A family of stores: the employees of the Idaho State Liquor Dispensary make the state stores what they are.

"Our state stores look more modern, more like boutiques than the typical state liquor store," said James "Dyke" Nally, superintendent of the Idaho State Liquor Dispensary (ISLD). "We receive many positive comments from suppliers and consumers."

The reason behind the stores' look? Perhaps a plan for store design imposed from the ISLD's central office? No. The state-store managers take it upon themselves to decorate. "They have some flexibility and bring in plants and pictures. Each store is a little unique," said Nally.

According to Nally, the 217 full-time and part-time ISLD employees who work in Idaho's 51 state stores make all the difference.

"Many of our store managers have a lot of tenure," he said. "We had one in Ketchum/Sun Valley retire after 41 years. They really seem to enjoy their jobs. Managers and clerks take personal pride in their stores."

In the state of Idaho, there are a total of 155 stores in the control state system, 51 state stores serving the larger cities and 104 contract agencies, ranging from convenience stores to meat markets and even an insurance agency, serving smaller towns.

Basically, these stores and agencies sell mostly spirits products. They also carry a few malt liquor products containing less alcohol as well as some wines in Idaho's several "Dry Counties." The control state system in Idaho handles the sales of 1,433 SKUs, with the average state store carrying 979 SKUs and the average contract agency carrying 225.

Total annual sales for the entire system is approximately $72 million, $57 million of that coming from the state stores, $15 million from the contract agencies. Sales trends through May of 2002 show an increase over last year of 6.7%.

The 51 state stores and contract agencies are sprinkled evenly over three districts: District #1, the southwest portion of the state, headed by district manager Art Lee; District #2, the eastern part of the state, headed by district manager Bruce Christensen; and District #3, northern Idaho, supervised by district manager Gordon Hubbard. The district managers all report to Ken Winkler, the ISLD's chief financial officer and chief operating officer, who is ably assisted by Joan Urresti.

The state stores in Idaho generally range from 2,000 to 4,000 square feet in size. The busiest, such as Store #101 in downtown Boise, rings up $3 million in revenue annually.

In an effort to keep labor costs as low as possible, each state store is staffed as minimally and efficiently as possible. Generally, the state stores have staffs ranging in size from 1.4 full-time personnel (FTP) equivalents to 4 FTPs. These staffs include one full-time store manager and clerks. In addition to full- and part-time clerks, the ISLD also has "temporary clerks," employees that can come in when and where needed. The stores are open six days a week, from 11 a.m. to 7 p.m., with a few, in areas with sufficient demand, having extended hours till 9 p.m.

The store manager and district manager generally train store employees on the job. The ISLD's human resource officer, Margo Edmiston, provides additional general training on topics such as interviewing, hiring and disciplinary techniques.

"And the district managers train the store managers," said Nally. "Most of the time, people come up through the system, where clerks become store managers."

Store managers continue their education. Every year, the ISLD holds a two-day meeting of all its state-store managers, usually in Boise. There, managers receive training in topics including I.D. checking, safety, computer systems, merchandising, etc. During the "New Product Seminar," store managers meet supplier representatives and are able to learn about and sample new products. They meet with people from the ISLI)'s central office and warehouse, "people they may talk to on the phone but not see on a regular basis," said Nally, and, perhaps most importantly, they get to meet and talk with one another, discussing the common issues they face working in a state system and in the retail world in general.

Nally is a strong believer in using the knowledge of his state-store managers, the people on the front lines. One change he made to the ISLD as superintendent is to involve store managers in the "listing' process, deciding what products the stores and agencies should carry.

Nally insists that the store managers are a vital part of the listing process. Store managers, on a rotating basis, meet with the district managers three times a year to discuss the listing of products and sizes. These meetings are organized by Bill Applegate, the ISLD's manager of procurement, pricing and distribution, and Kay Bennett, the special order manager. The ISLD's CFO Ken Winkler also attends these meetings.

Suppliers send representatives w who give a presentation of their product, discussing how it is doing in other areas of the country, what promotional program will be used to support it and how profitable the brand is.

The most important consideration for the store managers and district managers it these meetings, Nally said, is what niche the product will fill. "There are lots and lots of vodkas out there," he explained. "If we're going to take another one, we want it to fill a niche, or provide better profit to the state."

The ISLD usually considers 60 to 90 new products in these two-day meetings. The listing committee might choose to list 20 of the products they've seen. The district managers and store managers make their recommendations to Nally, who rarely varies from what they suggest.

The de-listing process is based on the product's performance. "If it's not doing well, we put it on a watch list," said Nally. "We contact the company and usually meet with them, and discuss ways to improve the brand's performance." If the product does not show promise after a period of time, it is de-listed from the product line. While the ISLD does not hold sales in its stores, it does pass along "temporary price reductions" from a supplier. "These are usually minimal discounts, maybe 50 cents off a 750," explained Nally. "We are not really in the business to promote [sales], but we will pass along a price reduction to highlight [a supplier's] product."

The ISLD is considered progressive in its use of p-o-s materials. Although the state stores do no advertising themselves, they do allow suppliers to come in with their p-o-s materials. Supplier p-o-s is used throughout the year, but especially during the holidays.

It is up to individual store managers to decide what point-of-sale materials suppliers can use in their stores. "Suppliers work with the managers who tell them what space they have available. The managers have to monitor what products are being highlighted with these materials, knowing that other suppliers will also want to have displays. They also approve what is to be used," explained Nally.

The state stores of the ISLD occupy a range of locations, including strip malls to stand-alone stores. Where possible, the ISLD places its stores near grocery stores. Store locations are leased, with the ISLD paying $1.2 million last year for its 51 state-store leases.

"Our stores are very clean; they are carpeted; they have a consumer-friendly appearance," said Nally. Most have the same shelving and are "set" uniformly throughout the state, with distilled spirits arranged by category.

The stores are kept fresh with regular maintenance. "Obviously, we change the carpeting and paint when needed," said Nally. Shelving is updated or replaced when needed as well.

The ISLD stores and four of its contract agencies use the ISLD's point-of-sale computer system. "It was built by two or three different IT managers over the past ten years," said Nally, "and it works pretty well, thanks to our current IT manager Bob Bergstrom and his staff." The cash registers in the stores are Compaq PCs outfitted with cash drawers. These PCs run p-o-s software that keeps track of inventory for each store and sends the store's sales to the central office's servers, also Compaq PCs, nightly by modem. Ninety-nine of the other contract agencies use whatever p-o-s computer system they use for their other non-liquor sales, and send their sales data to the central office by modem weekly. One small contract agency remains without a computer. That one sends its weekly sales information in by regular mail.

Nally explained that the ISLD has tried in the past to get more of its contract agencies to use ISLD's p-o-s system, even a providing them with used computers. Still, "the current situation is working relatively well," Nally said.

The p-o-s system used by the state stores provides each with "private-enterprise-type sales reports," said Nally. Indeed, store managers can make requests for customized reports. "And they know, by the end of the day, how many bottles they have on their shelves," said Nally.

Who's Watching The Store?

Security cameras and alarm systems have been installed in all 51 state stores. Because the stores are staffed as minimally as possible, often with just one person on duty, Nally worried about employee safety, especially in the extended-hour stores. These systems, each of which includes two cameras and a monitor, cost $2,800 per store.

In addition to sales to the general public, the ISLD state stores and contract agencies also handle the state's sales to on-premise licensees. These "discount sales," so-named because on-premise licensees buy their products at a 10% discount, represent 26% of total sales at the average state store. Some locations, however, especially stores located in a city's downtown area, do the majority of their business in discount sales. Store #101 in downtown Boise, for example, does 79% of its business with on-premise licensees. "We try to make these stores convenient [for on-premise licensees,]" said Nally, "and they also need to have plenty of product and storage space."

Special Orders

In the last 12 months, the ISLD has handled 23,139 special orders of 291 different brands. The average retail sale of a special-order product is $28.95. The top three categories for special orders are cordials, Scotch and bourbons.

When a customer requests a special order, "we might, if we have a vodka, for example, that is very similar to the one they want, suggest it," said Nally, "but, of course, if they still want what they want, we order it for them."

If that product is special-ordered often--for example, an on-premise establishment in the state uses it in a specialty cocktail--the ISLD will likely have some of it in its warehouse and the process will not take long for the customer. In some cases, however, some special orders have taken as long as six months to come in. "Sometimes, a product is difficult to locate or a supplier will wait to ship it as part of a regular order," explained Nally.

Of course, the ISLD watches how often special-order items are requested. "If it continues to be popular, we might make it a regular listing," noted Nally.

In general, sales for the ISLD are up. "One of the biggest trends we see is that rum, imported vodka and gin are up--and have been for the last couple of years," said Nally.

The top five categories at the ISLD state stores are vodka, with 20% of total sales, Canadian whiskey, with 16%, rum at 12%, whiskey at 10% and liqueur, not including cream liqueur, at 8%. After that, schnapps and tequila each claim 6% of sales, malt liquors and gin come in at 4% each, brandy, Scotch, cream liqueur and non-alcohol products (state stores carry a limited selection of mixers, such as tonic water) at 3% each, ready-to-drink cocktails represent 2% of total sales, with sherries, ports and vermouth making up the remaining 2%.

The top brand for the ISLD is Black Velvet. Its 750 ml size is the number-one item in terms of popularity and its 1.75 size is the ninth most popular product. Jose Cuervo Tequila is number-two, followed by Jack Daniel's Black and Captain Morgan Spiced Rum, all in the 750 size.

The ISLD opens a new state store every couple of years. "We're usually a little behind with that," said Nally. "We need to get authorization from the legislature, spending authority, and it is not always granted."

When it comes to the state stores, their vitality boils down to one thing. "I want to brag about our employees as much as I can," said Nally. "They are the greatest, honestly. They are an incredible group of people, very much all on the same team. They are the reason for our success."