In order to explain how obsessed specialty retailer BevMo is with customer service, Alan Johnson, chief executive officer of the Concord, Calif.-based chain, recounts an occasion when a customer came in looking for whiskey for her husband’s birthday. After a discussion with a BevMo associate, she decided to purchase a higher-end variety that the store wrapped for her. She took the present home and excitedly encouraged her husband to open it, but inside was the traditional whiskey, not the premium option. Frustrated, the woman filled out an online survey that is printed on every BevMo receipt. Within 15 minutes, Johnson says, there was a knock on her door from the BevMo store manager who had brought the higher-end whiskey.

The customer, who was unaware that the survey inspired the hand-delivery, followed up on this experience with a call to the BevMo headquarters and, to her surprise, ended up retelling the story to Johnson. The anecdote reflects BevMo’s overall business approach.

“The fundamentals of our business is that we offer superior selection, great service and everyday value in a fun and interesting experience that’s distinctive and that’s delivered by passionate, friendly and knowledgeable associates who love what they do and they really love who they serve,” Johnson explains.

Expansion story

Beverages & More opened its first store in 1994 in Walnut Creek, Calif., which remains a flagship store for the chain. A few years later, the company noticed that customers were not calling the growing chain of stores by its given name.

“Every time that we referred to ourselves it was Beverages & More, but whenever we spoke to our customers, our customers never called us that; they called us BevMo,” Johnson says. “In about 2001, we thought, ‘What the heck? Why not allow the customer to name the company? It’s their company, and they refer to us as ‘BevMo.’ That’s a very good example of the customer wanted it, so we gave it to them.”

By 2006, BevMo had grown to 62 stores. Private equity firm TowerBrook Capital Partners L.P., New York, purchased the chain in February 2007. Since the acquisition, BevMo has grown to 118 stores, with 106 in California, 10 in Arizona and two in Washington state. In late June, BevMo opened its first store in Tacoma, Wash. It plans to open four to five more stores in the state by Thanksgiving, Johnson says.

The retailer expects to have approximately 130 stores by the end of 2012, Johnson estimates. He notes that despite the economic downturn that began in 2008, there has not been a year in which BevMo did not add stores.

In order to provide customers with the best selection of beer, wine and spirits, BevMo prides itself on the expertise of its staff, he notes.

“If you looked at our top eight or nine merchants and you look at the experience that they’ve had in only the beverage industry, cumulatively, they’ve had more than 240 years of beverage experience,” Johnson says. “That’s about 27 years on average for each of our eight or nine merchants.”

One of BevMo’s top merchants, Cellarmaster Wilfred Wong, has traveled the world as a wine judge. Wong tastes and rates all of the wines for which BevMo does not have a well-known or recognized rating. BevMo incorporates these descriptions and ratings on shelf tags to communicate the wine’s tastes and ratings, Johnson explains. The shelf-tag descriptions are one point of differentiation for a store that often competes against other retail outlets for shoppers. BevMo also offers a line of private-label wines under the Vineyard Partners banner.

“We have all these fabulous relationships with the finest wineries in the world; a lot of them had excess juice, and so they came to us and they bottled product for us,” Johnson explains. “We own the label and the product. It’s an exclusive product that’s great-tasting, great quality at a great value and exclusive to BevMo. We have about 250 Vineyard Partners wines that you can only get at BevMo. This again helps differentiate ourselves from the typical grocery store or some of the large clubs.”

Selective selections

Positioning itself as “your neighborhood beverage store,” BevMo pays special attention to the vicinity around each of its 118 stores and customizes selection based upon those customers. With its proximity to renowned vineyards, California consumers tend to be very well-educated about wine and loyal to local vineyards, Johnson notes. Californians also are embracing wines from Washington, which is a growing segment. In contrast, shoppers at the 10 BevMo stores in Arizona are more interested in sweeter wines, spirits and beer, Johnson says.

“For the most part, every single one of our stores has a localization and selection that is specifically geared toward the tastes of that particular market,” Johnson says. “In most cases, because we are the headquarters of innovation, we don’t have the luxury of following any trends — we actually set the trends ourselves.”

BevMo customers count on the chain to be the first to market with new innovations, Johnson says. He notes that in 2011, the alcohol market welcomed 650 new products, 284 of which were spirits. BevMo was one of the first chains to carry Skinnygirl spirits, which was acquired last year by Deerfield, Ill.-based Beam Inc., and Brown-Forman’s Jack Daniel’s Tennessee Honey whiskey, he says. In addition, Johnson estimates that BevMo added 100 new craft beers in the last year.

“A lot of vendors who have a new varietal and want to launch it in 120 stores, they come to BevMo first; it’s an easy decision and our customers expect it,” Johnson explains. “We have weekly tastings in all of our stores: on Fridays you can taste beer, and on Saturdays you can taste wine. So new products have an entry: If you don’t taste it, chances are you’re not going to buy it.”

The retailer also keeps an eye on trends, and Johnson highlights flavored vodkas, handmade spirits and craft beers as growing items in BevMo stores. In addition, the retailer has noted the rise in Washington wines as well as South American varietals, such as Argentinean Malbecs, Johnson says. It also pays attention to demographic trends, including the evolving preferences of millennials, or consumers between the ages of 21 and 31 years old, who have increasingly switched to drinking wine and spirits instead of beer, he explains.

The retailer aims to maintain BevMo’s status as a destination, Johnson says.

“You can tell it in the faces of the customers: they arrive happy, they smile, they love to get welcomed,” he notes. “So many new associates have come from other parts of retail and joined our company, and at the grand openings I often ask them, ‘What was the big difference between where you were before and coming to BevMo?’ And they say, ‘The customer is just so happy to be here.’”

In addition to serving its customers, BevMo also prides itself on keeping its associates happy. Similar to its customer surveys, Johnson explains that the retailer provides semi-annual surveys to its associates, 25 percent of which are full-time and 75 percent of which are part-time. He notes that BevMo generally receives 94 percent participation.

 “You wouldn’t do that if you didn’t love where you worked or who you worked with,” Johnson says. “One of the most rewarding parts of being lucky enough to be supported by these wonderful associates is that you can see it everywhere. They truly do love what they do.” BI