Carrying national brands in boutique store

We carry about 400 wines in a 1000 sf store. We have very few national wine brands but I am considering having more token offerings in the basic categories of Chardonnay, Merlot, Pinot Grigio, Cabernet Sauvignon maybe even an white zin. I like to be product driven but I don’t want to chase away business. I know that we have lost some sales when people come in and look for Bogle, Kendall Jackson and the like. Generally I say “we don’t carry the national brands because we can’t get any pricing on them but here is a well priced product in the same category made by family xyz”. That generally makes the sale but not always.

One challenge I have is making a normal mark up on a national brand when national brands are advertised at my cost in the big stores. Do I cut my margin so I don’t look like I have high prices or do I just to a regular mark up and hope for the best?

How do other small stores out there handle the big brands? We sell our share if Bud Miller Coors but also have around 100 craft brews. I think beer is a little different. I don’t understand it but many people who buy good wine still seem to buy uninteresting beer.

This is a serious problem that all independent retailers have to deal with. Where are you located and who is your competition?

Justin, if you are ITB (in the business) you need to reflect that in your signature line.

Justin,
We had a similar business model of not carrying big national brands but when we counted a dozen people in one week ask for Rombauer Chardonnay we caved in and we sell a ton of it. As far as the profit margin on some national brands, we don’t sell them for full retail so we’re able to compete as best we can and accommodate customer requests on larger production wines but we pick and choose carefully on what we add. I felt it was better to have some of the wines and make less $$$ than have customers go elsewhere.
As Richard said, it’s always an issue for small retailers.

What Richard said. It also depends on the precise numbers of your cost/margin issue. Liquor buys always destroy my budget. In NY we don’t sell beer. In wine there are always high margin alternatives if you are a smart buyer, and in a Manhattan neighborhood store as long as you have the customer leaving the store with a wine the customer thinks is worth the price paid he/she is happy. The brand pricers will either walk out or accept that we’re a few bucks higher because we offer convenience and unique service, such as free delivery of a couple of bottles on demand to locals. Another strategy is to have a higher shelf price but be willing to ‘price match’ if a customer brings in an ad/receipt from a competitor who offers a lower price. Make them do the work if they want to pay less.

Granted our store was sold as a casualty of the ‘Great Recession’, so perhaps I’m not the best one to talk about this, but I DID spend about 40 years in consumer product retail and manufacturing before that venture. Successful retailing is about creating a niche for your business, but also about servicing your customer and making a profit. Sounds simple, but it isn’t always.

You have to decide what you want to be, make a strong stand at being that, but also be flexible enough to make realistic decisions about what makes sense to develop your business strategy. My original plan was to carry 300+ facings of harder-to-find, smaller production wines and be a destination for somewhat serious consumers. But I also found that I walked a lot of customers who wanted something that they were either more familiar with, or something specific we didn’t have.

Specific: Like Randy… in the first 60 days after opening I counted over 100 requests for Rombauer Chardonnay. So I sold my soul and bought their Cab and Zin to try to get the Chard. I never did get it (don’t ask… it’s an annoyingly painful story). BUT… I then brought in some labels I’d passed over, simply because while I was trying to build customer confidence in our selection and recommendations, I needed some labels they could just grab and buy based on their own comfort level. There was some margin quicksand in that strategy because of price competition, but I tried to keep those wines within a reasonable percentage of our total business.

The same thing happened on the upper end of the price spectrum. To be perceived as in ‘the zone’ I brought in labels like Caymus with which I could only make a small percentage profit, but brought reasonable dollars to the bottom line per bottle because they turned well.

I also found I needed to do some price/value business after a short while. That hurt the most (from a marketing plan perspective) but I isolated those wines in stacks, and they served their purpose.

Granted this was 2006 and 2007, when independent retailers were bobbing and weaving to figure out how to do business. Nobody needed to tell me the economy was in trouble back then. It took CNN well into 2007 to tell me what I already knew. By then my aficionado customers had migrated from buying small production labels by the case and telling me all about their allocation wines coming in… to sitting at the bar over a glass and asking me if I’d buy part of their incoming allocations so they wouldn’t lose them.

The moral of this story is that you have to try your best to stick with your vision but, unless you’re independently wealthy, you also have to figure out how to grow your business and keep the lights on. I suppose the trick is to balance those needs without compromising what makes your business meaningful to your market. Trying to be all things to all people is, and there are lots of books on this, a really bad idea for a small business. Just be careful and make well thought out decisions.

IMHO a boutique store’s decision to bring in Rombauer is is a big deal, but not the same as bringing in J. Lohr or KJ.

Good luck.

Thanks for the feedback folks. I am in a pretty unusual market - Montgomery County Maryland which is the only control county for beer & wine (two other counties in Maryland are control for spirits). It’s a long story but it is essentially a 4 tier system with the exception of small domestic producers who can ship directly to me by jumping through some hoops. Our competition includes the County itself as well as some very good places in DC and Total. However, we have a good location, good selection and all the intangibles which small stores should have. Anyway, I am going to bring in some more better known brands and see how it goes.

Depending on the size and configuration of the store, you might want to consider putting the larger brands in the back. That way, if someone comes in just to grab a bottle of some national brand, they have to walk past the more interesting selections which might make them stop and look at something they wouldn’t have though about. If you put Rombauer (or whatever) in the front of the store, they’re more likely to come in, grab the bottle, go to the cashier and then just leave.

Bruce

Mogo is a unique wine county! And if people are willing to pay those already somewhat inflated prices compared to neighboring counties, you may as well bring them in and price them accordingly to keep the business. Nothing wrong with keeping up with what some customers are asking for on a scale that won’t hurt your image.

At the risk of making the thread drift I will note that in many instances Montgomery County does not have to be as bad on pricing as it might seem. I find the best values in direct imports where the product comes into a place such as Norfolk, Baltimore or Newark. The importer brings it to the County from the port of entry and the County brings it to me. This is a relatively short supply chain so the pricing is not crazy. Plus a lot of the direct imports are tiny so the products are invisible on the internet and well priced anyway. As I said earlier, I can also get domestic wine sent directly to me without a distributor or the county in the middle if the producer is small and jumps through some hoops. These wines of course are not super inexpensive, but if they come to me directly,then the pricing is still pretty good and the producers tend to be relatively hard to find elsewhere.

All things considered, Montgomery County is a challenging place in which to have an alcoholic beverages business. However, we knew the challenges before we opened and nobody is forcing us to be here.

Justin, here is what I would do:

Continue to persist with the wines you want to carry and as politely as possible, try to convince those looking for brands to try other things. As you sa,d yourself, it works most of the time.

Overtime, you will notice that there are some brands you must carry as people will not take no for an answer. Let’s assume for argument sake there are 10 of them. Why not buy a case or so of each and leave them in your basement away from the pollution they will cause to the shelves. If someone absolutely has to have KJ Chard, then you will have that covered and not lose that customer. After they buy this bottle maybe try to get them to buy an equal priced one that you consider much better. Voila, the proof is in the pudding!

There is a lot of ways to approach your issue. In my experience KJ=chardonnay to a lot of people. When they ask for the brand they almost always mean chardonnay. It’s a synonym. For a lot of consumers this is all they know—they have been sent on a mission and this is what they must acquire.

I’d try a dozen or so wines, make a best-known section, at whatever your normal markup is. Some of those big names ALWAYS sell. They sell more when they are aggressively discounted, but they always sell.

Excellent advice. It’s important to be true to yourself and your niche, but it’s also important to make the rent and eat.