Photos by Carolyn Craven
Breaking away from the main stage at BevNET Live earlier this week, three beverage industry veterans took to a panel session in Santa Monica, Calif. to share their experiences balancing brick and mortar stores with wholesale operations and the strategic implications that kind of arrangement can have for a business.
The panel consisted of Juice Served Here CEO Alex Matthews, Dry Soda founder and CEO Sharelle Klaus and Kyle O’Brien, EVP of sales for La Colombe Coffee. Combined, they have decades of experience operating storefront shops while making interstate distribution deals.
For Klaus, opening a brick and mortar “tasting bar” in their Seattle, Wash. headquarters wound up being an excellent marketing vehicle for the emerging Dry brand, which was created in 2005. According to her, the on-site retail space also functioned as a proof of concept for retailers interested in stocking Dry, which at the time took risks by introducing unconventional flavors for sodas such as lavender. Distributors could make a visit to the storefront and see for themselves the success of the drink.
“We created a store within our office space,” Klaus said. “What was really amazing about that experience was that every day, all day, when I’m in the office I could hear people talk about what they liked about Dry, what flavors they like, so it was a really unique experience.”
For Matthews, Juice Served Here initially began as a chain of retail shops, although it recently launched a wholesale operation. Four years after Matthews quit his 9-to-5 in 2012, the company he started now works with 10 distributors for more than 1,000 points of distribution. Like Dry, Matthews said hearing customer feedback was one of the most beneficial results from his brick and mortar shops. Unlike distributor feedback, customers helped him learn what flavor pairings people liked with their juice and how to improve the recipes and better plan for future releases. It also allows more room for experimentation as a failed recipe for a new flavor can be quickly removed or remixed at little loss, whereas in a distributed CPG line testing the market for an unproven flavor can cost more time and money. Likewise, Klaus said customers have frequently given her unexpected ideas for flavors she may not have gotten without the direct contact brick and mortar provides.
O’Brien said La Colombe cafes are significant to building the brand by increasing consumer recognition. Matthews also said his chain has help created partnerships with other businesses who have visited Juice Served Here locations.
“They get wowed there and then we follow up and send samples and often that’s the way we’re winning some of these wholesale accounts,” Matthews said. “The real life tangible experience definitely plays into it, there’s no doubt.”
As for balancing the two operations, O’Brien said communication between departments and leadership is key to keeping wholesale and brick and mortar in sync. Making sure leaders are talking daily and coordinating is vital, he said.
While the panelists are all fans of dual operations, it can get expensive. O’Brien said he would advise against anyone thinking of trying to open up their first storefront in trendy spots like New York’s SoHo or TriBeCa neighborhoods where rental costs and neighboring competition are likely to be pitfalls for a new company. Matthews said if he had to start his business all over again, he would do it the same way by beginning with retail, but suggested other brands stick to what they’re best at before jumping into the deep end by trying to balance both.
“If you’ve started out life as a wholesale brand stick to that competency,” Matthews said. “If you have the dollars to open a retail store then yes, you go after a location. But we started in retail and kind of fell into the wholesale business. And I think I would have done it that way around the second time through, I wouldn’t have flipped it.”
Ultimately, the trio agreed that a store is, in Klaus’s words, a “3-D billboard” for a brand. If consumers and investors can walk by and see a logo and a sign, or if they can walk in and taste the drinks and feel the atmosphere, it’s a powerful asset to a young company.
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