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How Retailers are Managing in the Coronavirus Era

Off-premise sales are booming, yet protocol, consumer behavior, and regulations present new challenges

Photo credit: iStock.

The industry’s one bright spot during the devastating coronavirus pandemic has been the past week’s surges in wine, beer, and spirits retail sales across the country, even as the on-premise sector shutters and Americans are confined to their homes (and still very much drinking). The vast majority of U.S. states have ordered restaurants and bars to temporarily close, and consumers are stocking up on alcohol, alongside toilet paper and household disinfectants. 

The four Gary’s Wine & Marketplace stores in New Jersey saw a 62 percent increase in overall sales as of March 15—before local bars and restaurants were mandated to close in that state. The alcohol delivery service Drizly reports business is growing at six times the rate from earlier in the year. Even smaller shops like Vine Wine in Brooklyn, New York saw sales spike on March 11 and they have continued to increase. “The shop is insanely busy,” says Talitha Whidbee, Vine Wine’s owner. “I was really well-stocked because I thought this would go on for a few days, and we ended up really getting pillaged.” Large grocery chains, in markets where they are permitted to sell alcohol, are posting very high double-digit growth in beverage alcohol. 

But with the rapidly changing realities of daily life in the U.S., the precarious economic climate, and new health regulations and concerns, it’s far from business as usual. 

Managing New Protocol

JT Robertson, the general manager of Le Du’s Wines in New York City, says much of this increased business is through delivery or pick-up, rather than traditional walk-in traffic. “We have seen a decrease in walk-in traffic,” says Robertson, “but we have had some of the biggest web and call-in volumes ever.” This has required longer hours from staff members, who are working on a staggered staffing schedule with fewer physically in the shop at a given time. Robertson reports faster pick-up and drop-off times, which he believes may be due to fewer people on the streets. In New Jersey, Gary’s Wine & Marketplace has seen a whopping 300 percent increase in local delivery and pick-up orders.

Even retailers still seeing high walk-in volume are preparing for this to change. The Wine House in Los Angeles saw a 25 percent sales bump during the week of March 9, according to part-owner and wine buyer Jim Knight. While 40 percent of that was walk-ins, once the state put a stay-at-home order in place on March 19, Knight was “slammed” with curbside pick-up and delivery orders after the announcement.

The situation varies widely by state. While Pennsylvania has closed all Pennsylvania Liquor Control Board stores, in New York the government has deemed liquor stores “essential businesses” which means retailers do not need to reduce their workforce, as other New York businesses must, and may remain open for business (this still holds, even after Cuomo’s March 20 press conference ordering all non-essential workers to stay home).

Wine shops that continue to welcome walk-in business are taking coronavirus health protocols: canceling in-store tastings, staggering staffing, limiting the number of shoppers allowed at once, sanitizing surfaces regularly, and requiring employees to wash hands and wear gloves. This is particularly crucial for the team at the Red Wagon Wine Shoppe in Rochester Hills, Michigan, where sales have doubled; business remains almost exclusively from walk-in traffic (the shop does not offer delivery, though the shop has an e-commerce platform offering shipping). The shop has been communicating health measures like cleaning and sanitizing via social media, but they are also preparing for the inevitable directive to close. “Truly, I think we have seen the peak of business,” says Michael Descamps, the wine director for Red Wagon. “Many of us are expecting some level of quarantine to be mandated soon, preventing us from being open.”

Understanding New Purchasing Behavior

The retail sector is the undeniable beneficiary of the on-premise fall-out. “It’s a great time to shop at a wine shop,” says Whidbee. “We’re picking up all the allocations from restaurants.” Robertson, too, says that importers and distributors are offering him unusually high quantities of highly-allocated wines because on-premise accounts cannot take them.

“People were buying [more expensive] wine up until [Wednesday],” says Whidbee, noting that many were initially using quarantine as an excuse to splurge on wines that they would not normally purchase, but have mostly returned to their original price points as economic concerns loom. Elyse Genderson, the vice president of Scheider’s of Capitol Hill in Washington, D.C., also notes that customers are adding a few higher-end bottles to shopping baskets.

But for the most part, the average per-bottle price point is skewing lower than usual. “The average wine bottle price since the uptick has been $17.99,” says Gary Fisch, the founder and CEO of Gary’s Wine & Marketplace, “which is roughly 32 percent lower than the average bottle price in the past year, which is $25.” The Wine House’s average bottle price has been about $20, according to Knight, which is also slightly lower than normal.

That lower per-bottle average is typically offset by greater quantity, however. “Across the board, everyone seems to be purchasing at the bottom end of where they normally would purchase,” says Descamps, “but then they buy [those] wines in [larger] volume.” Genderson and Robertson also note that whole case purchases have been increasingly common.

Investing in the Delivery Model and E-Commerce

Most operators agree that delivery and shipping will be increasingly important as more shelter-in-place orders are issued. Whidbee is prepared to move to a shipping-only model, anticipating mandates that could bar delivery of non-essential items; the team has saved all of the boxes from this week’s wine deliveries for shipping purposes. 

For businesses that have delivery or shipping systems in place, this shift away from walk-in traffic is smoother. “Our retail world has been shifting to shopping online in general, so we have been prepared for this,” says Knight. At Schneider’s, Genderson and her team have made remote sales easy options for guests, lowering the free delivery minimum and offering curbside pick-up.

Robertson estimates that 70 to 80 percent of business at Le Du’s is based on direct client sales through private client sales relationships. “If we’re allowed to keep delivering, even in a shelter-in-place scenario, we’re going to be fine,” he says, noting that they use FedEx, couriers, and in-house delivery services.

Restrictions on delivery in Michigan, also a control state, make it complicated and expensive to deliver; all carriers of alcohol must have certifications from the state, requiring permits and fees that many small stores choose not to take on. “Our model, which is so heavily dependent on in-store traffic, would just about come to a halt if more restrictive measures are mandated,” says Red Wagon’s Descamps. “It seems more likely that regulations will end up having us close as we may be deemed a ‘non-essential,’ being a specialty wine and spirits retailer instead of a grocery.” In Michigan, grocery stores may also sell wine, beer, and liquor.

Particularly for small shops, delivery may indeed be the only way to remain operational and profitable. “I strongly recommend that small mom-and-pop stores invest heavily in their delivery and pick-up capabilities,” says Fisch. He suggests retailers look into all e-commerce options, such as hiring a third-party delivery service or back-end technology provider. 

Whidbee also recommends having all inventory online and linked to the store’s POS system to reflect real-time availability. 

It’s critical for retailers to communicate directly with customers through social media and emails about their delivery services—particularly for shops without robust ecommerce platforms. “There’s a lot of uncertainty as to whether shops are even open, so just sending out an email or posting that you’re open is very advantageous,” says Robertson. “More often than not, people will choose to support their small businesses.” He has also been using sponsored Instagram and Facebook posts highlighting the shop’s delivery radius to target the local community, noting that even if couriers are no longer allowed to operate, he can personally deliver bottles a few blocks away.

Planning for an Unpredictable Future

Several wine and spirits distributors who spoke with SevenFifty Daily report that they predict the boom will slow for independent retailers, particularly in states where grocery stores are permitted to sell alcohol and consumers increasingly opt for one-stop shopping. Many retailers agree, and are working to take advantage of it now—while preparing for a slow-down in the future. Whidbee anticipates that customers’ “snow day” mentality may wear off, particularly as more New Yorkers get sick, slowing their drinking and purchasing frequency. “I would say that next week, we will be at 30 percent of this week’s sales,” says Whidbee, noting that she plans to sell through current inventory without overbuying for the future. 

Seeing the drastic and swift effects that the coronavirus crisis has had on the on-premise segment of the wine industry also has Robertson preparing for the worst. “I’m trying to get to a point where everything I’m selling is to cover my payroll and keep the lights on for the next four to six weeks,” he says. “We’re very much operating day to day.”

Flexibility will be key to both short- and long-term success. “I think we’re looking at a drastically different wine landscape in the future,” says Robertson.

Courtney Schiessl is a Brooklyn-based wine journalist, educator, and consultant who has held sommelier positions at some of New York’s top restaurants, including Marta, Dirty French, and Terroir. She has written for Forbes.com, VinePair, and Wine Folly, among other publications, and she is currently pursuing the WSET Diploma in Wines and Spirits. Follow her Champagne-fueled adventures on Instagram at @takeittocourt.

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