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Chain stores would ruin Colorado’s competitive liquor business

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William J. Barr

Published February 28, 2008 at midnight

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I could not help but notice how light the paper was this morning. I remember from my carrier days during the late 40’s and early 50’s that this was a sign of lack of advertising, not lack of news. I hope today’s issue was profitable for you. This brings me to your CHAMPAIGN to change Colorado liquor laws.

I spent most of my adult life in the Denver grocery business at Big T Thriftway Inc., owning three stores over a period of almost forty years. I actually started as caddie boy for Safeway in 1952 at thirty five cents an hour. I watched the big chain stores take over, without mercy, many segments of the business over the years. The way the pharmacy business was won is especially egregious.

We have in this state a healthy, competitive and aggressive retail liquor business.

Most people can tell this when they pick up the Thursday Rocky which is full of liquor stores ads from a large variety of stores and formats. My wife and I have traveled to most parts of the United States since we retired in 2000, including two trips across by the country by bicycle. We are both experienced at price checking from our years of trying to stay competitive in our own business. We have found Denver metro prices to be among the very lowest in the country. Consumers have a very good deal here. I do not believe that in the long run they will have a good deal if the chain stores are allowed to sell full strength beer, wine and liquor.

When the chains get full distribution of liquor in their warehouses and stores, the battle will begin. The chains will take the top 200-250 fastest moving items and sell them at dead net cost for five or six years or however long it takes to get the same amount of the liquor sales as a percentage of what they have as a total of the grocery sales. They will take small price increases in other departments to cover the cost of no gross profit on liquor sales. When the liquor stores complain about below cost sales, they will all blame each other. Walmart will say they just want to be competitive to other stores, Safeway will say they didn’t start it, Kings did, and King Soopers will say they are only meeting Walmart’s prices. The net effect will be that no can survive except the grocery and convenience stores. It will a long slow process but one day you will wake up and say to yourself, “Why is the Thursday paper so light?” You will never notice the liquor stores going by the wayside because you can buy really cheap liquor at the supermarket. However, one day your Thursday ads will be gone along with the liquor stores, the distributors, and all their employees. The chains will not be hiring as it just another item to stock for maybe one or two new buyers. The liquor ads will be in some part of their standard Wednesday ads. Consumers will benefit for a few years with incredibly low prices but when the chains have the 85-90% of the sales they want, it will just be another item for them and prices will slowly go up until they are getting their regular gross profit on those liquor sales.

When the morning comes that you pick up that very light newspaper, please remember this letter and all the jobs that are gone, the hopes and dreams of independent operators, and the Thursday paper full of liquor store ads.

William J. Barr is a resident of Denver.

Comments

  • February 28, 2008

    3:07 a.m.

    Suggest removal

    mrfxx writes:

    I love half truths - as presented by this letter.

    1) The currently proposed legislation only includes full strength wine & beer. Liquor is NOT included.
    2) Only those store which have more than 50% of their sales from food would qualify - in other words, even the Super WalMarts wouldn't qualify, nor would the Super Targets.
    3) Just because a store would be allowed to apply for one of the new wine/beer liquor licenses doesn't mean it will automatically get that license. A city official from one of the suburbs pointed out on Mike Rosen's show a couple of weeks ago that if there is no "need" for another liquor store, the application will probably be denied. Many supermarkets are within a block or less of a full-service liquor store - would there be need for a "zone" in those supermarkets to sell full strength wine & beer? Might it not be in the best interests of both establishments to "partner up"? In fact, as of yesterday, the Albertsons at University & Dry Creek includes the ad for County Line Liquor as part of its weekly ad selection.
    4) If the supermarket full strength wine & beer bill goes forward, I suspect the only way it might pass is to also allow liquor stores to see food items which logically accompany liquor sales (chips, dips, deli items, etc) which liquor stores are currently not allowed to sell. Will the supermarkets be willing to trade their "lock" on these items?

    I understand that the "mom & pop" liquor stores are already at a disadvantage to the warehouse sized liquor stores (AppleJack, County Line, Dave's, Argonaut). Perhaps they need to get a bill passed which would allow them to form a cooperative purchasing group. Even as a group, they may not have the purchasing power on some items that the huge stores already have, but it seems to me that on "staple" items such as the most popular wines & beers they already sell they could become very competitive.

  • February 28, 2008

    12:26 p.m.

    Suggest removal

    sschow writes:

    The author praises the current competitiveness in the industry immediately before bad-mouthing a bill that would increase competition.

    There are obviously two different views of the world in play here. My view is that liquor sales should never have to be licensed. If you want to buy liquor in large quantities and resell it to the public at a higher cost, go for it. This bill would just remove an unneccesary barrier to entry in this specific market. All of this fretting over "megastores" taking over "mom-and-pop" businesses is absurd. If people wanted to buy from mom-and-pop stores, they would. But consumers, after carefully weighing the options available to them, usually decide that lower cost and more convenience are worth it to them.

    Just as environmentalists will spend $10 for a bar of soap because it makes them feel good and is "green", everyone should be able to purchase products from wherever they see fit. If mom-and-pop stores are important enough to consumers, they will pay the higher price to keep them in business. A little cold? Yes, but the law has to be cold and unwavering. Compassion is not a job for governments, who never have to see the consequences of their actions.

  • February 28, 2008

    11:43 p.m.

    Suggest removal

    ModerateBob writes:

    There is no good reason to keep grocery stores from selling full strength beer and wine, except to protect the "special" interests of the mom and pop liquor stores. I'll bet a large sum of money that the mom and pop liquor stores piss and moan about every government regulation they have to comply with, but at the same time they don't mind some old arcane regulations that protects them, even though that should not be a function of the government.
    As with any business, the smart mom and pop stores will adapt to the changing business environment and stay in business. Those that have been operating blissfully under the guise of government protection will not. That is called capitalism.
    I'll remain a customer of the mom and pop liquor stores even after the grocery stores start selling beer and wine. I usually don't buy the more common popular beer and wines, and the proposed law won't allow grocery stores to sell the fine single-malts that I like. Mom and pop stores that cater to tastes similar to mine will stay in business.

  • March 3, 2008

    2:58 p.m.

    Suggest removal

    NDeeZ writes:

    It IS funny that the business community is always going on about how the government should be less intrusive...until it helps protect THEIR turf.
    But turnabout is fair play--the liquor stores getting to sell chips-n-dips, limes, etc seems a logical trade-off.
    But what I'm most delighted with is the scrap-heaping of the archaic blue laws--enough already with one religion trying to impose their will on all of us.
    I say to Christians "You don't want to shop a liquor store on your 'holy day'--don't! But don't stop me from doing it--we don't share the same 'holy day.'