Sometimes, big is beautiful.
While many beverage retail entrepreneurs have recently opted for the business model and design of modest stores serving particular niches, that’s not what the partners and management had in mind when planning Hazel’s Beverage World, Boulder, CO’s newest and biggest beverage alcohol retailer.
At 35,000 square feet and about 12,000 skus including soft drinks, cigars and related general merchandise, the big store approach didn’t slow down Hazel’s dramatic ascent. In its first nine months or so in business, the store exceeded in sales what consultants had projected would be a good start after two years, according to store manager and partner Jim Dean. (Hazel’s ranks as one of the largest liquor stores in the state in terms of square footage.)
While the attractions of a large, well-designed, easy-to-shop facility with a broad-based selection of beer, wine and spirits are obvious, Hazel’s planners didn’t leave much to chance, deciding well in advance to craft a brand for the store that would establish its personality and iconography in a coherent way.
Creating a Store Theme
Their choice: flyers who served during World War II in the Women’s Airforce Service Pilots, better known as WASPS. ‘We wanted some kind of theme for the store,’ says Dean. ‘And along with the name Hazel, which is an older sort of name, the idea was to create an iconic brand for Boulder.’
The idea, devised by co-founder of the enterprise, real estate attorney Bruce Dierking, was to employ aviation imagery and graphics, and build local awareness of the store around something more than only a great selection of beverage alcohol; instead, they wanted to establish a pleasant and repeatable shopping experience in a unique environment.
So Hazel the flyer was born. Suspended from the ceiling inside the store is a half-size model of a F4U Corsair plane. Images gathered from historic records of the WASP aviatrixes line the walls, and the graphics used on the store’s website and ads features Hazel herself. A handful of the surviving WASPS living in Colorado have been hosted at the store as well.
The point is to make a visceral connection with shoppers, says Dean. ‘If you can give people a pleasant shopping experience, they’ll spend more time in your store looking around. And if you give them the items that they want to buy at a price they are willing pay, you should be quite successful. And so far we have.’
Boulder is slightly unusual compared to Colorado overall. The University of Colorado provides a flood of potential legal drinking age customers as well as professors and other highly educated personnel, and the town’s relative affluence ‘ its real estate values remain among the highest in the state and the area is a headquarters for numerous non-profit organizations ‘ translates into an awareness of current food and drink trends.
A Unique Market
‘Boulder is a unique market, a real foodie market among other things,’ says Dean. Hazel’s partners commissioned a study that found the market very highly educated, with a fairly large disposable income. ‘We didn’t feel that their needs were being met in terms of having an upscale wine and spirits store in town.’ While other stores operate in the area, Dean says they tend to be smaller and more old-fashioned in their retail approach ‘ there hadn’t been a new store in the area for nearly 40 years. ‘We didn’t think that sophisticated need was being met in Boulder.’
For instance, store layout. Dean and company made certain that customer shopping habits and patterns informed the floor organizational choices, making items easy to find and keeping the floor well staffed.
They also discovered that customers liked the idea of more service as well as a better shopping experience. ‘We try to hire people who want to be around people and help serve customer needs, whatever they are,’ he says. ‘Some customers only care about price, and if you don’t have the lowest price, they’re not interested. Other people care more about selection, and there are others who care about only service ‘ for them, it’s important that there are plenty of cashiers and staff on the floor to help them make their selections. So we try and meet those customer expectations, whatever they are because no one really knows what the customer wants when he comes in the front door.’
Even the maintenance of the restrooms is designed with the potentially finicky customer in mind, because ‘you never know what will make a customer not shop with you,’ Dean says. Clean floors, well-placed signage, neat displays, correct pricing, smartly organized shelves with accurate information ‘ all these are emphasized as rules of the road for Hazel’s. ‘It’s all the basics of retail and when you start thinking you can cut those corners, that’s when you start impacting your customer base. I tell my staff, ‘What business we get today is a function of what we did six months ago, not what we did yesterday.’’
Hazel’s consumer survey found among other things a need for broader wine selections, but also a better price mix ‘ it turns out that local retailers had mostly been operating in a high-low price approach that left overall wine prices fairly high priced. Dean says the store partners saw room for lower margins as well as a broader selection for the more affluent.
Using New Technology
Contemporary technology played a major role in two significant aspects of retailing: in the first, the pre-existing building was retrofitted with a high insulation factor roof and solar power system that supplies about a third of the store’s energy needs, and high-tech skylights that allow in natural light are specially tinted to prevent heat transfer and ultra-violet light from hitting store shelves.
From a business operational standpoint, though, most impressive are the electronic shelf tags in use. The system allows Dean and staff to manage price changes throughout the store electronically, almost totally eliminating ad hoc price checking. ‘Making sure the price on the shelf matches the price on the computer eliminates human error. We eliminate all the traditional steps like creating a paper tag and tagging the shelves each time there is a change. I can sit at my desk, change a price and 10 seconds later that price changes on the shelf,’ says Dean. The system is rare for beverage alcohol retailing, and is expensive but Dean figures it will return the investment in about two and a half years.
As for the store layout, it’s predicated on the idea that Boulder shoppers want something smaller than a big box but roomier that what was currently available – wide aisles, clear lines, well-lit areas. ‘I came out of the grocery industry which has always promoted wide and clean aisles with big displays and we’ve done that,’ says Dean. Hazel’s employs very little industry supplied point of sale, and generates all store signage on their own ‘ no neon in the window or large wall hangings, in tune with building the Hazel brand rather than that of any particular product.
Huge Beer Selection
One of the main facets of the store is its monumental beer selection, important given Colorado’s reputation for craft brewing ‘ every brew that’s available in Colorado at any one time is sold and kept on the shelves and in a cooler set up with 76 doors, about 5,000 square feet altogether, roomy enough to let customers walk through and shop.
Dean, a veteran of local beverage alcohol retail, says the craft beer shopper in the Boulder area continues to experiment in style and format. He carries an enormous selection of the 750 ml ‘bombers’ as well as standard sizes, and offers at Hazel’s something he’s featured at other stores – a price adjusted ‘pick six’ program that allows customers to combine all but the mass market beers to create their own reasonably priced sampler. ‘It’s probably our most popular item in the beer coolers since so many people want to try something new without paying a full six pack price.’
In beer, like in all categories, keeping on top of trends is crucial, he says, so while wheat and hoppy IPA beers are hot now, next year it might be something else. ‘Each year we get a whole new group of shoppers turning 21, and it’s all about experimentation and trying something new. We all look back at things we bought at 21 and wouldn’t drink now. But these days in all categories, the rate of change is amazing.’
Dean is looking into setting up a beer growler system for installation in the next year, since his brew-avid customer base already scoops up the 1200 ‘ 1500 brews he carries and keeps on him to get more of the obscure, rare and limited supply items so popular among the craft beer crowd.
Wines of All Kinds
Befitting any wine store in a well-heeled town, Hazel’s stocks a temperature controlled wine cellar space with vintages going for $300 and up. But with the approach that all price points be represented, they carry six and seven dollar brands like Yellow Tail, as well as plenty of box wines and Tetra packs. At both ends, those are the easy calls; what Dean instead wants from his wine buyers is to seek out values at any price. ‘There are a lot of great $25 wines, the idea is to see if you can find the $10 and $12 wine that is a great value,’ he says. Making the right choices benefits the store in both the short and long term, he says. ‘It seems whatever we put out there, our customer trusts us to have done the research on it so that when they buy it they think they’re going to get a good wine at a fair price. If they don’t, obviously we will take it back.’
He thinks values will be harder to come by as the excess of juice is sopped up by wine producers; in the meantime, the store is finding success with California and French wines, with shiraz/syrah and pinot noir still hot.
With 28,000 square feet on the selling floor, Hazel’s had room to add a good sized tasting area that is now accustomed to welcoming as many as a 1,000 customers over a two day tasting period. Hazel’s focuses on unusual items not widely available, and by making sure the pourings are promoted and treated like special events. Colorado law allows four tastes at any occasion ‘ one ounce of wine or beer, half an ounce of spirits ‘ and Dean says his customers are enjoying the opportunity and responding accordingly ‘ by buying. ‘When people get a chance to taste something there is an amazing impact on sales.’
While wine is the largest category and beer perhaps the most sought after, spirits are still a crucial component of Hazel’s selection. Like elsewhere, vodka is the biggest category, but last year’s confectionary flavors have faded in popularity and some like cake flavored are getting discounted and replaced with more classic flavors, Dean says.
While national sales data says flavored vodka is still growing rapidly, Boulder seems to be an anomaly, according to the records Dean keeps at Hazel’s. It seems that the university students who shop at his store have an overwhelming flavored vodka line favorite ‘ Burnett’s. If he screens out those sales, the first flavored vodka doesn’t show up in the top 70 vodkas sold. ‘You can’t allocate for that,’ he says. ‘You can’t keep cutting down the space of core brands for two more facings of a flavor that may not sell. How many raspberry or cake flavored vodkas do you need? We watch things and will take them of the shelf and put them on the discount rack if they don’t perform, but you cant just leave it because that real estate is way too valuable.’
Wide Spirits Selection
The size of Hazel’s means Dean must also keep well-stocked on spirits better known than bought. ‘Because it’s a big store people expect you to have a big selection so you may carry some things for lack of a better word part of the liquor museum. You sell a few bottles a year but people expect you to have them. From a purely economic standpoint they don’t make any sense, but from an operational standpoint they do.’
Just as some spirits highly touted as the next big thing fall flat, one never knows which one will take off. Espolon tequila is a major performer among the growing tequila category for Hazel’s. ‘I’m not sure yet why but I have to buy a hundred cases every six weeks or so.’ Colorado may be known as the Napa Valley of beer because of all its small brewers, but Dean thinks the state’s small distillers are making a similar mark, so fast are they opening and flourishing in the state. Stranahan’s may be best known, but such others as local Boulder Distillery, Roundhouse Spirits, and Spirit Hound are developing retail and consumer fans fast. Dean thinks the easy access to retailers has allowed these micro-distillers to flourish and go to market more easily in other states where chains are able to dominate a portion of the market. So he makes room for many of them among the 1,600 or so spirit skus Hazel’s carries. Like every other modern business, Hazel’s maintains an active digital presence, with an in-store marketing director in charge of using Facebook and Twitter. Little newspaper advertising is done, and then, mostly as brand building for Hazel’s every day low price approach and to tweak competitors.
Soon they will roll out mobile shopping via a mobile phone app to accompany text coupons and other digital marketing. The loyalty program, the Z-Card, has 26,000 members already, attracted by rewards based on purchases, drawings and weekly emails.
But when all is said, Dean is levelheaded about the enterprise, despite the early successes. ‘We’re not doing rocket science or saving lives here ‘ we’re selling alcohol, but we do think some of what we’re doing might change how people look at the retail aspect of the alcohol industry.’