Beverage Dynamics is the largest national business magazine devoted exclusively to the needs of off-premise beverage alcohol retailers, from single liquor stores to big box chains, through coverage of the latest trends in wine, beer and spirits.
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Retailer Profile 16 Beverage Dynamics • March/April 2017 www.beveragedynamics.com and activities. As a result, he also dedicates time to developing educational opportunities for his approximately 50 employees, who can take advantage of beer festivals, winery trips and other activities designed to deepen their knowledge about beverage products and the industry. Another unique opportunity afforded to Frugal MacDoogal staff members is the chance to participate in an employee stock option plan. The program, which launched two years ago, es- sentially makes every employee an owner in the business. "They get rewarded and it's an incentive for them as a stock- holder to go a little farther in their work each day," Sonnenberg explains. "It's just one example of our strategy to empower staff as much as we can." MODERNIZING OPERATIONS Sonnenberg's desire to be as informed as possible helped him coordinate some extensive planning in advance of a new law that went into effect last year. Until then, Frugal MacDoogal's 18,000-square-foot Nashville location actually consisted of two separate stores with different entrances. It was constructed that way because Tennessee state law prohibited the sale of wine and spirits in supermarkets and also banned the sale of beer in liquor stores. As a result, the Nashville location was split into a wine and liquor store and a second party store that offered beer, snacks, soft drinks, glassware, gifts, and other items. However, as of July 1, 2016, a new state law permitted the sale of wine in Tennessee grocery stores. While this change made it easier for consumers to pick up a bottle of wine at the same location where they purchase their food, it posed a huge challenge for beverage retailers who were already struggling to remain competitive. When Sonnenberg realized that the new law would put his business at an extreme disadvantage once it went into effect, he decided to do something about it. "This change has had enormous repercussions in the mar- ketplace, but we used it as an opportunity to contemporize out interior in terms of aesthetics and function," Sonnenberg states. "We knew we had to take advantage of the chance to retail under one roof." For three months prior to the new regulation's implemen- tation, Sonnenberg's Nashville store was under construction. The undertaking was both extensive and expensive because Sonnenberg opted for the store to remain open the entire time during the renovations. In order for that to happen, he had to pay a premium for contractors to begin work at 11 p.m. each evening after the store closed, work all through the night, and have the store operational again by 8 a.m. the following morning. Some of the many changes made to the store include removal of the drop ceiling, updates to the HVAC systems, removal of partition walls between the retail wine and liquor stores, installation of a single store entrance and automated doors and the addition of a growler station with 24 taps. Sonnenberg says that even though his customers were in- convenienced during the many months the store was under construction, consumer reaction to the renovated space has been overwhelmingly positive. Despite the large-scale renova- tions, however, Frugal MacDoogal's Nashville location hasn't generated a significant boost in overall revenue. "We are confident it was money well-spent, and we are very happy with the results of the renovation itself," he states. "Re- tailers are often hesitant to invest in this kind of capital expendi- ture without being sure of the reward. In our case, we are seeing increases in some aspects of the business, but wine sales have inevitably declined as a result of the new legislation. We've had to find more esoteric products for our customers to maintain their interest. The competition makes it necessary to find other profit centers." Even though the Nashville location's sales aren't what Son- nenberg would like them to be, he thinks the store is in a much better position now than it would be had the renovations not taken place last year. Charles Sonnenberg (front) has been in the business for more than 30 years. "Remember that we are a privileged license, and everything the legislation does affects us." —CHARLES SONNENBERG, OWNER OF FRUGAL MACDOOGAL