
This latest economic recovery can't come soon enough for the thousands of wine shops there are across the country. Whenever our economy enters a recession or remains flat in terms of growth, most consumers begin to reel in as much spending as they can and often this hits the Wine Industry very hard. No other segment gets rocked more than the independently-owned wine shop.
We see this trend with each dip in the economy. Here in Richmond, Virginia we have lost two of the most respected, premier wine shop destinations in Wine & Beer Westpark run by our friend Matthew Lake in the West End and The Wine Cellar over in the Southside in Midlothian off Midlothian Tnpk. Both closed up shop and have been sorely missed. Matthew Lake's passion and drive was the very foundation of his store and his masterful series of events promoting both wine and beer has not been matched by any other here in Richmond. Sure there are other shops remaining, but there was certainly something special about Wine & Beer Westpark.
The catalyst for the recent downturn in consumer spending brought about mostly due to the banking and housing crisis the last decade has resulted in hundreds of closures throughout the region in terms of wine shops. Here in Virginia, its even that much harder on operators because we are a pay as you receive State. Unlike the District of Columbia, Virginia operators must inventory their wine and pay for them upon delivery so there are no terms or lines of credit like in other States. As we all know, these inventories can run in the hundreds of thousands if not millions of dollars for some stores and if consumers are not spending than that inventory is not being turned. This can result in operators being very tentative in taking on new arrivals or even new releases because of the expanding inventory levels of previous vintages. Sometimes this can be a very good thing for the savvy consumer in terms of finding some rare back vintages but I would steer clear of older domestic Chardonnays, Sauv Blancs and Pinot Grigios that are older so be sure to do your due diligence in this situations. Caveat Emptor!
The economy may not be the only reason as to the decline of independent wine shops. Many shops have failed to evolve. In the 80's it was a very big deal and almost a thing of status to buy wine through a local wine shop. This was the era of the "power lunch" and a boom in high end French wines that seemed would never end. It did. Back then "grocery" stores were for the most part out of the game with the exception of some major domestic houses and larger scale importers. Many smaller vineyard operators could not even get into grocery stores and leveraged the small, independent wine shops to bring their wines to market. The winshops also catered to the higher end clientele seeking the First Growth Bordeauxs and the like from France that would never be seen on anything other than a premier wine list or at the wine shop.
The times have changed. Its not so much that the Wine Industry has changed; its just that the consumer has evolved. The biggest resource any of can have is "time". While in the 80's and 90's it may have been trendy to buy wines in winshops; lets face it the quality was indeed better in these locations than "grocery" store wines but soon as the culture was wept up with "Soccer Moms" and a majority of folks eating out and not at home and the arrival of the Internet boom to include wine sales things began to change. Consumers now have a different mindset in large part because of the context of "time".
Buying quality wine now in 2013 has never been more accessible. Wineries want to be where the traffic is in terms of exposure to the consumer. Wines that would have never dreamed (or preferred) to be positioned on "grocery" shelves now in 2013 actually design marketing programs specifically for these stores. Gallo for example has a very obvious if not explicit relationship with the wine sets here in Richmond, Va with the Kroger chain. You can typically see the majority of Gallo's immense portfolio on the shelves of Kroger, which has done a masterful job in exploiting the departure of Ukrops Supermarkets almost three years ago. Ukrops did not sell alcohol, which meant that the loyal consumer of these stores were forced to go elsewhere for wine and beer. Typically, there was a Wine & Beer Warehouse or other shop located near or next to most Ukrops to cater to these folks. In fact, Wine & Beer Westpark was one of these that captured the Ukrop's faithful by offering them a convenient place to stop in after grocery shopping.
Kroger, Wegmans, and Harris Teeter have changed the game regionally here in Virginia in terms of "grocery" wine sales. Not only are the more branded labels available, but now many wines that had been what the industry calls "on-premise" or for restaurant service are now readily available because many of these locations have VABC licenses that allow them to offer wines and beers by the glass on site. This opens up these wines to the cafes of these retailers and thus to their shelves like never before and is a huge draw, especially when consumers can go out and enjoy a glass of wine at a restaurant and then be able to find the bottle at the retail location as well.
This trend of buying and convenience offered by "grocery" stores fits more with today's consumer lifestyles than the wine shop. The wine shop requires a special and specific trip. A trip dedicated to one purpose; which of course takes "time". Some shops attempted to evolve and offer other items like cheese and now today some also offer butcher services locally but operators expose themselves to the potential of over extended themselves and leaving their comfort zone---wine!
Will the "wine shop" die? While many have closed in this latest downtrend, there is still a value that wine shops offer a community outside of the hurdles regarding convenience. The value is in the area of expertise. While "grocery" operators like Kroger and others have hired on specific wine stewards to assist the consumer. Many of these stewards are not as knowledgeable as their wine shop counterpart and a big part of this is passion. You can't coach passion! You can educate and manage people up but passion is one thing that is either there or it isn't, but it is also something that is rather obvious to the consumer.
Whether or not wine shops collectively survive this environment will in large part depend upon the operator themselves given the expanded competition. The rise of Internet wine sales, expanded "grocery" sets and the national roll out of "clubs" like Costco all pose a daunting challenge for wine shops in the future. If wine shops do not leverage their customer base, provide them with a unique buying experience or solve that little important thing known as "time"; than we will likely see more wine shops close than open in the coming years.