find what it is they’€™re looking for, they email their friends and their families who also want it,’€ says Poulos. One day’€™s internet order for a small distribution Scotch whisky like Compass Box, for instance, will be followed suddenly by a wave of requests, something Poulos believes could only come from networking enthusiasts tipping each other off when Pop’€™s stocks a brand they covet.

The same happens when an item is discontinued in some markets. Internet sales of a certain Canadian whisky suddenly skyrocketed a few years ago when a brand extension was pulled from some markets, and Pop’€™s was soon shipping it by the caseload to buyers all over the country.

Keeping Stocked and Nimble

Such buying waves keeps Pop’€™s nimble in order to achieve the goal of stocking at least two weeks’€™ worth of every sku the store carries. In his inventory system (a self-designed computer program), Poulos ties reorder levels to sales by looking forward and back three months rather than year to year. ‘€œWhat’€™s the sense of setting a reorder level of five cases of a brand and all of a sudden that brand isn’€™t moving anymore? We have to keep on top of what’€™s moving. Managing inventory is key to any store’€™s success in this business; a lot of failures come from managing inventory incorrectly.’€

Keeping inventory tight allows Pop’€™s to take advantage of another significant trend Poulos has observed among consumers is their broadening tastes, both in the store and on the internet. ‘€œWhen I started in the 1970s, people had a beverage, and they came in and bought that brand and drank it for the rest of their lives. Now, it’€™s two bottles of this, two bottles of that, and they put an assortment together. People want to try and want to change. They may have their favorites, but the rest are a variety; the shopping cart is filled with a lot of items in addition to their favorites.’€

Of course, especially during the current recession, a wide inventory can only take a store so far. ‘€œWe mainly compete on selection,’€ says Poulos ‘€œBut we compete on price as well. To be able to do so, you have to buy everything on the maximum possible deal and you have to pass it along to your customers.’€ To prevent customer drift to competitors who employ heavy advertising and focus on loss leader promotions, Poulos will match any advertised price a customer brings in. While that promise is more common these days among wine and spirit retailers, it’€™s often a false one ‘€“ stores with limited inventory have little to fear from deep discounting rivals. But with Pop’€™s range of items, it’€™s a deal that works for all.

The downside of a broad selection is that not every new item catches on. During a recent visit to the shop, end bins were bursting with a cordial flavor that simply hadn’€™t won consumer favor. But priced at less than $3, the liters were drawing significant customer scrutiny. Whenever any product Poulos buys doesn’€™t perform as expected, Pop’€™s performs rapid and radical surgery to its price. ‘€œWe take the Sy Syms approach,’€ he says, referring to the legendary New York City men’€™s clothing retailer, who cuts prices on quality goods the longer an item stays in stock. ‘€œIf we can’€™t sell it at $20, then we price it at $18 the following week. If it’€™s not going to move, the idea is to get it out to the customer for the best price you can and move on.’€

Keeping Customers Happy

Pop’€™s approach ‘€“ depending partially on close contact with customers to discover what items they are looking for ‘€“ demands an attentive and friendly staff, not exactly a common occurrence in the New York area. As Poulos notes on his website, ‘€œWe want happy customers and we’€™ll do anything, short of giving you the wine for nothing, to attain that goal. Happy customers tell their friends, [and] that gets us more happy customers. It’€™s amazing how well this formula works. We provide our associates with the tools to take care of our customers and I’€™m proud to say that they’€™ve utilized those tools to create service that is state-of-the-art.’€

Poulos says he knows this attitude works, because customers routinely tell him they shop at Pop’€™s because ‘€œeveryone is so nice ‘€“ that surprised me because you don’€™t gamble on that in your business plan.’€

Efficiency is also key. ‘€œA lot of retail operations spend a fortune on advertising and promoting and getting people in the door, and then they keep them waiting ‘€“ I don’€™t understand that logic. I don’€™t want people waiting. I know when I shop in a store and I fill my basket with a lot of items, when I get to the register and see a line, I don’€™t wait, and I don’€™t want my customers waiting either.’€

Staffing in the midst of high unemployment isn’€™t much of an issue, but Poulos says when he does find good employees, he takes care of them. ‘€œOur staff would universally take a pay cut if they went somewhere else.’€

In his tiny office, a picture of a Piper Cub airplane looms large behind him. Flying the single-engine four-seater is another passion and he tries for at least a weekly excursion, perhaps to Connecticut or Block Island for dinner. He’€™s gone as far west as Las Vegas, 19 hours each way, and to Key West.

Oh, and the name of the store? No, it’€™s not from an early attempt to market bubbly. When Nick Poulos’€™ father decided in the 1940s to make the move from Brooklyn out to the sleepy summer resort, he named the modest store what all his neighbors had called his father. Peter Poulos sold the shop in 1960, but bought it back eight years later, keeping the seat warm, it turned out, for Nick. ‘€œI wish my father was around to see that it all worked out and was worth his investment – he was around when I needed his help to make it along, and as we were coming into our own he suffered a stroke.’€

And for Pop’€™s grandson Nick, the original kernel of an idea he developed as a young graduate has paid off. ‘€œI wasn’€™t crazy about it at all at first, but gradually, it became more and more appealing to me to be my own boss. I knew I was either going to create my own destiny or ruin it.’€

PHOTOGRAPHY BY DAN WAGNER

Leave a Reply

Your email address will not be published. Required fields are marked *