Doing Good While Doing Well

Talk about doing well by doing good. For Chuck Ferrar, founder of Bay Ridge Wine & Spirits in Annapolis, MD, part of the responsibility of operating a wine and liquor store has included an active involvement in supporting the alcohol retail industry, at the local, state and national levels. Just this July, he took a spot as head of the biggest national organization, the American Beverage Licensees (ABL). In the public realm he has helped broaden sampling rules, open the door to online sales and beat back what might have been an onerous rise in state alcohol taxes during the past, highly contentious legislative session in the state capital. So much for doing good by the industry that has been good to him. Then there’€™s the doing well part. As an agile operator, Ferrar has often been the first in his trading area to exploit those hard-won gains, garnering an edge over stodgier competitors and building Bay Ridge into a formidable competitor. Throw in a blowout twice-a-year Dollar Sale that rates as a major local event (see sidebar), and you have a retailer with a highly distinctive profile.

Even so, the space the store occupies readily reveals its roots as a former supermarket, with a big, barn-like space with lemon-yellow walls. The store offers wide aisles, bright lighting and the airy feel that comes of banning ceiling danglers and other clutter from the store. Manufacturers’€™ reps are discouraged from pasting up their point-of-sale materials and the small portion of shelf talkers deemed actually helpful to shoppers usually are regenerated through Bay Ridge’€™s own graphics system so they are more in synch with the overall store look. Lines of vision are kept clear to all corners of the store.

Consumers entering through the main entrance find wine toward the left, spirits to the right. The wine section encompasses nearly 50% of overall floor space and accounts for a bit more than half of overall sales. Through an interior door to the left is the gift area, stocked with wine glasses, cocktail napkins, even pendants displayed draped over the necks of wine bottles. The store maintains a cigar humidor and a selection of non-alcoholic items like mixers, non-alcoholic beer and wine, orange juice and tonic water. On a good summer weekend it also can move 10,000 pounds of ice.

Up front, just beyond the six checkout counters (an additional two are in the gift area) is a locked, two-sided glass cabinet in which are merchandised single-malts, high-end bourbons and such anomalies as Ciroc grape-based vodka (which was deemed to be worth a spot in the cabinet after in-store cameras revealed that a crew of shoplifters had made off with half a dozen bottles in one go). Rarities range up to a 1958 Macallan at $6,299 and Bowmore White and Gold at about $6,000 each. A Knappogue Castle from 1951 goes for $854.99. A handful of beers have also earned entry there, such as Brewdog’€™s Tactical Nuclear Penguin at $78.99 and its Save the Bismarck at $99.99.

In back are two large beer coolers, one for premium mainstays like Bud and Miller Lite, the other for micros, imports and specialty items like malternatives. Adjacent warm shelves contain pretty much all the brands Bay Ridge stocks. Strikingly, the mainstream cooler merchandises its suitcases of mainstream beers with their narrow sides facing the shopper, so as to boost cooler capacity and minimize the need for restocking. That trades off the usual billboard effect, but Ferrar doesn’€™t see much of a cost in doing so. ‘€œIf they want Miller Lite they’€™ll find it,’€ he said. At the time of Beverage Dynamics’€™ visit toward mid-July, a major event was looming in the Maryland beer world: the long-awaited arrival of New Belgium’€™s Fat Tire beer. Characteristically, Ferrar and son-in-law, David Marberger (who these days runs the store’€™s day-to-day operations) had thoroughly prepared: they were planning a 6 a.m. tasting the first day the beer became available. Ferrar said he’€™d made sure his store would be the first to have the coveted Colorado craft brew available in the state.

Now at 14,000 square feet, in two decades the operation has grown 15-fold in sales to where it does upwards of $10 million annually, Ferrar said. It turns its inventory 11 times per year, including 15 times for beer and six times for wine. Ferrar said he’€™s happy to see customers of all social and economic strata sharing his checkout lines, with sophisticated wine buyers standing right behind residents of a low-rise housing project across the street who’€™re there to snag a 22-ounce bottle of Heineken. ‘€œWe serve everyone’€ in the community, he said. Asked to name the core reason for his success over the past 21 years, Ferrar declares: ‘€œThe personality of the store made the difference.’€

The Early Years

Though Bay Ridge is a community institution by now, at 21 years it’€™s a relatively young player on the retail scene, launched by an entrepreneur who had never been in the business and, at the time he got going, barely drank the stuff. Ferrar, who grew up in Prince George’€™s County, MD, was working at Sysco in food-service distribution in Houston when he had a heart attack at age 48. That prompted a rethinking of his priorities. After the corporate rat race, a move into retail, where he could be his own boss, seemed like it might be restorative. ‘€œI needed a break from the corporate structure,’€ he says now. Though he has only praise for Sysco as a company, ‘€œI was just not cut out to be in that kind of corporate structure,’€ he reminisces. He’€™s now 69 years old.

So he returned home to Maryland, where an aunt who’€™d been in the liquor retail business helped finance his venture. Certainly, the project didn’€™t stem out of any deep personal enthusiasm for the fruits of the vine: ‘€œI was almost a non-drinker at the time,’€ Ferrar recalled. With his aunt as his ‘€œsilent partner, my golden angel,’€ he bought a foundering 4,000-square-foot operation housed in the shell of a former 14,000-square-foot former supermarket. He raised his share of the down payment by selling his home. ‘€œMy wife and I put everything we had into this,’€ Ferrar said. He did garner one edge from a stint earlier in his career at supermarket equipment supplier Hobart, which gave him a knack for store design and merchandising innovation.

The early years were arduous. In the first five years, he said, he didn’€™t take a single day off. Real relief only came with the arrival to the business of his son-in-law, David Marberger, about four years into the run of Bay Ridge. Though Marberger was new to the business, he brought some relevant credentials that included a culinary degree from the University of Maryland (Eastern Shore) and a career in the restaurant business in Ocean City. Marberger’€™s key role in the store’€™s operations allows Ferrar the flexibility to come and go as he likes. On the Saturday afternoon that Beverage Dynamics visited, though, both were present and taking a hands-on role in all the store’€™s activities. Though the pair have their share of disagreements over the direction of the business, Ferrar said he views the youthful ardor of his 42-year-old son-in-law as vital to the store’€™s future success. ‘€œComplacency is death ‘€“ but my son-in-law is young, hungry and ambitious,’€ he said.

In initially finding its footing, the store couldn’€™t take one route of aggressive newcomers, offering greater value than its established rivals, because of laws prohibiting quantity buying. There were nine other package stores within a mile-and-a-half radius, and they all paid the same price for their inventory. ‘€œI was never a discount operation,’€ Ferrar said. ‘€œWe’€™re a (former) supermarket, but even with our high ceilings and space, we’€™ve not ever given the impression of being a big-box store.’€ Instead, he decided to accentuate customer service. As the store design evolved, it moved ‘€“ presciently, as events proved ‘€“ in the direction of making itself increasingly inviting to female shoppers, buttressing its appeal among a demographic that Ferrar believes now accounts for 60% of his customer base, one that’€™s the dominant purchaser in every store section except Scotch whisky. That means wide aisles, the absence of clutter, bright lighting and ‘€œno thanks’€ to the girly posters constantly proffered by beer and liquor marketers. A pair of women work the wine floor, but otherwise the sales staff is male. The store is situated in a well-lit shopping center and Ferrar makes it a point to hire off-duty police officers to park their marked cars prominently at the front entrance. That they’€™ve never had to be called into action only confirms to Ferrar that they represent a sound investment in deterring problems and assuring tranquility at his store.

The store has an interesting orientation in that it seeks to carve out a reputation as a specialty retailer targeting even the most discriminating buyers on the spirits side, but does not make a comparable effort to pursue such customers on the wine side. Though it has an extensive wine stock, it doesn’€™t cater to the fine wine aficionado seeking out first-growth Bordeaux. That’€™s an outgrowth of the store’€™s beginnings, when established retailer Mills Fine Wine located at the Annapolis dock specialized in offering fine wines to boaters loading up their yachts for winter in the Caribbean. Later, the general manager of that store opened a rival operation, Wine Cellars of Annapolis, and Ferrar says he’€™s content to let the pair scrap for that 3% of the market. ‘€œMy philosophy is I’€™d rather fight for the other 97% of the market,’€ he said. There is no fine wine room; Ferrar and Marberger prefer to keep their customers in a single, central location. First and foremost, store employees work to make the section approachable to their customers. ‘€œWine’€™s still a mystery to most shoppers,’€ Ferrar said.

Specializing in Spirits

The store boasts an extensive bourbon selection and about 125 single-malt Scotches ‘€“ a style that is a personal enthusiasm of Ferrar’€™s since the day, 19 years ago, that he broke a bottle of The Macallan and found himself intrigued by the overtones of sherry in the smell. If it weren’€™t for that happy accident, ‘€œI never would have tasted the Scotch,’€ he said.

The store does have one quirk in its spirits selection: ‘€œAnnapolis is a huge rum town,’€ thanks to all the nautical activity there, Ferrar indicated. ‘€œA drinking town with a sailing problem,’€ he jokes. So the sailboaters are served with a huge selection of rums, and Annapolis has garnered the status of being one of the nation’€™s biggest Mount Gay markets. Five miles inland that brand is virtually not sold, Ferrar notes.

Bay Ridge also has become increasingly serious about its beer selection, which now exceeds 1,300 sku’€™s. The store started with conventional domestic premium offerings like Bud, Miller and Coors and popular imports like Heineken and Corona, but has ridden the wave of burgeoning interest in craft beers by adding such regional favorites as Dogfish Head, Annapolis’€™ own Fordham Brewing and DuClaw of Abingdon, Md. And of course, ‘€œwe’€™re finally getting ready for Fat Tire.’€

Though customer service is paramount in the store, Ferrar insisted there are no particular secrets on the hiring side. ‘€œWhen we interview, we look for people that we like,’€ who have some relevant experience, he said. He’€™s been patient on some key hires: his current general manager he first encountered years ago as a waiter who moved on to a rival wine shop before eventually becoming available to Bay Ridge. ‘€œWe deal with personalities ‘€“ and honesty ‘€“ and we can train them,’€ Ferrar said. He feels the industry does a good job making information available on brands and styles, and employees go to tastings and visit wineries, though Bay Ridge doesn’€™t go in for formal classroom training for its staff.

Political Activity

Though his accomplishments prove he has a diplomat’€™s tact when needed, Ferrar doesn’€™t mince words on how far the liquor business has to go. ‘€œThe liquor industry is probably the most primitive industry in this country,’€ he declares. It’€™s difficult to get information on brands, state and local laws often are antiquated and ‘€œhalf of the retailers in this country think it’€™s 1952.’€ Distributors are not so far advanced either, he added.

Aided by the fact that he lives just a few blocks from the legislature, Ferrar spends 60 to 90 days a year involved in government activities. If, as Woody Allen once put it, 90% of life is just showing up, that alone would assure Ferrar of a fair amount of influence. But that’€™s been compounded by his natural political instincts as well as the goodwill he’€™s accumulated among other liquor store operators for the time he’€™s put in on their behalf. He’€™s been president of the Anne Arundel County Licensed Beverage Association five times, president of the Maryland State Licensed Beverage Association, and the Wholesalers Retailers Association of Maryland, and just was inducted to a two-year term as president of the 20,000-member American Beverage Licensees, a major national organization based in nearby Bethesda.

For Ferrar, the work he’€™s done to broaden opportunities for wine and spirits retailers in Maryland often proves to be a competitive advantage ‘€“ because he’€™s willing to move first to adopt new innovations. For instance, while in-store wine tastings had long been allowed in the state, he lobbied heavily to have beer and then spirits added to the list ‘€“ then found himself the only retailer to do spirits tastings for about three years following passage. ‘€œOther people’€™s complacency is good for us,’€ he notes.

The pragmatist in Ferrar knows when a setback actually should be viewed as a victory. That’€™s certainly true for the recently inaugurated 3% sales tax increase on alcohol, on top of existing tax of 6%. The increase, effective July 1, capped a major statehouse battle in which some proponents had sought to move to 10 cents a drink in an effort to generate greater revenue for the recession-strapped state. That would have amounted to $6 on a 1.75-liter bottle of spirits or $5 on a bag-in-the-box that now might go for $13.99. In light of that alternative ‘€“ and the state of Maryland’€™s undeniable need to raise revenues ‘€“ adding just 3% ‘€œwas a major victory, in a sense,’€ Ferrar noted. After all, he said, there had not been an increase in the alcohol tax on spirits since 1955. The anticipated $85 million in revenue is being used to support disabilities and educational programs.

Among significant recent developments was the store’€™s being invited to join the Wine & Spirits Guild, which has recruited its 40-plus members on the grounds that they are the most innovative, influential retailers in their respective markets. Joining ‘€œwas the best thing we did for this store,’€ said Ferrar. The buying aspect and shared knowledge ‘€œis like having another partner in the store whom you don’€™t have to pay.’€

Looking Toward Online

Another big change is looming as well: online sales. Though the retailer has been restricted from doing mail-order or online business, that’€™s about to change: now that out-of-state wineries became entitled to ship into Maryland as of July 1, the handcuffs next will come off in-state retailers. ‘€œWe’€™re ready when the law is changed,’€ assures Ferrar. As always, he expects his first-mover advantage to be considerable. ‘€œI figure 98% of the retailers in the state won’€™t fool with it,’€ he said.

Though Ferrar happily acknowledges he’€™s a political animal, getting Marberger involved has been more of a challenge. Marberger readily allows that he’€™s got his hands full enough just running the business, but says he recognizes it’€™s time to step up to some of the broader responsibilities that role entails. He was just elected vice president of the state association and says he’€™s learning from the best tutor he could hope for. ‘€œI’€™m very lucky to have Chuck as my father-in-law,’€ he said. ‘€œHe’€™s both brilliant at business and savvy about politics.’€

As for Ferrar, his post-Sysco plan has worked out very much as he’€™d hoped: he’€™s been able to be his own boss, built his tiny store into a community institution, and can rely on a trusted family member from the next generation to keep it advancing into the future. All told, the wine and spirits retailing industry has been very good to him. ‘€œThis is one industry where you can still start small as a family business,’€ said Ferrar.

Yikes! Dollar Sale

Ask local residents what they most associate with Bay Ridge Wine & Spirits and many will say the Dollar Sale. Founder Chuck Ferrar kicked off what he officially calls Customer Appreciation Sale 17 years ago after hearing about the idea from a friend from outside the area who was doing it in his store. The concept is simple: the store charges a dollar above its Maryland wholesale cost. But it’€™s enough to unleash an in-store frenzy that may even see customers stealing bottles out of each other’€™s shopping carts. The first sale brought in $33,000 in three days ‘€“ the amount now brought in just in an hour during the sale.

How ardent are shoppers about this sale? Well, people typically line up with folding chairs at 5:30 in the morning even for the February event, at a store that doesn’€™t open its doors until 10. By the time the doors do open, there may be 150 or 175 people waiting, many of them of an age where creature comforts normally would rank as a high priority. ‘€œThese are not kids going to a rock concert,’€ Ferrar noted drily. In the days before the sale, some customers come in to pre-shop the store, even drawing maps for their spouse to follow so as not to lose time meandering the aisles looking for coveted items.

The sales are not advertised, though the store’€™s 18,000 club card members receive email notification the weekend before as one perk of membership. The sales run for three days, from Tuesday to Thursday, and are held twice a year, in February, when the sale helps generate cash during a slower time of year, and in September. ‘€œFebruary is for me, and September is for them,’€ summarizes Ferrar.

The store can move 32,000 bottles in a single day during the sale. Though the wait at checkout has sometimes extended to 45 minutes, with the line looping all the way to the back of the store and then forward again, more commonly customers can expect to get out in less than 25 minutes. At its peak, with the registers in the gift wing also open, the store can ring up 180 customers in an hour, or one every 20 seconds, at its eight checkout stations. (The record is 240 in a single hour.) Even after all these years, the sales still draw coverage from the local newspapers, which treat it as a social event. For Bay Ridge, the sale has been a valuable incubator of repeat customers.

The store’€™s entire stock is available at the sale price ‘€“ though the proprietors strive to be both rational about it and also fair to their customers. Besides a few modest restrictions, Bay Ridge’€™s sale is elegant in its simplicity ‘€“ in contrast to the numerous stores that have copied the concept, but restrict some items, don’€™t allow payment by credit cards or otherwise hedge their bet.

Ferrar and Marberger don’€™t deny that, in some ways, the sale has become an albatross. Says Marberger bluntly, ‘€œIt’€™s the best thing we’€™ve ever done to grow this business, but I love to hate this sale. It’€™s a beast.’€ Agrees Ferrar: ‘€œYou have a tiger by the tail because you couldn’€™t stop it if you wanted to.’€ Among his reservations, ‘€œthe amount of effort that goes into this sale is just overwhelming,’€ given the hundreds of shelf tags that must be altered and the tremendous amount of overtime that must be paid to employees. By the end of the first day, Tuesday, orders go out to suppliers’€™ sale reps and 1,200 cases can come in the door to be stocked for Wednesday. ‘€œThat’€™s a lot of effort for a dollar,’€ Marberger said, with some understatement. And then the effort must be repeated for Friday. ‘€œWe will sell over half our stock in those three days.’€

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