How Molly’s Spirits Leverages Data and Technology for Growth

It’s been less than five years since the first Molly’s Spirits opened in Denver’s Lakeside neighborhood. In that short amount of time, the store has quickly become a beverage retail powerhouse, largely due to integrating data and technology into many aspects of the business. 

Now a major local destination for wine, spirits and beer, Molly’s is preparing to open a second location this fall, and expand its reach to a broader customer base.

A Non-traditional Approach

The store itself evolved in a rather unusual way.

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Rufus Nagel, one of Molly’s Spirits managing partners and co-owner, has a background in real estate development. A graduate of the University of Chicago, his entrepreneurial spirit led him to launch a number of businesses earlier in his career in the areas of real estate, retail and finance. Initially, Nagel saw Molly’s as another business-ownership opportunity, and never anticipated himself becoming involved at the operations level. But as the project evolved, he found himself drawn much deeper into the process.

“I became more excited as things kept moving forward, and I saw an opportunity to approach the business in a very different way,” Nagel explains. “Many stores do things the same way that other stores do them, and they’ve been following the same process for many years. There was a lot of opportunity for innovation in the industry.”

One factor that played into Molly’s success is its location. The Denver metropolitan area has experienced tremendous growth in recent years, as has the state of Colorado as a whole. When the store first opened in late 2014, the area lacked much competition in the industry. Big-box retail liquor stores didn’t exist in Colorado, and independent operators abounded.

Nagel and his partners saw tremendous opportunity to take advantage of this market while approaching the business in a different way. They decided to build a 28,000-square-foot location that was uniquely designed, and also integrated technology into most every aspect.

Data is constantly collected from multiple touchpoints on an ongoing basis, allowing store leadership to identify new patterns and trends, and jump on them before most other retailers are even aware that they exist. For example: rosé wine wines have gained popularity across the country over the past two years, but Molly’s has showcased rosé for more than three years, because store data indicated that it was a growing product segment that more customers were interested in.

The ambiance of Molly’s is also distinctive. Nagel is a self-proclaimed amateur interior designer, and it was important to him that the large retail space project feelings of both intimacy and innovation. Almost 20 digital screens are on display throughout the store, featuring the latest product offerings, while data is collected throughout multiple points in the store. Dynamic floor sets are flexibly designed to allow for constant product display rotation, which often changes on a weekly basis. 

According to Scott Smith, Molly’s Director of Product, the company focuses on high-quality products that can be purchased in bulk and offered to consumers at a competitive price. 

The company focuses on high-quality products that can be purchased in bulk and offered to consumers at a competitive price. 

“At Molly’s, you’ll find the products you’re familiar with and are looking for, but this is also the place you go if you’re in the market for something new,” Smith says. “Our customers do not always want another bottle of what they have liked in the past. They are more often interested in pushing the envelope and finding something new to enjoy. So many large stores go about curating their selections largely based on distributor needs and the path of least resistance. At Molly’s, we’re really committed to having a different landscape, which means doing a lot more work ourselves.”

The store regularly brings in new products that most customers won’t be able to find anywhere else. On average, Molly’s introduces 30 new products per week, including their own Molly’s-branded products, such as their hard soda collaboration with Rocky Mountain Soda, and canned cider rosé with Snow Capped Cider, both of which released this summer.

Items that are not selling do not sit on the shelves for months, collecting dust and taking up valuable display space. Instead, consumer purchase data is collected and reviewed each week, and products rotate in and out based on that information. As a result, Molly’s has deeper insight into its customers’ evolving needs and can quickly make adjustments that are in line with consumer shopping patterns.

For many retailers, this process only occurs on a quarterly basis. At Molly’s, the extra work speaks for itself in terms of overall sales growth. During its first year of operation, the store grossed $10 million in sales, and in the 2018 – 2019 fiscal year, sales topped $20 million.

In order to keep pace with customers’ changing interests and preferences, Molly’s also works closely with its wholesaler and distributor partners. These relationships go beyond that of a traditional retailer/seller collaboration.

The leadership team at Molly’s spends a great deal of time working with its partners to set product pricing, incorporating an electronic MarginMate tagging system on all products in order to allow prices to change quickly.

Maintaining Variety

Connecting with local breweries is also a priority for the store. Molly’s routinely embarks on special-product collaborations with various breweries, and maintains a strong relationship with the Colorado Brewers Guild. Molly’s is proud to have collaborated with a number of Colorado breweries, including New Image, Finkel & Garf, Crooked Stave and New Terrain.

“We’ve released some fun beer collaborations with 35 different breweries so far, which is amazing,” Nagel says. “The brewers trust us to help grow and represent their product in a way that benefits us both.”

“We’ve released some fun beer collaborations with 35 different breweries so far, which is amazing,” says Rufus Nagel, one of Molly’s Spirits managing partners and co-owner. “The brewers trust us to help grow and represent their product in a way that benefits us both.”

In addition to beer collaborations, Molly’s has also co-released limited-edition ciders and spirits with a number of partners. The operation has included cider production, collaborating with Snow Capped Cider and Colorado Cider Co. The liquor aisles have a revolving selection of single-barrel, collaborative blends and unique products from producers like Buffalo Trace, Herradura, Deviation Distilling, Four Roses and others. 

The store’s craft beer selection is huge, and constantly growing. One way Molly’s encourages customers to try its array of beers and ciders is by featuring a six-door “build your own six-pack” collection. The store incorporates a number of upscale beers into the selection, and all bottles are individually priced. Customers can choose a selection of whichever products they want, and they receive a 25% discount on the total cost of the six-pack.

Molly’s is known for its large selection of whiskey, along with a unique selection of bourbons, particularly single-barrel bourbons. Gin and tequila are two up-and-coming categories the store is also focusing on growing.

In terms of wine, sparkling is all the rage. Molly’s currently features a selection of more than 350 types of rosé, including its own private-label canned rosé, Molly’s Rosé Bubbles. Saké is another category experiencing steady growth. Molly’s has a robust saké selection, larger than that of most other retailers in the area. 

Alternative packaging is another category that is gaining momentum across the state. As many residents take advantage of Colorado’s countless number of outdoor activities, they’re interested in beverage products designed to fit their active lifestyles. Boxed, canned and pouched products are all on the rise, as is the hard soda category.

Delivery is also gaining popularity at Molly’s. Orders come in and go out via Drizly, and Molly’s utilizes electric vehicles for all deliveries. Around 98% of all deliveries arrive within 40 minutes to one hour, ensuring the fastest possible service. In an effort to best meet the needs of all customers, Molly’s is open for business every day of the year except for Christmas Day, and offers extended hours to accommodate people’s different shopping schedules.

Building Relationships

Molly’s Spirits has developed a reputation of being an innovative retailer that offers a unique array of products to its customers. However, integrated technology and robust product selection are just two attributes of the store’s overall success. Nagel says that the main reason Molly’s does so well is because of the people behind the business.

“From the time we first opened the store, we’ve had a very involved HR model,” he explains. “Our staff members are very well-trained. We incentivize our employees very well, and as a result, everyone who works here is extremely welcoming to customers, and are also very knowledgeable and enthusiastic about our products.”

Molly’s utilizes electric vehicles for all deliveries.

At Molly’s, all 52 staff members are trained to think of themselves as hosts tasked with welcoming guests to the store and ensuring that they have the best possible shopping experience. Nagel says that Molly’s pays its staff a higher wage than most competitors do, in order to make sure that top talent can be recruited and retained. Additionally, the store tends to hire more people with experience in the service industry rather than in retail, which is a good fit with Molly’s hospitality-focused business model.

Another key focus of the business is cultivating relationships outside the store itself. Molly’s is committed to community engagement and support, and sets aside funds for various causes and organizations. One key partnership is with the Denver Art Museum: Molly’s supplies alcoholic beverages for all of the museum’s benefits, and also oversees the product selection process and delivery for each event. The store also works heavily with local nonprofits and their sponsorship requests.

“We get hundreds of inquiries each year, and can’t write a check for all of them, but we can always provide products priced at just above cost, making it easy for organizations who need cost-effective products for their events or auctions,” Nagel says. 

Looking To The Future

Molly’s Spirits is poised to increase its customer reach by opening a second store in November 2019 in another Denver suburb: Greenwood Village. After analyzing vast amounts of business data and reflecting on insights gleaned over the past five years of operations, the store’s leadership team will make several adjustments with its new location.

“The Greenwood Village store will have some key distinctions,” Nagel says. “Delivery is built into the entire design of the store to ensure optimal efficiency. We plan to open with a fleet of 10 electric cars and car chargers on hand, and we have a total capacity of up-to 20 cars and chargers, so we have plenty of room to grow. The new store will also have a unique cooler configuration for cold wine, and a special cool-down area for deliveries that are getting ready to go out the door.”

Anticipating that the state will eventually allow retailers to operate full-service bars in-store, the new Molly’s location has been configured to allow for that if necessary. In fact, nearly the entire store has been designed with flexibility and mobility in mind, allowing for quick and easy reconfiguration whenever necessary to accommodate new product displays and allow for additional space for large events, such as Molly’s annual large whiskey auction that will take place in the new location shortly after the grand opening this fall.

Nagel also hopes to eventually incorporate more educational events into store programming, pending the outcome of several Colorado laws currently under debate in the legislature.

Along with opening the new store, the Molly’s leadership team plans to continue building a strong and collaborative network with distributors, wholesalers and brewers. In particular, there is a new focus to collaborate with breweries, because as of January 1, 2019, new legislation went into effect allowing grocery stores to sell full-strength beer — or beer with more than 3.2% ABV.

“Many licenses changed, and that had a big impact on our business and on this industry in general,” Nagel says. “Consumers can now go to any grocery store to purchase beer, which makes it more challenging for independent retailers like us to stay relevant and competitive. We’re trying to work even more closely with different breweries to come up with new product offerings that are unique and special, and that customers won’t be able to get anywhere else.”

Considering everything Molly’s Spirits has accomplished thus far, those new products and the new store itself are sure to bring more innovation and success. BD

Melissa Sherwin is a freelance writer and marketing communications strategist from Chicago, IL. Her work has appeared in Chicago’s Daily Herald newspaper, Time Out Chicago, Suburban Life newspapers, and various magazines. She is also the author of several children’s books. Follow her @MelissaNSherwin. Read her recent piece, The Rise of Twin Liquors.

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