When Gendler’s Wine and Spirits closed its doors in January of 2007, the wine specialty store had been in business since 1916 – first as a grocery store, then as a liquor store (following the repeal of Prohibition), then as a wine store. For most of that time, it prospered in Rock Island, Illinois. But when the store was sold to Tom Getz, it moved in 2001 from its downtown location in that city to a newer, more high brow location in the downtown of neighboring city Moline, Illinois. What had been a profitable business in one city became a failing one in just a few short years and several factors were to blame.
One of the primary reasons for its decline was that there was too much in the way of overhead. From imported Italian stone floors, to custom wood paneling, Mr. Getz spared no expense when it came to creating ambiance within the store. However, such things did have a high price and were not covered in the build-out for the location; a price that the store would have to bear. Right away, the store was being burdened with costs not included in its longtime Rock Island location.
That was not the only factor in overhead. The rent for the location was considerably inflated when in comparison to other locations within the same area for the downtown. Locations nearly a third of the size of Gendler’s were only a sixth of the price for rent, leaving one to assume that tenants of the building were paying double what the space was worth (neighbor Isabel Bloom renegotiated their lease when it was up after Gendler’s left. Rumor has it that their cost was cut nearly in half). With $6000 per month in rent due, that was an immediate $72,000 per year the store was required to make: a total very close to the profit margin at the previous location, which did not require rent, as the property was owned by the business. With the debt of the build-out combined with the rent, the store was immediately facing an uphill battle against finances.
Yet, overhead was not the only factor for the store’s closing. Apart from an expensive build-out and high rent, the location itself worked against Gendler’s Wine and Spirits. In downtown Rock Island, it had been on a one-way in a high-traffic part of town. However, in Moline, it was in the downtown area designed for tourists and away from the main traffic flow through the city. It was not the kind of location that one regularly drove past unless one was specifically driving there as one’s destination. The City of Moline had (and still is) developing the area for foot traffic and attempting to draw more tourists to the area, but at the present time and at the time that Gendler’s was located there, that traffic had not developed and the area had not succeeded in being a “destination.” As such, the traffic (both foot and vehicular) was not very active unless the civic center was hosting an event, in which case, it became the destination and not the local businesses that surrounded it. That in itself became a problem as the area Gendler’s was in was not designed to host that much traffic and so when an event was happening, it made it extremely difficult to reach Gendler’s and the surrounding businesses, unless one planned for extra amounts of time.
Also, in Gendler’s location, the property owner would not allow more than a flat, metal sign that sat against the building. It was fairly easy to miss if one did not know to look for it. The owner also would not allow a light up “open” sign in the window. The reasons for both of these were given so as to preserve the aesthetics of the building; however, the general idea of a business having a sign is to grab passerby’s attention. When non-attention grabbing signs are all that is allowed, it kind of defeats the purpose in attracting what little traffic passes by. Being in a spot that was not in a popular area and having signs that didn’t alert the few potential consumers that were in the area to its existence both added to the list of things that Gendler’s Wine and Spirits had to overcome in its move to Moline.
The answer of course for any struggling business lies in the customers. The more people a business has spending money within, the better off it should be. Gendler’s Wine and Spirits' plan when it changed locations was to rely on the already established customer base. However, a couple if items were not addressed when it came to that customer base. One of them being that, when one moves a business, not everyone will follow it to its new location. Part of it may be because of lack of accessibility in a customer’s already established routine. Part of it may be because the customer feels betrayed by such a dramatic change. Both reasons were cited by former Gendler’s customers who had shopped at the Rock Island store but rarely ventured to the Moline store.
If not all of the customer base is going to come along, then one would have to establish new customers, even if it is more expensive than retaining older ones. The most effective way is to advertise to get them to visit, then once they do, have a wide variety of product to choose from and a friendly and knowledgeable staff to sell it, thus ensuring a pleasant experience for the customer and a willingness for them to return. While Gendler’s had a good staff and great selection of product and would typically make returning customers out of the new ones that walked through the doors, it failed to follow through on the advertising end and get many new faces through the door in the first place. Mr. Getz, a businessman in the manufacturing industry who had bought Gendler’s as a hobby, didn’t fully realize the importance of advertising for a retail business. He did not grasp that larger businesses spend money on advertising not because they have the money but rather that they want more money, and referred to spending money on advertising as “throwing [the money] out the window.” He wanted to rely on the older customers primarily.
The main problem with that strategy is that while older customers tend to remain loyal, they are becoming older customers. As one ages, alcohol consumption typically decreases. An older customer for a specialty wine store, while possibly spending more per bottle, typically would purchase less than someone younger with the same amount of income. Also, older customers have a tendency to die. It’s just a fact of life, as no one is around forever. Therefore, older customers, while providing a nice base, cannot be the sole source of income for a wine specialty store. They simply do not spend enough or last long enough. The customer base needs to constantly be replenished with younger faces who will be repeat customers and become the older customers in the future. That’s not to say that one should give priority to younger people in business, as all customers should be treated as honored guests, but that rather “new blood” needs to be brought into business in order for that business to succeed. Marketing is key to this in that it allows the name of the business to “get out there.” Visibility is not strictly limited to a business’ location as a business exists partially as an idea. Therefore, by expanding that idea to as many people as possible as often as possible, the business has a better chance at success.
After their move, Gendler’s did not do that. It put minimal effort into advertising. This wasn’t limited to just money, but even in doing special promotions that could draw people in. It did offer wine classes a couple of times per month, a tasting on Saturdays, and two large tastings per year, but apart from the large tastings, those events were primarily advertised in-store and marketed to the existing customer base. There was little effort to go outside of those established events, at least until the last year when the store began to address ways to attract new clientèle. That proved to be "too little, too late" for it to overcome with all of its other obstacles. Without part of its established Rock Island customer base, without new customers coming in, and without advertising to attract new customers, those other obstacles proved to be too much, and the aged store was forced to close its doors.
Gendler’s Wine and Spirits didn’t close because of financial reasons. It closed due to poor planning and failure to address the problems that arose from the lack of forethought and research. It is entirely possible that had it been in a more appropriately priced location with better traffic, had higher visibility both physically and in media, and focused on expanding an already broad, though aging, customer base, Gendler’s Wine and Spirits would still be in business today.
No comments:
Post a Comment