Forgive the phrasing. I’m in the process of looking into jobs in the wine industry, particularly in off-premise wine sales. I was speaking with a long-time small retailer, and this is what he told me*.
While I very much appreciated his candor, I wonder to what extent folks on the board agree with his assessment. On the one hand, retail jobs in all sectors are under significant threat Retail Job Losses Are Hurting the Economy, so this is probably at least in part an element of larger macroeconomic trends. It also seems that retail is consolidating (another significant feature of the US economy in the last 25 years), so that what retail exists happens more at big-box stores than ever. This is a positive or a negative, depending on your outlook.
It’s also possible that the nature of retail is changing–moving from face to face interaction–to the extent that occurred–to digitally curated wine clubs and garagiste/WTSO-style mailing lists. (Obviously this is highly contingent, given state-to-state rules on outside shipping.) In addition, there is direct mailing from wineries. There are huge benefits to these models, not least of which is vastly increased access to a broader market. But these models sometimes lean heavily on branding and promotion, so there may be some concerns there.
So where is retail right now, and where is it headed? Say out-of-state shipping is fully legalized; is that the nail in the coffin of higher-end retail?
*Note: I get the sense that the business owner I spoke with was frustrated by the cultural sweep of technology; i.e., for him, it lessened people’s willingness to come into his shop, have a discussion about wine, think about things a bit more slowly and deeply, and be a part of a community. Btw, I was the only person in his shop when I came in, so he gave me his time, attention, and advice.
Back in the 1980s when I was in business school there was a guy who wrote a book about how small business could compete with Home Depot. That was the category killer of the time. His thesis, backed up by data, was that HD only had better prices on a few things and that people would be happier to go to a place with better service that they could quickly get in and out of. The people who were most hurt were the specialty guys like the local electrician or plumber supplier, not the small hardware store. In Brooklyn, my corner hardware store had better prices and service than the Home Depot a mile away and consequently it was crowded every morning.
Then when Amazon came along, that was the category killer. They hurt bookstores, but they sell virtually everything else and when I looked last night, there were lots of stores around. Right now I’m seeing a lot of little remote-controlled carts rolling around the street. Google is testing their mapping and they’re planning to offer those to stores for automated deliveries for local restaurants and stores. Apparently they’re expecting the locals to stay around. Eventually there will be some legislation regarding what can be sent around in those carts and frankly, I can’t see how they’d work in a place like NYC where they’ll be broken into first day on the street.
Point is, every time someone says something is dead, it isn’t. I have absolutely no need to buy wine for years and yet I still find my way into the occasional store, browsing and buying. I think we’re all like that – there’s something about the immediate touching and feeling that you don’t get on line. Is retail different and will it become even more different than what it was fifty years ago? Sure. But it’s not going anywhere.
Look what Gary V did. He became an on-line sensation and as a result, his bricks and mortar store was crowded every weekend. People wanted to go see him. As retailers figure out the balance, they’ll be in good shape.
However, and this isn’t a joke, the so-called “living wage” laws can make a difference. They already are killing some restaurants in the Bay Area who can’t pass on the prices any more. Those will have an effect on all small businesses.
As a partner in a small, high end retail shop, I see no reason why we can’t remain successful for the foreseeable future. There is a niche that we occupy that can’t be replicated by the warehouse stores or on-line. Service and knowledge still pay off.
DoctorJay
According to the American Booksellers Association, independent bookstores are thriving – with a 25% increase in ABA membership since 2009. Bookstore sales are up 6.1% since January 2016, the U.S. Census Bureau reports.
As a person who became interested in wine–and now interested in entering the industry–via great retail shops, I’m glad to hear that you’re positive regarding the future. I do think there is something unique about face-to-face relationship building combined with the hands-on nature of stores that is important. It seems that the former is where smaller shops can cultivate their best customers.
I’m not in the business, so take that into consideration. 1st of all, the people on berserkers are the 1% of the wine buying public. The fact that we buy most of our wine online proves the point. Most people dont care as much as we do. They just want some nice, tasty wine that they can drink with their friends. Heck, 45% of people won’t buy a wine at a restaurant over $30 for a special occasion!
One type of wine store I think will do well are specialized wine stores in dense neighborhoods that are not car-centric. People in the neighborhood will naturally purchase at a shop they can walk into and talk with people. This seems like much more interesting from a store employee standpoint, as you can actually assist people by hand-selling interesting wines.
But maybe I’m wrong, maybe millennials and the next generation wont want to talk with people, or have everything delivered by wheeled drones. Who knows.
I’ve seen two examples of very neighborhood centric, walk to type stores, in central Denver’s more dense, relatively affluent neighborhoods. Both eventually added beer and spirits to their line up because they were viewed as neighborhood “liquor stores” more than just wine stores. Both eventually changed hands at least once in each case. One moved their inventory to under $20 wines with Fri/Sat afternoon tastings of the same. I wish them well, but it seems like an uphill climb.
Some of the local wine retailers have gone to more of a wine bar approach. The joints are packed during the happy-hour period, but the crowds and the noise is not conducive to thoughtfully shopping for a nice bottle to take home. Maybe the retail off-site sales part has become a secondary priority?
My guess is that few people other than wine geeks shop on the internet for wines. I think that what is killing neighborhood stores are things like Total Beverage, Costco and supermarkets. Even where it isn’t true, people believe that Total Beverage has the best price for wines. And the other two get all the guys who are in the store anyway.
Frankly, I think a lot of smaller retailers hurt themselves when they started relying on Parker and Wine Spectator scores to sell wines. Anyone can do that. So, sales went to the lowest price.
I see a future for a long while yet, but it’s always been a lot of hard work.
Over here we have supermarkets dominating the cheap end, driving down prices, individuality/authenticity and quality. They do try to work the top end, but aren’t very good at it. They still haven’t got their heads round the concept of ‘vintages’. Amazon will be competing directly here.
A single national specialist (Majestic), since Oddbins got destroyed firstly by Castel/Nicolas and then finished off by an extremely dubious self-enriching sprog of the founder. They’re going again under new ownership but only on a small scale and don’t appear to be a great success.
Then lots of independents / small chains following bricks & mortar model with / without online sales, plus more independents working out of internet only sales (be that via garage or warehouse storage). The good ones of each are prospering. Indeed the specialists in particular regions are well adapted to this model, avoiding much of the generalist market to focus on doing a great job in a specialist area. Something that rarely works in bricks & mortar as you’re failing too many customers with that focus.
It is a wonderful time to be buying wine here, as although prices can be a little cheeky if you’re not careful (but also very good indeed if you are), the range is wonderful.
Don’t see how this could ever be thought if as a positive, unless you figure in better benefits for the employees (certainly not from the consumer point-of-view).
The main positive from a consumer point of view is a wider selection, accessible in a single giant space. Lower price is not so straightforward, but can sometimes follow. Whether that makes up for an increased homogenization of retail is another matter; I know what I think, but that’s all I can say.
See, whenever I go into a big box warehouse-syle wine store, I don’t really see variety. Instead, I see sameness of offerings and nearly everything based on a Walmart “lowest pricing” model, which really doesn’t support or highlight small or more interesting wine selections. When Wegman’s took over local stores in Upstate NY, selections thinned out and conformity took over.
The retail wine business is being split into two complete different categories. Very much like Home Depot split the hardware category.
The big box stores have taken over the mainstream business of major brands, low priced liquor and beer.
The fine wine shops are now free to no longer having to carry Kendall Jackson, Budweiser, Smirnoff etc and are free to get as kinky as they want -
It’s obviously good for business to have both an online presence and a walk-in presence, but I see smaller fine wine retailers doing very well in today’s market, at least the one’s that are run right -
There are tons of options where I am. All the grocery stores - some not as close ones have great selections (Draeger’s, Robert’s). There are niche shops. Somehow a Total Wine just opened next to the local Costco, which is 2 miles from a BevMo. I rarely get anything shipped - my main online purchases are winebid and K&L, which are picked up.
I saw the Amazon thing real close with a neighborhood bookstore. It was frustrating watching, as they had enough strengths they could’ve adapted. They’d heard all the advice. The resources to accomplish it were accessible. But, they stubbornly clung on to a slow death.