Retailer of the year: Centennial Fine Wine and Spirts; The 65-year-old Dallas-based chain is expanding, revamping and re-energized under the direction of a strong management team.
Though the chain, based in Dallas, TX, has been consistently profitable since it was, acquired by its present owners in 1967, it was becoming dated. Its stores were showing their age. Employee morale was down; turnover was up. And many trends in the beverage alcohol market were passing Centennial by.
"How can I put this?" said Roger Voss, Centennial's executive vice president in charge of wine buying, retail sales and marketing. "Centennial was not exactly on top of the [wine] market when I was hired, which is why I was hired." The 2,000 or so wines the chain carried back then, in 1996, were arranged alphabetically on store shelves. "There was no attention to price: a winery whose name started with A, whose wine cost $2.99, was at eye-level, while ZD Chardonnay at $40 a bottle was gathering dust on the bottom shelf," Voss remembered.
Bringing Voss in to revamp the chain's wine program was just one of many changes undertaken by Centennial's current management team, headed by Greg Wonsmos, the chain's president since 1996, along with Vicki Vandeveer Moore, an owner, with her father Jim Vandeveer.
Virtually all of Centennial's 22 beverage alcohol stores and 10 convenience stores (The convenience stores sell beer and wine; half of them also sell gasoline) are new or have been substantially renovated. (Plans for renovating the remaining two locations are underway.) Increased attention to employee issues -- including what Wonsmos calls one of the "best benefit packages in the industry" -- have reduced employee turnover by half during his tenure as president.
Currently, the chain rings up sales of approximately $120 million per year, and in this period of economic downturn, reports growth, including sales from new stores, of a little over 10%. Same-store sales are up by about 2.5%, said Will Hajek, Centennial's vice president and chief financial officer.
In May of 2000, Centennial acquired Big Daddy's, a two-store beverage-alcohol retailer in neighboring Tarrant County. Because Big Daddy's is a well-established and successful retailer in its own right and because local laws prohibit the shipment of alcohol across county lines, the company runs Big Daddy's as a separate division. It just opened a third Big Daddy's in December.
The chain's latest development is its new headquarters and warehouse/distribution center, which is due to open in the beginning of 2002. The headquarters' office space will more than double, from 12,000 square feet to 28,000. The rest of the space, 55,000 square feet, will increase the chain's total warehouse space by 50%. And the new warehouse has been designed to handle the chain's growing Class B business, sales to restaurants and bars in its county's "wet" areas and to private clubs in its "dry" ones. Class B business makes up approximately 25% of Centennial's total sales. A conveyor-belt system will bring Class B orders, most of which are mixed cases, from a mezzanine level where the orders are put together, to the loading dock.
Centennial is becoming an old hand at design and construction. "Over the past six years, our [store] design has changed significantly," said Wonsmos. Where before Centennial stores averaged 3,000 square feet in size, they now average 8,000 to 10,000 square feet.
Wonsmos credits Vandeveer Moore, who has a degree in art history as well as one in international management, for the stores' new look. While each store has its own identity -- one was even designed to fit in with the historic look of neighboring stores, all have wide aisles and state-of-the-art lighting. All have cigar humidors; in some of the larger liquor stores, the cigar humidors are walk-ins. Most of the stores have four or five check-out lanes; even the smallest stores have at least two.
The reason for the new look? "The female shopper is more prevalent for us than she was 15 or 20 years ago," said Vandeveer Moore, "and being a woman, I knew that, when shopping, I like to be able to use a cart, go down brightly lit aisles and see a lot of selection."
The result of the new look? "Many of the renovated stores -- the same store in the same spot -- saw sales increases of 25% to 30% after the redesign," said Voss.
Centennial has used the same point-of-sale system -- Unify from Osprey Retail Systems (www.ospreyretailsystems.com), based in New Bedford, MA -- since 1995. From the beginning, the chain was able to use Unify without much customization. "I'd say we use 85% to 90% of the present system, as is, basically right off the shelf," said Rudy Reyes, Centennial's director of MIS. And what changes the chain had to make -- such as a program which tracks how much, in gallons, a customer is purchasing, to conform to state and federal laws -- have been made years ago.
Centennial is planning, however, to upgrade from Unify1, a DOS-based system, to Unify3, which is Windows-based, within the next year. Though the chain technically does not have to change the hardware it has been using -- Wonsmos pointed out that one of the beauties of the system is that if a computer fails, replacement parts can be bought in any computer store -- Centennial has been upgrading some of its stores' hardware in preparation for the conversion to Windows.
Reyes expects several benefits from the switch. One will be improvements in the chain's preferred-customer program, called Buyer's Plus Card, which was launched six months ago. Approximately 12,000 customers have already filled out the application to receive their Buyer's Plus cards. In exchange for providing the chain with information about themselves, such as their names and addresses, and presenting their cards at check-out, Buyer's Plus Card customers receive discounts on a selection of products, which change monthly. Wines are especially well-represented in the selections. In turn, Centennial receives valuable marketing and demographic information.
Already, Centennial's current computer system can automatically enter the discounted price when the customer's Buyer's Plus card, which has both a magnetic stripe and a barcode, is swiped.
The new Windows-based version of the chain's computer system will allow Centennial to post its Buyer's Plus customers' purchasing history, under password protection, on its website. Those customers can then access information about what they've bought in the past. "So, if a customer asks himself, 'What was that wine I liked so much?' he can look it up," explained Reyes.
Those sales histories will not be the only new feature of Centennial's website (centennialwines.com). Indeed, the company is in the process of substantially redesigning the entire site. "It's in need of upgrading," said Vandeveer Moore. "The new one will be state-of-the-art." Though Centennial is allowed to take orders for pickup or for delivery to a wet area within the county through its website -- and its management is in favor of Texas's direct-shipping laws, which prohibit the sale of beverage alcohol over state lines -- its website can also serve as an important advertising tool. The new website will feature links to product information, such as wine periodicals, on the web. The chain can also sell its new gift cards (see sidebar) through the website.
The new Windows-based version of Centennial's POS system will also be able to handle credit card and debit card transactions. At the moment, the chain uses separate Verifone machines. "This will reduce expenses dramatically," explained Al Andrews, Centennial's POS consultant. "Two side-by-side Centennial stores [a beverage-alcohol store and a convenience store] now might have 16 phone lines. With the new version, we'll be able to eliminate 10 or 11 of those. At the cost of about $40 per month per line, that's quite a savings, and at the same time improve customer checkout time."
The current management team has also developed more sophisticated ways of tracking the performance of each of its products and the business done by each of its stores. It then uses this information to decide what products to carry, which stores to place them in and how and where to display them in individual stores.
"We analyze our own scan data and any that a wholesaler might provide," said Ron Cockerham, senior vice president of retail operations for the chain. "This is valuable in determining the items that need to be purged as well as shelf adjustments to sales trends within a category. Utilizing shelf space efficiently is a key to maximizing profits and reduces inventory costs."
One recent trend Centennial spotted was a surge of growth in Mexican beer over the last year and a half. Mexican brands now account for over half of the chain's total imported-beer sales. "Imported beers have been really strong across the board, growing at a double-digit rate," said Cockerham, "but Mexican beer has been especially strong."
In spirits, which represent 4,000 of Centennial's SKUs and about 40% of the chain's sales, some high-end spirits categories continue to grow, while another, single malt Scotch, "has been standing still," said John Walker, senior vice president and the chain's spirit buyer. Walker currently sees more growth in the boutique bourbon and high-end vodka categories.
The stores' displays are changed -- and evaluated -- monthly. Store displays range from stackings of up to 50 cases to three-case displays on racks where space is more limited. Centennial's stores, located in areas with diverse demographics, have been profiled and grouped: each grouping of stores receives a different display, which is based on sales trends within those stores. Centennial's system of evaluating its displays is so efficient that sometimes an existing display is just moved, from a prime area to a secondary area or vice versa, because the monthly deal on that product has changed, making it more or less profitable.
Perhaps the biggest change in Centennial has been its wine department. In 1996, Roger Voss, a native Texan and certified sommelier who had been running his own shop, Central Park Liquors, in Steamboat Springs, CO, was brought in to revamp Centennial's wine program.
Voss increased Centennial's wine selection from about 2,000 SKUs to 6,000. In tandem with the stores' general redesign, he brought in new shelving for the wine departments, where possible, and arranged the stores' wines by varietal and price.
He also hired wine consultants for Centennial's larger stores. Currently, there are 12 of them: five of them come from restaurant backgrounds, two are graduates of the Culinary Institute of America and 10 recently took -- and passed -- a certification exam administered by the Court of Master Sommeliers.
Said Voss, "They are ambitious and dedicated, skilled in working with people, they have a quest and thirst for knowledge about wine, but I don't allow wine geeks."
Voss is thoroughly against geekiness. "We discuss it right off the bat," he said. "I think it is very unfriendly to consumers, who are already scared enough about wine. I tell my consultants you need to read your customer. If they want a discussion, fine, but most people don't."
What Centennial's wine consultants do is nurture customer relationships. And many customers trust the wine consultant they've come to know, often asking them to make their wine choices for them. "Even if people would like to spend two hours browsing for wine in our stores, many don't have the time," said Voss. Recently, wine consultants at nine of Centennial's stores got their own e-mail addresses and internet connections, making communications even easier for their customers.
The wine consultants do not work on commission; they do, however, receive bonuses based on their store's sales and on the profitability of its wine sales. This system is meant to discourage the consultants from "cashing in" on every wine sale, always pushing the most expensive wines even when not appropriate, while, at the same time, giving them an "incentive to sell and do a good job," according to Voss.
Another morale booster is Voss's Tuesday meetings, where wine suppliers often bring in samples for the consultants to taste. It is then determined whether that particular wine should be added to Centennial's approved list or not. The consultants also discuss what they've experienced on the sales floor.
One recent topic has been how customers have lately been buying less expensive wines. "Rather than a $30 bottle, they might buy a $10 or $15 one," explained Voss. "They haven't stopped drinking wine, but they are doing it more frugally. We discussed how to be aware of and how to handle that situation."
Centennial's wine program has flourished under Voss. When he started with the chain in 1996, wines represented 17% of Centennial's total sales and no store counted wine as more than 40% of its sales. Now, wine makes up 28% of Centennial's sales and five stores report that their business is more than 40% wine. "We've come a long way in a short time," said Voss.
Voss's contact with his wine staff at the stores is more the rule than the exception at Centennial. Indeed, Wonsmos and Vandeveer Moore made a point of including all of the operation's employees in the revamping of the chain from the very beginning. "We did a company-wide survey just after I took over as president," said Wonsmos, "asking about everything from the hours of operation of the c-stores to payscales and advancement opportunities. We got some real honest and searching answers."
Centennial's management team continues to solicit ideas and feedback from its employees. Once a quarter, the chain's Retail Advisory Committee, a rotating group of seven store employees, meet with Jim Vandeveer, the majority owner, Vicki Vandeveer Moore, Wonsmos and Roger Voss.
"We hear from them about what we are doing right, what we need to change and about ideas they've had for improvements. Being in the stores, they are aware of things that we may not be," said Vandeveer Moore.
Centennial realizes the value of its approximately 350 employees. "I'm always bragging on our people," said Vandeveer Moore. "They are one of the most important things we offer as a retailer. We offer such excellent service, we have such knowledgeable, helpful people. We are constantly getting that feedback from our customers."
Indeed, even as Centennial was renovating its stores and revamping its wine department, one of its primary goals was to elevate its employees' morale. "We pride ourselves on our teamwork," explained Wonsmos, "and our reputation, word about how well we treat our employees, gets around."
In addition to highly competitive rates of pay, Centennial offers its people a benefits package that CFO Hajek describes as "second to none." It includes two retirement plans, one defined benefits and one a 401K, group health, dental and life insurance and prepaid legal services. Perhaps most importantly, Centennial's management has made sure "there is always the possibility of movement within the company," said Wonsmos, which helps to ensure that high-quality, ambitious people stay with Centennial.
The Centennial team also gets together for events such as "Family Day," spent at a nearby 6 Flags amusement park, Christmas parties and even a golf tournament.
Concluded Wonsmos, "We are very proud of our teamwork approach." And Centennial is rightfully very proud of all that that teamwork has accomplished.
RELATED ARTICLE: SEARCHING FOR A WAY TO USE THE WEB
Although shipment of alcohol across state lines -- even couny lines -- is illegal in the state of Texas and Creg Wonsmos, president of both Centennial and the National Association of Beverage Retailers (NABR), is opposed to changes in the direct-shipping laws, Centennial is looking for ways to harness the power of the internet.
In addition to its own website (centennialwines.com), Centennial is also a founding member of a new web-based venture, wineisit.com.
Wineisit.com, whose website is due to become fully operational in the second or third quarter of 2002, is a marketing company that partners with beverage alcohol retailers across the country (so far, 48 retail operations have signed on) and accepts advertising from beverage suppliers.
The website itself will provide consumers with information about beverage alcohol products -- and when consumers want to know where they can obtain those products, the site will hyperlink them to the websites of retailers in their state. "We do not sell [beverage alcohol], you cannot order through our site," explained Orrin Tobbe, CEO of wineisit.com.
The company does other marketing for the retailers as well. It sends e-mails and direct-mailers to the retailers' consumer databases. It also analyzes those databases, comes up with a consumer profile for each retailer and is able to send those e-mails and direct-mailers to other people in the retailer's area who fit the profile but are not yet customers.
"We provide retailers with a website and with a professional marketing and advertising staff," said Tobbe.
LINE OF FIRE
In the state of Texas, areas -- cities, counties and justice-of-the-peace precincts -- can be "wet," meaning they allow the sale of liquor, beer and wine within their borders, or "dry," meaning that they do not. Some are even referred to as "damp," because they allow some sales of alcoholic beverages but not others, such as allowing the sale of beer and wine but not of spirits.
And perhaps nowhere in the state is more mixed when it comes to the wet-dry issue than Dallas and the counties and towns surrounding it. Sometimes, even local officials aren't sure where the "wet/dry" boundaries are.
And that is precisely why Centennial ran into trouble when it opened a convenience store in The Colony, a small town north of Dallas, in 1999. The 5,000-square-foot store, slated to sell beer and wine as well as food, gasoline and other convenience-store products, was in the process of being built, when an anti-alcohol activist began to suspect that he might have a case against the store.
According to newspaper accounts, the individual remembered hearing something about the border between The Colony and its neighboring town, Lewisville. He spent days at the local courthouse going over maps and even ended up hiring a surveyor. What he discovered was that, back in 1978, The Colony had annexed about 200 feet of land from Lewisville, a town which was, and still is, "dry."
That meant that beverage alcohol could not legally be sold in half of the new Centennial store.
Greg Wonsmos, Centennial's president, maintains that the discovery was not a big setback. "In fact, the entire affair resulted in a publicity bonanza for Centennial, in that it landed on the front page of the Dallas Morning News, complete with pictures of the store and its interior wet-dry line. We simply modified the interior configuration of the store and placed a big red line, built into the floor tile, demarcating the border between wet and dry."
EVERYTHING IS BIGGER IN TEXAS
Take, for example, Centennial's famous sign, Big Tex.
A cowboy standing 50 feet tall, Big Tex is an official landmark in Dallas. "He came with the company," said Vicki Vandeveer Moore. He is actually one of two Big Tex's in Dallas, the other being a few years older and located at the state fairgrounds.
Centennial has had its Big Tex since 1958, when the chain acquired him from another retailer that had gone out of business.
The Centennial Big Tex is a neon sign, weighing 10,000 pounds, outlined with 1,200 feet of neon tubing in eight different colors.
He has moved around over the years and is now next to I-35, a major thoroughfare.
Centennial had him renovated after that last move. "Now he is all bright and shiny," reported Vandeveer Moore, "though, this being Texas, he did have some bullet holes in him that had to be fixed."
GETTING AS GOOD AS YOU GIVE
There's one way of getting carded at Centennial that its customers actually like. Centennials' gift cards, introduced a year ago, have proved to be very popular.
A plastic card with a magnetic stripe, the gift card "is more professional-looking than a paper gift certificate," said Wonsmos. And theft is not a problem because the cards hold no value until one is loaded onto them with special equipment. Fifty dollars seems to be the most popular amount, Wonsmos reported.
"Most importantly, these cards bring customers back into the store," he pointed out. For example, if cardholders don't use up all the value on their cards the first time they use them, they are not given the rest back in cash, as is the case with paper gift certificates. They are simply given their cards back, to use another time. Indeed, even after the original gift is used up, the cards can be "recharged" with more value and used again.
Though the cards are for sale at all of Centennial's stores, at this point, they can be redeemed at 12 of its biggest locations.
Centennial, located amidst a confusion of "wet" and "dry" areas, where alcoholic beverages cannot be delivered into "dry" areas, finds it difficult to deliver to its customers. It is simply too confusing. For the chain, these gift cards are an important way to capture corporate gift business. They can even legally be bought through the chain's website.
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|Date:||Jan 1, 2002|
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