Liquor update: Some stores still abuzz, others struggling
Five months after Washington state transferred liquor sales to the private sector on June 1, business opinions are mixed about whether adding alcohol products has benefited their bottom line.
“The first day we opened the section, it was truly amazing — there were so many people,” said Cindy Peterson, manager for Costco in Tacoma. “But today, as far as penetration, I’d say it’s about 5 percent. It doesn’t account for that much of our revenue.”
Alcohol hasn’t been an attraction for new customers, either, she said.
“I don’t think people are coming out of their way to buy it here, since there are so many local groceries and other stores,” Peterson said. “Because we’re a nimble business, and we sell so many different products, it’s just an additional thing for our members.”
At Target in Tacoma, however, front line manager Lauren Clarey said that alcohol sales are a definite boost to that retailer’s business.
“We’re selling a lot of alcohol,” she said. “I know, because some of the more expensive liquors have bottle-wraps on them, and (as a manager) I have to take off a lot of bottle wraps whenever I’m here.”
It’s not just pricier brands that are selling, either. Another indicator of sales is the mandatory driver’s license scan at the checkout by regular clerks, whenever there’s an alcohol purchase.
“We know that we’re selling quite a bit of the less-expensive wines and other items,” the Target store manager said, “because if you talk with any cashier on any given day, they’ll tell you that they don’t go through a shift without scanning someone’s driver’s license. So, yes, altogether alcohol is a big part of our sales.”
However, alcohol is only 3 to 6 percent of sales for a regular retailer or grocery store. For independent liquor shop owners, many of whom took over former state store locations, alcohol is 80 to 90 percent of the bottom line.
Bob Nino, manager for Liquor and Wine in University Place, said that business has been steady since the store’s June 1 opening.
“Everything has been selling pretty evenly, but our prices are compatible with the market and we have a good location,” he said. “We’re doing alright so far.”
Steady sales haven’t been enough, though, to keep others from worrying about staying in the black.
“The main thing is that we have to pay the 17 percent (tax) on our gross to the state,” said Nick Kumer, owner of the former state Liquor & Wine on Union Avenue in Tacoma. “That’s a lot of money on our net.”
To cut costs, he said, he and his partners are considering moving to a less expensive site.
“The rent is really high, but if we lose this place, we might lose our customers,” said Kumer. “The 17 percent is the only part that’s killing us. Business is OK, except for that.”
Jas Singha, president of the Washington Liquor Stores Association, said that many independent outlets are struggling right now for just that reason.
“The big box stores can take 17 percent and spread it over cans of beans or milk or whatever. But, for us, we have nothing else,” he said. “And because it’s also 17 percent tax on retailer-to-retailer, or retailer-to-restaurant sales — on top of the original 17 percent retailers like us pay on a sale from the distributor — we think that the state is double-dipping on the 17 percent.”
Because of this, Singha said independent liquor store owners have already lost most of their regular restaurant and smaller retail customers. The WALSA is now searching for a lobbyist to help the industry get the tax turned back at the state level.
“It all makes a cost problem for (smaller businesses) to buy from us,” he said. “These are tough times, so one of the things the state can do is take off that 17 percent.”For chain retailers, there have been some minor problems with selling alcohol as well, but none with worries about staying alive.
“We used to have alcohol displays on the end-caps of the aisles at the checkout, but people complained because this is a family store,” said Clarey at Target. “Other than that, we’re still selling.”
Reach writer Holly Smith Peterson at hpeterson@BusinessExaminer.com.
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