Retailing is nothing if not competitive. The name of the game is to offer the lowest prices, the best selection, the most easily accessible location, the most memorable advertising, the fastest check-out.
And many beverage alcohol retailers believe that the industry will soon enter its most competitive and swiftly changing period in history. “I think retailing as we know it is in a state of flux. It is changing rapidly,” said Jack Stoakes, president of Liquor Mart in Boulder, CO.
According to many retailers, including Stoakes, the change they are watching with the most
anticipation is shopping via the internet (see story, page 14). Many believe that state laws currently prohibiting interstate shipping of alcohol will eventually change and web sites will emerge as a new source of competition — and, more importantly, as a new business opportunity.
But, these retailers say, the internet is not the only source of competition. In many areas, the booming economy has led to a flurry of beverage alcohol store openings. In Boulder, for example, Stoakes reported, “One [new competitor] has already opened, one is about to open and more are on their way.”
Whether the competition is using the latest in internet technology or has just signed a lease on the store location across the street, retailers have to keep on top of their game in order to remain successful.
What do some of the top retailers in the country consider the 10 most important elements to success?
10 A SOUND FINANCIAL BASE
Without this, in a business where competition is fierce and margins thin, beverage alcohol retailers cannot weather the storms that will inevitably come their way.
“Every business has its ups and downs,” said George Schaefer of Schaefer’s Wines, Foods & Spirits in Skokie,IL. “Without a sound financial base, one bad year can put you out of business.”
Lack of capital can also hamper retailers by making it impossible to take advantage of good deals when purchasing. This, in turn, keeps them from achieving the next key to retail success.
Having the capital to invest in a large purchase of product when the wholesale price is low is key, according to Byron Gambulos, owner of Byron’s Liquor Warehouse in Oklahoma City. He has good reason to think so: his store has grown from $3 million dollars in sales in 1964 to approximately $16 million per year today.
Many retailers acknowledge that offering good prices is essential, no matter what else you do. “Customers will do your market research for you,” said Hal Gershman, owner of Happy Harry’s Bottle Shop, a four-store chain headquartered in Grand Forks, ND. “They always know where the best prices are.”
Gershman added that “excellent pricing is the easiest marketing tool there is,” but he warned that there is more to it than just the low price. “Lowering prices requires no brains,” he said. “Being profitable with those low prices is where the talent lies. How you purchase, how you merchandise the rest of the store so that customers will buy something else, that’s the trick.”
Merchandising, the art of arranging products, whether permanently or as part of a temporary special, to encourage customers to buy more items, is also key, according to many retailers.
“I am a firm believer in the basics of merchandising,” said Louis Glazer, president of the Sigel’s chain in Dallas, TX. “If people can touch and feel the products, they will probably buy.” Indeed, that’s one reason Glazer makes sure Sigel’s offers the coldest beer in Dallas.
Merchandising in-store is an affordable form of marketing, he pointed out. “Some retailers can afford newspaper ads, some can’t. But there’s always something you can do, such as signage or a ‘What’s New’ section of products.”
7 STORE DESIGN
The store itself is an important sales tool. Gershman is in the process of moving the third of his four stores into a location designed in a style he calls “prairie architecture.” His stores, which he affectionately refers to as his barns, do resemble those farm buildings. They are large sites with peaked roofs and, in some cases, a grain-elevator-style tower. On the inside, they boast 30- to 40-foot ceilings and post-and-beam construction.
“Your facility has to be well-maintained, easy to shop, with wide aisles and excellent lighting,” he said. “People need space to shop. We try to keep our store designs open so that people always have a view of the whole store.”
He saw the effect of store design for himself when he moved his first two stores into their “barns.” One store was moved only 1 1/2 blocks from its original site. “We had exactly the same products and the same wine racks,” Gershman reported, “but people thought we had doubled our selection.”
Design can give customers a feeling of comfort. Being comfortable, they will shop longer, and, hopefully, buy more. Also, they will be more likely to return. “I believe in light,” said Gambulos. He also believes in wide aisles, low shelving, color-coded signage and just the right amount of sound, not too loud and not too quiet. “It has to be a customer-accepted environment,” he said.
And careful design can also give customers a feeling of security. Gambulos, for example, insists that the lights in his parking lot be bright enough to read a newspaper by. In addition, he posts armed guards, mostly off-duty deputy sheriffs, both inside and outside his store.
Another telling detail that should not be overlooked — “Cleanliness,” said Gershman. “It’s very difficult to keep all those bottles clean, but it’s important.”
And, of course, design means nothing if it’s not in a good location. “The old saying about ‘location, location, location’ is more true than ever,” said Schaefer. “Today, shopping convenience is key.”
6 BEING KNOWN IN THE COMMUNITY
Schaefer’s, which was founded by George Schaefer’s father in 1936, is, of course, well-known in Chicago and its suburbs. The best way to become well-known, aside from being in business for 64 years, is to focus your operation’s concept. Maybe your store is known as a fine-wine shop; maybe it’s known as a warehouse-style operation that carries everything at the low prices. There’s an operation in New York City, called Best Cellars, that specializes in wines priced at $10 per bottle or less. Other operations, like Schaefer’s, offer extensive gourmet-food departments. Some even install restaurants or wine bars in markets where that is legal.
“The niche we’ve found,” said Schaefer, “is offering service and personal attention. We know we’re not going to get all the business, but we do want our fair share.”
Many retailers become well-known in their areas for the charity and community work they do. “We give tens of thousands of dollars a year to charities, especially to arts groups,” said Happy Harry’s Gershman. “It’s amazing the good will it generates and it’s also the right thing to do.”
One thing a retail operation can become known for is having a large selection. “Having a good selection is a big deal,” said Gershman. “It’s one reason for our success. When people want something specific, they come to us because they know we’ll have it.”
Gambulos agreed. “I carry everything I possibly can, including every new product,” he explained. “I may not keep every new product, but I will try theXm all out.”
Indeed, should web sites become a viable way to sell alcohol nationwide, Jack Stoakes thinks that Liquor Mart will be in a good position to compete. “Wine.com has 2,000 wines,” he pointed out. “We carry 7,000 to 8,000.”
4 PRODUCT KNOWLEDGE
What goes hand in hand with having a good selection? Knowing something about all those products. Otherwise, customers are going to look at the thousands of wines or dozens of single malts in your store and wonder why they should care.
But like anything else, imparting that product knowledge is a bit of an art. “There are a lot of people in our industry who know everything about wine but can’t carry on a conversation about it without aggravating the customer,” said Schaefer.
Advertising is another way to stand out in the customer’s mind, “whether it’s a billboard, a mailer or an in-store brochure,” according to Sigel’s Glazer.
Gershman agreed. “You have to keep an energy and excitement about your store. You can’t just open the doors and wait,” he said.
2 GOOD EMPLOYEES
One of the most important ingredients for success is also one of the most difficult to achieve: hiring and retaining quality employees. “Frankly, the single biggest reason why we still have only one store is the difficulty of finding good people,” said Schaefer.
In this era of low unemployment rates, getting hired has definitely become a seller’s market. “If you’re a warm body, you get hired,” is how one retailer put it.
Some find that college students make ambitious, eager employees. “But then, they do graduate,” said Gershman. “May, especially, is a month of transitions for us. ‘
Stoakes is happy about the new Social Security law that allows retirees, ages 65 and older, to collect all of their Social Security benefits no matter how much they earn. “That’s been a real boon,” he said, “and is really going to help the crunch in the labor force. Retirees can now continue working for longer and can work more hours.”
And many retailers find themselves paying more money and offering more perks to keep their quality employees happy. “If you pay $4 an hour to your help, you’re going to get $4 per hour help,” said Gambulos, who starts his employees off at $8 an hour. “And you’re going to find yourself hiring new people every 30 days.”
Gambulos tries to do what he can to make his employees happy, including installing a snack room for breaks and paying incentives. For example, on especially busy days, such as during the holiday season, Gambulos awards bonuses of $25 to $50 to cashiers who can ring up a certain number of customers per shift. “On those busy days, when customers are usually in a bad mood, everybody in our store is popped up,” he said.
Byron’s, he happily reported, can ring up 700 customers in a single hour.
1 AND THE #1 KEY TO RETAIL SUCCESS… CUSTOMER SERVICE.
It’s what all the other keys — good employees, good prices, good selection, good-looking store — unlock. “You have to have the proper attitude to do retailing, which is: whenever a customer walks into your store, whether they are looking to get change, ask the time or even use the bathroom, they are doing you a favor,” said Sigel’s Glazer.
Gershman echoed his sentiment. “Every customer is my best customer. I don’t care if they are buying a pack of cigarettes or a thousand dollars worth of wine. They deserve the same respect, courtesy and level of service,” he said. “It’s the root of everything.”
The most successful retailers are the ones who have thought the most about all the details of providing customer service. Greeting customers at the door in a way that is friendly but not pushy. Providing clean bathrooms for customer use. Organizing products so they are easy to find. Making the check-out process as fast and painless as possible. Carrying those purchases out to the customer’s car.
And even the smallest details do get noticed. Gershman, for example, refuses to use point-of-sale pieces featuring pictures of scantily clad women in his stores. “I think it makes our female customers uncomfortable,” he said, “and we do get positive comments about it.”
The key to the most beneficial customer service, these retailers say, is to think long-term. In other words, the customer is more important to them than any individual sale. George Schaefer reported that he encourages his people to sell down, suggesting a product that is less expensive than the customer said he was willing to spend rather than more. “I tell them you are making a customer not a sale,” he explained.
And once you’ve got happy, loyal customers, you’re in.