Sunday, February 25, 2007

Endangered Species

Tucked away in the back of the December 2006 issue of The Atlantic is an interesting article on the future of independent wineshops. With larger retailers and chain stores narrowing the already small margins on retail wine sales, the fate of these smaller shops is certainly in question.

Being an aggressive price shopper when it comes to wine, I often wonder if I’m contributing to the extinction of these shops. The city I reside in has a good variety of choices when it comes to buying wine: Sam’s Club, Total Wine & More, Green’s Beverage Stores, well-stocked grocery stores and several small wineshops.

I’m not a Sam’s Club person, so I don’t shop there, although they have a good selection and the prices are competitive. The grocery stores rarely have wine that interests me and the prices aren’t very good in general; I occasionally find an amazing bottle for some ridiculous clearance price.

I do the bulk of my shopping at Total Wine or Green’s. Having two large retailers—Total is an East Coast chain and Green’s is a local chain with stores in South Carolina and Georgia—doing business in the same city has dropped wine prices through the floor. They both have great selections.

In the spirit of full disclosure, I worked for Green’s for three years, but I’m certainly not what you would call an advocate for the company. I do, however, have some trusted sources of information with Green’s, which makes my shopping experiences much easier.

Total is well-staffed with salespeople who have varying degrees of wine knowledge. I am aware when I shop there that the company’s marketing tactic is to hard-sell customers on private label wine with high margins, and they pressure their sales staff to push these wines under threat of dismissal. I shop there occasionally because they have a larger selection.

Unfortunately, this leaves small wine shops in a tough position. They have neither the buying power nor the volume of sales to compete with the big boys. When I see wines that I know I can buy for $3 less elsewhere, I just can’t bring myself to do it, no matter how much I enjoy the wine shop experience. So I buy an occasional bottle that I haven’t seen anywhere else, but still with the knowledge that I’m paying a higher mark-up.

The retail margin on wine is shockingly small—usually between 25% and 35%. Large retailers have trimmed the margins even further. While I’m glad that people still enjoy the wine shop experience enough to patronize those places, I still can’t bring myself to do it. My wine dollars are too precious.

If the margins are 10% lower in the big stores, that means for every case of wine I buy, I get a bottle for free. Green’s kicks in a 10% mixed-case discount, which is like getting another bottle for free.

It’s worth mentioning that although these small wine shops put real effort into personal service, I’ve never found any of them to be helpful enough to make me shop there. I’m sure there are well-heeled customers that are waited on hand and foot, but for a $10-a-bottle shopper like me they don’t seem very interested in building relationships.

I think this is what the success of small shops depends on—knowing your customers, what they drink and taking good care of them. Knowledge also plays a large part.

“Wineshop owners can not only tell you what Aglianico tastes like, they can also pour you a sample. They can tell you what to serve it with—and give you a recipe,” writes Corby Kummer in The Atlantic.

That’s the sort of experience that will keep wine shops alive. Larger cities are more likely to be able to support smaller, independent shops, but smart owners in smaller market can cash in on quirky selections and the personal service that stores like Costco and Total Wine cannot replicate.

Independent wineshops might look to the example of independent bookstores, which have faced the same threat from Borders and Barnes & Noble. Those bookstores that have survived have using innovative marketing practices combined with old-fashioned customer service to develop loyal customer bases.

Unfortunately, wine shops can’t pool their buying power like bookstores have done, because of the complex systems of distributorships and laws that control wine sales. However, independent wine shops should be eyeing ways to cooperate with each other.

I hope that independent wine shops can find a way to survive. Wandering around a quirky, cool wine shop is one of the great pleasures of life for a wino like me.

And if you want to try a bottle of aglianico, look for Di Majo Norante Contado 2002 or 2003. This is a stunning example of 100% aglianico. Try serving it with your favorite lasagna recipe.


Sara, The Wine Makers Wife said...

I really enjoyed this post. I was in agreement and feelign high and mighty about how I support my local wine shops- then I considered my book buying habbits. do I support my local book shops? I don't have any, they've all gone away from the comeptitive business that Amazon and Barnes & Noble gave them. In the past, like a local wine shop, a book seller would order for me the title I wanted if they didn't have it in stock, and always with great customer service. Now I'm stuck depending on Amazon for all my book purhcases. I admit, it is so much more convenient. But I'm certainly not out and about, meeting author's at book signing, as I would at my local shop when guest wine makers have tastings. I miss the personable qualities of my old book shop and would hate for my shopping to all go to Bevmo if the local wine stores went away...

John said...

Thanks for a very thoughtful comment, Sara. The comparison between bookstores and wineshops is very apt. I feel guilty not patronizing my local wineshops, but the savings are just too great to overlook. I hope small retailers of all sorts can make a comeback, but it has to make sense for consumers.

Dr. Debs said...

Where I live, we are blessed with a small independent wine shop that is competitive with any wine super store, Chronicle Wine Cellars. They buy up bin ends, odd lots, less familiar varietals. It is my favorite place to shop, and they are a Pasadena institution. The drawback is that you can't go there looking for a specific wine. The great thing, though, it that you always walk out with a wine you've never heard of before and it turns out to be a great find. I think if more independent stores tried to compete price-wise by offering really different selections and service, they might survive. But John, I'm with you on the consumer end of things: I want the most, best wine for my wine bucks and for them to go as far as they possibly ca. When I lived in N. Carolina for a year it was Total Wine or nothing. Great post!

John said...

I'm a huge proponent of local, independent retailers. But as a consumer, I understand the need to balance principle with practicality. Let's hope there will always be those quirky, cool wineshops.