Under New Management

A sign in the window trumpeting a business ‘€œunder new management’€ can be a double-edged sword. If the store has been poorly run, customers may rejoice at the prospect of a change. When the store is a Chicago-land institution like Schaefer’€™s Wine, Foods & Spirits that sort of announcement may cause some trepidation.

Schaefer’€™s, which celebrates its 75th anniversary next year, built its business and reputation on the extensive knowledge of its staff members and the lengths they would go to service customers. Opened as the Boundary Tavern in 1936 in an area of ‘€œdry’€ towns in Chicago’€™s northern suburbs, the business was converted to a package store in the mid-1940s. A focus on wine as people became more well-traveled in the 1950s and great customer service’€”including delivery to customers in all the surrounding dry towns’€”helped Schaefer’€™s grow in volume and reputation.

Less than two years ago, the store’€™s fate was up in the air. George Schaefer, Jr., son of the store’€™s founder, and his sister Gene, a co-owner since the 1970s, had decided to sell the business. Then George died after a long illness, putting Schaefer’€™s future further in doubt.

Several prospective buyers stepped up and expressed interest. Some simply wanted the property for development. Others wanted to buy the business, but sell off the property and use the Schaefer’€™s name in some other location. But Gene and other family members harbored reservations about Schaefer’€™s reputation if the business moved elsewhere.

In December 2008, however, local resident and long-time customer Bill Graham started talking to Gene about purchasing the business and keeping it right where it is on Gross Point Rd. in Skokie, IL. A few years earlier, Graham had sold a water treatment business he and his brother had built. After some time off, he was itching to find another challenge.

‘€œI really missed running a business that offers hands-on customer service, and the opportunity of building a brand,’€ Graham said. ‘€œI also wanted something closer to home so I could spend more time with my family.’€

Graham walked into Schaefer’€™s one day to ask if the store would donate wine to a charity event, the kind of charitable contribution the store makes frequently. But George Schaefer’€™s recent death had thrown the store and its staff into turmoil. When Graham returned some weeks later, the mood at Schaefer’€™s was somber. Both customers and staff told him they weren’€™t sure the store would survive.

‘€œA light bulb went off,’€ said Graham. ‘€œI saw an opportunity to keep the business intact and build a well-known brand.’€

Despite the fact that Graham had almost no experience in the wine and liquor industry, he and Gene hit it off. Graham reassured her that he intended to uphold the store’€™s traditions and the Schaefer family’€™s philosophy towards customer service. After several weeks of talks, they came to an agreement and Graham took over the reins in February 2009.

In With The New’€¦ And The Old

Graham brought with him not only a shared passion for excellent customer service, but the drive to build on the reputation Schaefer’€™s had established over seven decades. While the business may have lacked a little luster in the uncertainty following George Schaefer’€™s death, the store’€™s reputation remained sterling. What it needed was some polish.

‘€œGeorge planned to renovate,’€ Graham said. ‘€œHe just never got to it.’€

The 12,000 square-foot facility hadn’€™t gotten a facelift in ages, so Graham obliged. The renovation included all new laminate wood flooring, new lighting featuring LED spots in the wine section, new liquor shelving, and wooden racks to properly store all the wine on its side. Before, wine was simply shelved like the rest of the merchandise.

A wall between the retail floor and the stock room was bumped out, adding several hundred more square feet for floor stacks of value wines. The additional space also means the store can offer more variety at a wider range of price points. The back room where the original bar still existed from the store’€™s days as a tavern was spruced up and turned into a demonstration and special events room. Recently this summer, for example, Michael Mondavi is stopping by to talk about his winery’€™s products.

The deli area was moved to another part of the store. The upgraded section also got a new 12-foot refrigerated deli display case. Even the checkout stands got a makeover; the counters on which the new POS terminals sit are now black granite.

‘€œThe Schaefer’€™s name may not be as well known among new, younger consumers moving to the suburbs from Chicago,’€ Graham said. ‘€œIn order to build the brand, our job is to increase traffic by building awareness among these newcomers, and expand delivery by stressing the full-service nature of the business.’€

The renovation already has people staying longer and browsing more. With more wines to choose from, a wider range of prices, an expanded gift selection of non-perishables and an even more attractive deli, Graham is sure that the increased time customers spend in the store is contributing to higher volume.

A Family Affair

Even after being gussied up, at heart the store remains what it’€™s always been’€”a family oriented business that cares about its customers and the community.

‘€œThe renovation effort really was intended to keep Schaefer’€™s the store customers know, but update it,’€ Graham said. ‘€œIt’€™s an unusual business, a real gem. What makes Schaefer’€™s successful is the experience it offers customers. There are boutique wine stores and big box stores, but there’€™s a sweet spot in the middle where intense customer service can serve a broad demographic area like ours. People around here like and will pay for great service.’€

That service starts with a dedicated staff that’€™s free to do what it takes to make customers happy. The store’€™s 20 full-time employees have a long average length of service. Most have been with Schaefer’€™s for more than 10 years, and a half dozen have worked there for 20 years or more. Sterling Pratt, Schaefer’€™s wine director, is a great example. He has been with the store for 30 years, searched for wines all over the world, and been a leader in the Chicago wine industry for those three decades.

‘€œThe staff is a big part of our success,’€ said Anje Schaefer Cluxton, executive vice president and a third-generation family member in the business. ‘€œThey take pride in what they do and how they make customers happy. We let them work however they want to best service the customer.’€

Schaefer’€™s has formal staff training checklists for new employees and a 30-day trial period to test out new hires and let them see if the store is a good fit. The store holds bi-weekly staff meetings to discuss changes in policy and other administrative issues. Managers have an open door policy to address staff questions or concerns right away.

Staff education is less formal. Wineries and other suppliers visit the store four or five days a week to put on dog-and-pony shows for staff. Travel and special education requests are handled on a case-by-case basis, and these requests are usually honored. The wine and beverage directors recently went to California, for example, to find out what’€™s new at several wineries. The beverage director is a certified sommelier; now another staff member is studying for certification, too. Several years ago, George and Gene put an employee who expressed interest in computers through college. He now works for the company that recently installed the new POS system in the store.

The staff tends to be self-motivated when it comes to learning about the products they sell. They learn from a variety of resources, and the store gives them whatever tools they need to learn more about the trade.

‘€œWe can also get information and share that information with staff very quickly now with the Internet and e-mail,’€ Cluxton said, ‘€œand no question is too mundne as far as we’€™re concerned.’€

That emphasis on education and product knowledge has served the business well from the beginning. George, Sr., set the stage by hiring a full-time wine consultant and expanding the store’€™s wine room in the late 1950s. George, Jr., who came into the business in 1966 after graduating from the University of Notre Dame, gained national recognition for the store due to his k’€œWhen everyone else was selling liquor,’€ Cluxton said, ‘€œmy father and grandmother looked forward to wine as the next big thing. Before the California wine movement took off, Schaefer’€™s already knew what was happening in the industry, and all the wineries knew Schaefer’€™s.’€

Customers Are Key

Knowledgeable staff exists only to serve customers, of course. Almost as often as staff has recommended wines to customers over the years, customers have asked about and for wines they’€™ve encountered in their travels or read about. That kind of feedback has been one of the store’€™s keys to customer satisfaction and its success.

In the store’€™s early years, Schaefer’€™s implemented programs like delivery and house charge accounts not only to provide better service. The store also recognized the extended value of that level of customer service. Schaefer’€™s delivery trucks, painted with distinctive store signage, advertised the business in neighboring towns that didn’€™t have wine shops or liquor stores. House charge accounts gave the store a built-in database of customer names, addresses and phone numbers.

Every week, the store mails a postage-paid comment card to customers who have made purchases that week. Cards also are available at the registers. Customers can fill out the cards anonymously. About 95% are positive, according to Cluxton. Negative concerns are addressed immediately.

‘€œThe way we’€™ve learned over the years is to address mistakes or complaints as soon as they happen,’€ she said. ‘€œCustomers tell us how we’€™re doing.’€

Staff members know many customers by name. Those they don’€™t they can quickly and easily look up on the computer, cross-referenced by phone number and address. To help track the 20,000 names the store now has in its database, Schaefer’€™s instituted a customer appreciation program, or CAP, a few years ago. Customers who sign up get discounted prices on select products and can opt to receive e-mail announcements about new products and specials. CAP members also receive $5 back on every $250 in purchases and can get free glassware on loan for parties and special events.

The system tracks customer purchases, too. Customers often call in to ask the name of a wine they served at a party the year before. Employees can quickly look up their purchase history and tell them. The store also does a lot of special ordering for customers, and many of the new products the store carries are customer suggestions. The store also has a full-time party planner to help customers with logistics and ordering for special events.

Most of all, Schaefer’€™s makes the customer experience fun. ‘€œSchaefer’€™s employees have a real talent for putting smiles on people’€™s faces,’€ Graham said.

‘€œWe like to see customers smile,’€ Cluxton agreed. ‘€œStaff will do almost anything to see that happen. In this day and age, other wine shops are not our competition. Supermarkets and big box stores make it easy for people to get everything they need. We have to get customers to make a second stop. We have to make the experience friendly and worth their time.’€

A Sense of Community

Something interesting is happening at Schaefer’€™s almost all the time. The store conducts tastings every Saturday, and usually every other Thursday, too. Vintners and winery reps visit frequently to talk about winemaking and new products.

Wine dinners are held several times a year with two large events each year’€”up to 100 people’€”focused on a single winery. Venues for these events vary from restaurants to private clubs in downtown Chicago.

Every January or February, Schaefer’€™s holds a major warehouse sale event, selling 80 to 100 select wines at up to 40% off regular prices. The store recruits help from suppliers for the two-day promotion and creates a party atmosphere. Everything is open for tasting, giving both the store and customers the opportunity to learn about and try new things. It’€™s not unusual for the store to sell 3,000 cases of wine over two days.

The store’€™s other big event is a summer wine kick-off. The all-day barbecue held in the parking lot features great food and music and attracts entire families. ‘€œIt’€™s a community fixture and a great party,’€ Graham said. ‘€œWe also sell a lot of wine.’€

Schaefer’€™s tries to get to know customers so they feel like they’€™re part of the Schaefer’€™s family. But Schaefer’€™s is part of theirs as well. The store has always generously given back to the community. The store donates wine and gift baskets to scores of charities each year for events and auction prizes. It makes the newly renovated Boundary Room available to charities for events and often hosts groups like the local Chamber of Commerce when they need space and staff to hold meetings.

‘€œWe’€™re very active in the local community,’€ Cluxton said. ‘€œWe like to help customers who have helped us, so we’€™re known for giving back.’€

The store’€™s other philanthropic efforts include hiring developmentally disabled adults through groups like Chicago-based Misericordia to package holiday gift boxes and providing wine service at charitable events. Even store promotions are often developed around a charity. A promotion running this summer, for example, offers customers a free bottle of wine with the purchase of $50 or more. As a sponsor of a charity’€™s 5K run, the store got placement in the charity’€™s goodie basket.

Low-Key Approach

Even promotions that aren’€™t related to a charity, though attention-getting, are relatively low-key. Last year, for example, the store gave away a trip to Sonoma, including a wine tour. The promotion was developed in house and didn’€™t feature any particular vendor. If vendors do provide giveaway prizes, in fact, the store still creates its own in-house promotion and signage.

‘€œThere are no blinking lights or revolving displays,’€ said Cluxton. ‘€œJust a nice, clean wine shop. We let our own signs and beautiful bottles speak for themselves.’€

Signage and shelf-talkers are created in-house so the store has a uniform look throughout. Shelf-talkers on sale wines feature price, a flavor profile and staff opinions. Only occasionally will the store include a point score from a professional wine reviewer.

When George Schaefer’€™s sister Gene joined the staff in the 1970s, she focused on food and expanded the store’€™s deli offerings. Now, the deli section is a profit generator and integral to the party planning aspect of the business as well as the customer experience. Food and wine are cross-merchandised extensively, and shelf-talkers invariably highlight appropriate pairings.

Schaefer’€™s does dress the store up for the holidays (and special occasions like the recent Stanley Cup win by the Chicago Blackhawks), but keeps decorations low-key and to a minimum for the most part.

‘€œWe’€™re more sedate than we used to be,’€ said Cluxton, ‘€œbut that reflects the demographics of the north shore suburbs.

Looking To The Future

One thing Graham didn’€™t have to update when he acquired the business was the operations side, in part thanks to the employee George and Gene put through college. The store purchased a new computer software system in 2005 to track sales, inventory and purchases.

Because the store handles a lot of deliveries and special party orders, employees used to hand-write tickets as the inventory went out the back door. The software Schaefer’€™s bought allowed them to tweak the program to meet their needs.

Now, the software allows the store to take phone orders for deliveries, generate pick lists and invoices for those items and track the inventory. That also has made it easier for staff to quote prices for events rather than waiting until the order was assembled and the ticket actually written to determine the cost to the customer.

The store runs a just-in-time inventory, carrying about 30 days of stock on hand in a storage area. The system automatically generates orders each week based on minimum inventory requirements the store specified. Daily reports help managers to stay on top of inventory and anticipate potential out-of-stocks with suppliers. The store also runs random inventory checks and a report on the top 25 wines weekly.

Though the store has had an online presence for years describing all its offerings, it didn’€™t offer online ordering until 2007 when it could process credit cards over the Web. Before that, customers had to call Internet orders in over the phone. And though the store can only ship wine in Illinois, online sales have already grown to about 5% of the business.

Online sales haven’€™t cannibalized phone orders at all. ‘€œWe’€™re trying to build the online business to service our customers better,’€ Cluxton said. ‘€œThe Web makes Schaefer’€™s available to customers twenty-four/seven.’€

One cool update to the system recently has been the addition of Palm Pilots to help restock store shelves. Employees use the PDAs to scan the shelves and generate a pick list they use to restock from inventory in the storeroom.

The Internet also has made communicating with customers faster and easier. Early on, the store offered a recorded message for customers calling in, updating them on new products and events. Now the store sends out a weekly ‘€œSay-Vino’€ e-letter to keep customers apprised. The store used to print four brochures a year, but only plans a 30-page holiday brochure this year, since the website is so effective. In addition, Schaefer’€™s is now experimenting with social media like Facebook. The store is also instituting bar codes on customers’€™ CAP [customer appreciation program] cards , which are intended to speed up register transactions.

But no amount of technology can replace the philosophy that has made Schaefer’€™s such a well-loved institution.

‘€œI can’€™t stress enough our focus on customer service,’€ Cluxton said. ‘€œIt’€™s typical to get a call on a Friday night from a panicked host who wants another case of wine for a party. Someone here will gladly run it over on their way home from work.’€

‘€œI have distinct memories from when I was around seven and seeing Schaefer’€™s glassware in the garage for some special event,’€ Graham said. ‘€œThis place has real history and connection to the community. As an MBA grad from Northwestern University, I learned about things like the life-time value of a customer’€”LTV. From an accounting standpoint, I could look at how much this store gives away and almost want to cry. But what would really keep me up at night is if I blew a neighbor’€™s wedding reception. The reputation Schaefer’€™s has for service is the kind of tradition worth carrying on.’€

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