Here's to low liquor prices

J.C. Penney has moved away from frequent sales in favor of "everyday low prices" -- and drawn widespread attention for the dismal results so far.

John Wolf thinks liquor will be different.

Just in time for the busiest month of the year for liquor stores, Wolf opened Liquor Boy in St. Louis Park Monday with everyday low prices on more than 900 wines, as well as liquor and beer.

Why does he expect the everyday-low-price concept to work on alcohol when it didn't work on sweaters and towels at JCP?

"People know the price on wine and liquor," he said. "They can't tell what a shirt should cost."

Wolf said his 10,000-square-foot store, between Office Max and PetSmart on Cedar Lake Road, will be unique in the Twin Cities, except for "no sale" pricing at Chicago Lake Liquors in south Minneapolis, which he also owns.

The stores are riding a wave of nationwide pressure to lower prices, said David Strasser, financial analyst at Janney Capital Markets in New York. "You have to have low prices to compete," he said.

Most local liquor store owners are not drinking the everyday-low-price brew yet. But Mitch Spencer, wine director at Haskell's in Minnetonka, said liquor stores now have to hold many more sales than they ever used to.

Haskell's, which has 13 locations, decided six years ago to make an aggressive attempt to lower its pricing. Its Nickel sale, held in the spring, is the largest-volume sale in the country, Spencer said, but at any given time about 3,000 of the stores' 10,000 wines are on sale.

"The market is demanding more sales," he said. "We can't afford to not have something on sale."

As for the everyday-low-price concept expanding in the Twin Cities, Spencer isn't worried. "We do price matching," he said.

Other liquor retailers such as Merwin Liquors, Morelli's and Hennepin Lake Liquors believe in holding few if any sales, but keep their prices lower than average. Hennepin Lake has everyday low prices on wine, said owner Phil Colich, although his beer prices fluctuate.

Louis Dachis, who has owned Merwin's since 2004, instituted everyday low prices in his three stores in Minneapolis, Falcon Heights and Maplewood.

Dachis said owners instituting everyday-low-pricing face added pressures, and a lot of stores don't do it because it's more difficult. Selling at a constant low price means lower profit margins, but you hope to make it up in volume.

Spencer said low prices aren't enough to succeed in this market. Selection and especially customer service are important, too.

Scott Belkin of Cedar Lake Wine & Spirits, a few blocks from Liquor Boy, described his store as a relationship store with service, cleanliness and selection, "Our customer base is different."

Still, Liquor Boy is hardly a Spartan, low-rent concept, despite its pricing philosophy and working-class name. The black metal and cherry wood-grain shelving, polished cement floors and plentiful lighting are a contrast to typical warehouse-club decor, Wolf said.

Retail heritage

Wolf comes from a retailing family. Sid Applebaum, founder of Rainbow Foods, is his great-uncle. The Applebaum family also owns Big Top Liquor stores in the Twin Cities.

Wolf would like to open additional stores throughout the metro area, but says it's a slow process. In 2010 he attempted to open a "Crazy Johnny's" liquor store in Minnetonka but was turned down by the City Council.

The new store's proximity to a Costco location invites risky comparisons. Few retailers attempt to beat a warehouse club on price.

In a price check Monday, Liquor Boy was pennies to a couple dollars less on a 24-pack of Miller Lite cans and a 1.75 liter of Bombay Sapphire gin, but analysts don't expect that to stand.

"Costco is incredibly vigilant about pricing and will respond to pricing competition," said Piper Jaffray analyst Sean Naughton.

People expect lower prices from a warehouse club, he said.

After hearing about Liquor Boy on the social networking site Thrillist, Suzann Ellis of Northfield was satisfied with the prices she found at Liquor Boy on Monday.

"I'm a scotch drinker," she said, but it was a bottle of Redbreast Irish whiskey that caught her attention first.

"It's $41 here," she said. "I paid $49 the last time I bought it."

John Ewoldt • 612-673-7633