Wednesday, October 31, 2012

Great Moments in Retail v1.07: Or Maybe Not...

RIP Mustang Beverages.

For as long as I have worked at Sigel's Greenville Avenue, across the street a small, independent liquor store eked out their share of the market. I'm sure they stocked products we didn't, maybe their prices were a little lower on some items, for sure they didn't style themselves as an 'Elite' store as we did, not only in the new name of the store, but in our high-priced wines and whiskies, tile floors and big screens HD televisions and satellite radio. To quote from their one review on 'Yelp:'
Mustang Beverages is a lot smaller than your normal liquor store and reminds one of a Astoria or Williamsburg bodega.  Though their space is limited, they've done the most with their area and have a large selection of different liquors of all sizes. You won't find much wine or craft beer here, but what you will find are friendly employees that will chat about soccer or basketball and will always remember your name.
We coexisted. Until this week. After an 'inventory reduction' sale, they closed their doors, and one by one, we are meeting their customers. Why did they close?

Because the big dogs have come to town. Total Wines sells most major brands below cost. Other big stores are responding by lowering prices. Survival depends on having good business on other brands which can be sold at a profitable price. The change in the wet/dry lines opening up the city for beer/wine sales changed the game in a big way. Now the grocery and big-box discount stores led by Tom Thumb (Safeway) and Sam's offer an expanded selection of major brand wines at highly discounted prices. It's tough!

Total's MO is to lose large money for a year or more on their new stores. Their goal is to drive 40-50% of the independent stores out of business. And then they'll raise their prices on the major brands. Of course their major goal is to drive customers to their own private labels which have more than enough margin to offset the discounting.

So keep a watch on the little independents stores that populate the city. Support them when you can. Notice when they're gone. Remember that a capitalist economy depends on profit to exist. You don't get somethin' for nothin'!

RIP Mustang.

Great Moments of Retail v1.06: You Can't Have It!

As an industry we do some really dumb things.  For instance....

Whenever a spectacular vintage of a particular wine is released several things are likely to happen. The action/reactions follow a similar pattern usually depending on who owns the wine. It's classic supply and demand. Those who have it want to hold on to it, raise the price and save it for themselves or for customers with insider connections. Those who don't have it want to purchase the wine and those who have favored or insider connections will be able to purchase some.

The great thing is that this model works on all levels where the wine changes hands. From supplier to wholesaler, from wholesaler to retailer, from retailer to customer. The bad thing is that the average customer never sees the wine. All that's left for him is the lesser quality bottlings that still carry the same high price tag. On those special occasions when the customer buys one of these lesser quality bottlings, he is invariably disappointed.

What a great model!

Who would train a dog like this???