Retailer of the Year - Sam's Wine & Spirits

A humble saloon grows up into a business model and cultural center.



Sam's Wine and Spirits

Retailer of the Year Award

 

When is a wine store not just a wine store? In the case of Sam's Wines and Spirits in Chicago, having the largest sales nationwide from a single location is just a starter. Fred Rosen and his two sons, Darryl and Brian, have built this family business into a $70 million-a-year operation, and in the process, they've created a new model for selling wine, one that's been copied all over the country (at least where local laws allow). Indeed, Wine Enthusiast's Retailer of the Year for 2005 is a veritable cultural center for wine.

Sam's success has been achieved by focusing foremost on customer service, and a key element of that service has been a knowledgeable staff that goes out of its way to educate and assist customers. Competitive prices and wide selection are also important: "We have 8,600 wine SKUs in Chicago," notes Brian Rosen, COO of Sam's. "Costco has 200."
Sam's has come a long way since Darryl and Brian's grandfather, Sam Rosen, opened it in the 1940s. The business began its life as a saloon, albeit one that had the distinction of having the longest bar in the United States. Sam tended the 118-foot bar by himself to save on his payroll.

The saloon was in a distressed building in northern Chicago, only a mile and a half from the city's Gold Coast, but in the '50s the rich and famous never headed into that run-down area, which is now totally gentrified.
Fortunately for Sam, one of his staff was a knowledgeable wine lover and started stocking some of the world's best wines. Not knowing any better, Sam didn't interfere, and soon the saloon that had once mostly sold half pints of Wild Irish Rose, and then spirits, become a wine store that happened to serve liquor. It became the place to buy great Bordeaux and Burgundy, says Brian Rosen.

Treasure Trove
The store wasn't very organized, or particularly businesslike. Rosen says it was like buying at a garage sale; customers loved the excitement of discovering a treasure. "We didn't know what we had," he says. That, thankfully, has changed. Darryl, who now serves as president and chief financial officer, is a CPA, and also has an MBA from Northwestern University's Kellogg School of Management.

The business prospered, and in 1986, Sam's moved into what became the forerunner of its current superstore. The 10,000-square-foot location was huge at the time, with six cash registers so customers wouldn't have to wait to check out. From that single store, the company sold $36 million annually in wine and spirits.

In 1996, Sam's moved to its current location, a giant store that includes a gourmet market, cigars, a bookstore and of course, the wine collection. It's now a one-stop store for many customers, who come by even when they're not buying wine. "I love to see a customer buying cheese and a baguette even if he's not getting wine. That shows that we're established in their minds," says Brian Rosen.

Growing Business
There are now two Sam's stores, one in Chicago's Lincoln Park and the other in Downers Grove some 20 miles west. The two brothers split responsibilities for running the business. Darryl, who began working on the store's delivery trucks at 13, has been in charge of finances and operations for 15 years. "His job is to get the right stuff at the right price. Mine is to get people to buy," says Brian, who recently completed his 14th year at the store. He handles daily operations, seeking to create a comfortable shopping experience while overseeing a staff of nearly 200.

Brian Rosen says Sam's has benefited from the unique nature of Chicago customers. "They're very loyal to brands they trust," he says. "They'll drive past a dozen stores to get to the one they like."

Sam's returns that loyalty. "We treat customers like family," he says. Though it's technically no longer his role to deal with customers, they find him on the sales floor, not in an office, and he still knows hundreds by name. In another example of that personal touch, the store staff calls customers to tell them about specials and cement their bond. Sam's also delivers, and has 10 trucks carrying not only wine and spirits but soda, water and other products to 400 offices.

Rewards Program
Yet another program designed to promote customer loyalty is a Rewards Program that offers a menu of benefits to frequent customers. Membership is free and members get discounts on tastings and seminars, discounted pricing on selected items each month, e-mail notices about pre-offers, new releases, rare or limited items and exclusives, and a subscription to Pour, the quarterly Rewards Program newsletter.

Brian Rosen is a proponent of experiential retailing. Customers like to touch and feel, he says and Sam's makes that easy. It has been a leader in using seminars to educate customers, and its wine school, Sam's Academy, offers a wide variety of classes and other events. Its seminars focus on particular regions and grape varieties helping students learn more about wine in an enjoyable environment. The grand tasting nights focus on wine-producing regions or countries. They are held in a walk-around format that allows attendees to socialize, talk to experts, and taste hundreds of wines. All sell out regularly.

Special Events
Sam's also sponsors special events such as dinners, miscellaneous tastings and other events such as the annual Chicago Wine & Food Festival. In a recent month, for example, the schedule included the basic "Wine 101" educational seminar; a "Stinkies & Stickies Seminar" (strong cheeses and dessert wines); and a Port dinner with Robert Bower of the Fladgate Partnership. That same month's schedule also included a seminar on "Lovelies from La Loire," a "Champagne Night," an evening devoted to "Signatory Single Malt Scotch," another on Beaujolais, a sit-down seminar about staff favorites, and "Sam's Academy: Step II-Intermediate Level: The World's Best Value Wines." The school also offers cooking classes.

It's not surprising that an innovative retailer like Sam's has aggressively jumped onto the Internet. "We'll do $6 million on the Web this year," says Brian Rosen. "It let us go from being a regional to a national retailer."

Sam's isn't coasting on its success, however. It is opening a third store in Highland Park, north of Chicago, in February, and that store will have a wine bar on the premises. Brian Rosen expects to continue innovating. "This is a challenging business, but it's fun," he reflects. "With a few exceptions, people are coming here to celebrate and they come to us in a great mood. We don't want to mess that up. We need to take that feeling and make the experience special."

Still young men, the brothers are a long way from worrying about the future, but both are married and have children who might one day join the business. Darryl has three young children, and Brian, two. And Sam's is well on its way from being a huge success to becoming a legend.

See the other Wine Enthusiast Wine Star Award Winners.

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