Targeting Customers, Market By Market

All retailing is local. That might not quite have the ring of truth of the words of the late Speaker of the House Tip O’€™Neil, but it makes just as much sense.

In the case of the Southeast’€™s Green’€™s Discount Beverages, what’€™s local changes dramatically from store to store. With units in two states (Georgia and South Carolina), separated by as much as 360 miles, it’€™s not a surprise that each store has a different market position and client base. For instance, at the chain’€™s Atlanta store in the booming Poncey Highland section of town, the wine manager keeps tabs on the annual Burgundy and Bordeaux market and has established a robust international wine selection. But meanwhile, over in Green’€™s warehouse unit in Columbia, SC, the large footprint market sells only beer and mostly lower-priced California wine in unusual contrast to the entire chain’€™s overall spirits sales, which comprise more than 50% of the business.

Each store, then, is calibrated to make sense for local customers, says Green’€™s president Lock Reddic. ‘€œWe’€™ve always targeted our audience and their needs and never tried to take them somewhere; we just try to be the best for what we know they want,’€ he says, pointing out that the differences depend specifically on those unit locations.

‘€œWe’€™re in small town America and a big city, and we wouldn’€™t really know the differences if we didn’€™t operate in both. But as a result it gives us a bit of an advantage, a chance to develop relationships with both high-end and volume suppliers,’€ he says.

Green’€™s six stores include two in Atlanta – the afore mentioned 8,500-square-foot Poncey unit and the chain’€™s original 7,500-square-foot establishment; two in Columbia in the center of South Carolina – a 13,000-square-foot store, and the 16,000-square-foot warehouse; a 12,000-square-foot store in Greenville, in northwest SC; and a 7,500-square-foot store in one of the country’€™s best-known Atlantic coast playgrounds, Myrtle Beach, SC.


Appealing To All Shoppers

The Poncey Highland neighborhood Atlanta store and the non-warehouse Columbia unit are Green’€™s best performers, with the Atlanta store bucking economic trends and growing in sales daily. But whatever the store, Green’€™s focus is to make certain that their heavy foot traffic is rewarding.

‘€œWhen we have 7,000 people a week come through a store, we feel we have just about everybody coming ‘€“ we’€™ve got the high-end shopper, the low-end shopper, the African American shopper, female, male, gay, lesbian, straight, everyone. We have a tremendous cross-section of the community and if you can get the right products in front of people at a price that’€™s been discounted, usually you’€™re going to have a success.’€

While the traffic is steady in all six stores, calibrating what to offer each set of customers is influenced by regional differences. ‘€œIn our South Carolina areas, there’€™s more of a blue-collar mindset because that’€™s what South Carolina is,’€ says Reddic. ‘€œIn the middle of the state where we operate, there’€™s not a lot of consumer wealth.’€

In the wine business, for example, the Poncey Highland store, post-recession, has seen customers gravitate back and forth between the $12’€“$15 price point and up, in general slightly lower but not significantly down from pre-2008. But in South Carolina, ‘€œWe’€™re still trying to get them from $8 to $12; it’€™s a very different mindset,’€ he says.

These differences keep Reddic and his buyers on their toes, especially with constructing the proper product mix. While some retailers have sought to weather the economic storm by going all out discount, or dramatically reducing their position in higher-end wines and spirits, Reddic has continued to take Green’€™s down an old and once obsolete road: private label.

Developing Private Label

Reddic, grandson in law of the company founder, has been president of Green’€™s since 1994, and as an active member of the Wine and Spirits Guild, has put considerable energy into developing a contemporary and sustainable private label program, building a partnership with various distillers willing to work to create offerings that offer premium appeal and modern packaging. The difference between today and past private label models is that the general quality of spirits is so high that many suppliers can offer good, low-priced products at affordable prices.

Reddic says that as the consolidation of the industry on the supply and wholesale sides has increased, slices of gross profitability has been pared from the retailer’€™s share, forcing them to find creative ways to stay profitable. Cooperation from suppliers is key. ‘€œThere are companies out there that have realized that you can have and sell your very successful brands you have spent time and money creating, but also feel like it’€™s a great avenue to develop new brands with retailers who are serious and committed to the concept.’€

How to implement and introduce private label is crucial, as so much of Green’€™s share of sales is spirits, but the amount of activity has ramped up in the past two years. ‘€œAt first our customers were a little tepid especially on the liquor side. They bought minis and pints to try them out before stepping up,’€ he says.

Spirits Sales Holding Up

Spirit customers are very brand loyal, however, so Green has kept a tight rein on the number of private labels skus ‘€“ currently, the count is approximately 150 ‘€“ 200, up from 100 skus just about two years ago. But the skus add up quickly – a single 80 proof vodka can quickly become a five sku brand. (Vodka was a good place to start as there is so much activity, trading up and down and experimentation among consumers.)

‘€œWhen a customer walks into our liquor stores, he doesn’€™t see a vast number of private labels in amongst a few national brands at a good price ‘€“ we very much skew toward the national brands and we will punch our private labels in sparingly with a very, very soft approach.’€

Overall in spirits, Reddic points out that whenever possible, Green’€™s takes large positions on brands ‘€œthat we think we could do maybe a better job than the [general] market could, especially given our very high traffic and customer count.’€

Spirit sales have held their own since the recession began after a little softening at the premium and above level. Now, industry-wide innovation has been driving customer interest. ‘€œWhen Maker’€™s Mark released its 46, it sold well; when a Ketel One releases a new flavor, it sells well. In spirits we simply haven’€™t seen the financial impact as we have in wine and beer,’€ he says.

Regional trends are shifting slowly; for instance, in the gin category where Georgia and South Carolina have long been significant markets, sales have begun to move a little to the higher end with such brands as Hendrick’€™s growing, and to newer styles, with Gallo’€™s New Amsterdam having an impact. Category leader Seagram’€™s Gin is still extremely popular.

Canadian whisky, too, has maintained its great popularity in South Carolina and in both states he’€™s seeing an uptick in cordials and shooters ‘€“ with brands like Dr. Mc Gillicuddy’€™s Fireball growing fast enough to challenge Jagermeister among shooters. That’€™s a category that’€™s showing great customer curiosity and experimentation and robust sales in his stores.

Increase In Premium Sales

In two other categories, strong interest in premiumization has more than off set slower unit growth. ‘€œIn tequila, we’€™re selling fewer bottles but much better – now you almost have to be 100 percent agave to sell,’€ he says, with brands like the relaunched Espolon taking off, while the mixto version of category leaders Sauza and Cuervo are way off. In Bourbon and Tennessee whiskey, the story is much the same ‘€“ high end and single release items like the annual Woodford Reserve Select doing especially well.

Of course, the flip side of all this industry innovation is this: where to put all those bottles? ‘€œIt is our single largest problem. To me, one of the greatest challenges we face now is inventory management.’€

Reddic describes the difficulty he faces turning down supplier partners when a new product comes out, and how it can skew his bottom line. For example, a supplier with whom he has frequently worked closely came in with a product extension that Reddic and his staff, after tasting, decided had only a limited chance for success in his stores.

‘€œBut I put it in because the supplier was a great friend and it was very important to them that we at least gave it a chance.’€ But he ended up with a range of skus of the brand that, in fact, ultimately didn’€™t sell. ‘€œI’€™ve probably got 60 or 70 cases of the stuff and I have absolutely no idea how I’€™m going to get rid of it.’€

In order to keep the shelves clear for the next new thing, Green’€™s evaluates new items every quarter and tries to get rid of anything that’€™s not selling through continuous discounting. ‘€œIt’€™s painful and expensive but the bigger sin would be not to put in stuff and to lose the image in the marketplace as a retailer who features everything that sells with any volume.’€

Wine and Beer Challenges

In wine and beer, Green’€™s faces different challenges. The stores saw a massive trade-down with wine because of the recession, and Reddic says that while customers are starting to show a willingness to pay more, they now are always bargain hunting.

‘€œCustomers today are very savvy and well-educated, and the Internet plays a huge part in that. When a wine customer is able to go online and see what wines sell for at retailers across the country, they develop a mindset that ‘€˜I shouldn’€™t pay any more for that wherever I live’€™ – forget the tax and wholesale structure and laws and whatnot. I think the wine business has forever been changed by the internet. It really has made the consumer a lot smarter, a lot sharper and more demanding,’€ Reddic says.

Green’€™s private label wine program is almost the reverse of the spirits side: a few national brands interspersed among more than 250 private label and additional discount wines bought at volume. The contemporary wine drinker’€™s willingness to try new things encourages experimentation and thus, the discounted brands are a good bet for building sales.

Especially in the modest income South Carolina stores, California wines have thrived, though Reddic expects prices to begin to rise soon. ‘€œWe had a Stags Leap Cab that we sold at $19 at very good margins for awhile, and that’€™s a thing of the past. I think the supply and demand axiom is about to come back into play.’€

He sources less-expensive wines from Chile, Italy and Spain, where he consistently finds value and quality, and stocks up on $3 to $5 bottles ‘€œIf we didn’€™t pursue that business we’€™d lose all of it, and I’€™m not sure we’€™d replace it with anything, so we try to embrace it.’€

Focusing on Craft Brews and Imports

The beer business is under a different kind of pressure, this coming from other types of retailers, including grocers and big box stores who are driving down the price of mass market beer at a time when customers are deserting the brands, with one retailer in Columbia selling suitcases of domestic beer at cost all year long. Faced with the decision to match low prices or hold firm and give up the volume in the domestic side, Green’€™s has found salvation with craft beers, imports and a growing business in growlers. ‘€œWe sell a tremendous amount of growlers ‘€“ it’€™s been a godsend and made up a lot of the revenue we’€™ve lost from domestic sales.’€

Now, with temperature and humidity controlled beer caves installed for fans of the Duvels and Chimays of the world, Green’€™s has established a point of differentiation that can’€™t be found at a Walmart. ‘€œIt’€™s a different world and it’€™s changed more than any category we do business with,’€ he says.

Possible State Law Changes

Green’€™s operates under state and local strictures that limit tastings, and state rules on ownership that are in flux. Right now, Reddic is closely watching the Georgia legislature, where a bill (supported by a large national retailer aggressive about selling alcohol) would allow a single operator 10 liquor licenses. ‘€œIf it passes, the landscape in Georgia will change so quickly, we’€™re going to have to ramp up or get out,’€ he says, with small operators with one or two stores in danger of becoming irrelevant. If no changes come, he’€™s interested in looking to expand into neighboring states that might open up ‘€“ he mentions North Carolina and Alabama as likely targets if the laws change there. ‘€œWe would be much better as a regional player rather than building more stores where we are.’€

Meanwhile, juggling the needs of the various markets keeps Green’€™s busy enough matching national trends with regional responses, adding and subtracting products and building business through discounts, industry innovation and private label. In the right combinations, that’€™s a formula that could work in any locale.

At a Glance: Green’€™s Discount Beverages

Total units: Six

Founded: Leonard Greenbaum opens his first Green’€™s Beverage Store in 1938 ‘€“ the company still operates in the same location, now a 7,500-square-foot Atlanta store.

Company president: Lock Reddic

Locations: Operates in Georgia and South Carolina ‘€“ two stores in Atlanta, two in Columbia, SC, one in Myrtle Beach, SC, and one in Greenville, SC. One Columbia store is a warehouse format that sells beer and wine only; all others sell beer, wine and spirits.

Annual revenues: Approximately $63 million

Sales split: More than 53% spirits, 25% wine, 22% beer

Trajectory: Spirit sales are soaring, with premium brands picking up any slack in volume. Wine holds steady, though the South Carolina market looks for value and most wine buyers are bargain hunting. Beer is a battleground, with big box and food retailers keeping mainstream brand prices near cost.


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