Binny’s Maps Plans To Expand In Downstate Illinois And WisconsinNovember 7, 2011
With its 27th store opening late last week, Chicago-based Binny’s Beverage Depot is laying plans for the next stage of its expansion. In February, the retailer will make its first move outside the metro Chicago market when it opens a new unit in the downstate Illinois city of Champaign.
Binny’s CEO Michael Binstein says he’s seeking sites in other downstate Illinois markets and is preparing a push into neighboring Wisconsin. “We’re looking at moving into both Madison and Milwaukee,” Binstein told Shanken News Daily. “There are some exceptional opportunities in Wisconsin.” Binstein also disclosed clear ambitions to expand regionally and then nationally. “Once we set up the internal infrastructure to expand to Wisconsin, we can use that as a springboard to go national,” he said.
Binny’s latest expansion plans are a signal that it has come close to saturating metro Chicago, a market with a population of more than 9 million. A 28th Chicago area store, in the western suburb of LaGrange, is set to open in the coming months. After that, most expansion is likely to occur beyond Chicago.
Champaign, where the new Binny’s unit will open in a former Border’s bookstore, is roughly 150 miles south of Chicago and is dominated by the University of Illinois campus. After the Champaign store opening, Binny’s is slated to move into the downstate Illinois twin cities of Bloomington/Normal. Real estate sources say the company is near a deal on a store lease in that market. Beyond that, Binstein said he’s considering branches in Peoria and Rockford, as well as several other Illinois cities. “Our prototype stores now run between 25,000 and 30,000 square feet, which we think is the scale necessary to display the assortments we offer,” said Binstein. “We won’t consider a town that isn’t big enough to support a store of that size. I don’t have much interest in rolling out any 4,000-square-foot stores for smaller markets.”
Rivals don’t doubt Binstein’s resolve. David Luebke, president and general manager of the seven-store Otto’s Beverage Centers chain in Milwaukee (once owned by Market Watch Leader David Kujus), says greater Milwaukee has become hotly competitive as the Woodman’s Food Market chain has erected two big local stores and Costco is expanding its reach. Otto’s biggest store is 16,000 square feet and the company is a big name in the market. “Binny’s doesn’t seem to be afraid of anybody,” Luebke said. “If they come in here with 30,000-square-foot stores, then the rest of us will have to really watch our pricing and margins a lot more closely. The world here could change dramatically.”
In Rockford, an Illinois city more than 80 miles northwest of Chicago near the Wisconsin border, local retailer Tony Artale said that “Binny’s no doubt would do well here. Many people here have actually been waiting for them to arrive.” Artale, the owner of the three-year-old boutique Artale Wine Co., which covers just 2,000 square feet, notes that Woodman’s dominates the beverage alcohol business in Rockford and that local consumers would welcome more competition. “Woodman’s can be very aggressive in pricing,” he said. “It will be interesting to see Binny’s and Woodman’s face off here.”
At Binny’s, merchandising has been refined in the past year in a couple of important ways. Cheese and other perishable foods, once a company mainstay, have been banished from all but the four biggest stores. “Our craft beer business is growing fast, and when we were forced with a choice between craft beer and cheese, we decided on beer,” said Binstein.
Meanwhile, even as smoking laws have tightened in Illinois, Binny’s is building bigger walk-in humidors. The company has no private-label programs in wine or spirits, but it has hired two full-time cigar specialists to source private-label Binny’s cigars priced as high as $6.50 apiece and imported from countries including Nicaragua and the Dominican Republic. Many independent tobacco shops around Chicago complain that they can’t compete against Binny’s low prices. Binstein reports that cigar sales have risen at a double-digit annual pace the past few years and that they’re on pace to surpass $8 million this year, while the company’s overall revenues will rise nearly 5% to around $270 million. “Same-store sales are up by 3%-6% in most of our stores this year,” he said. “We’re barreling ahead and should pass the $300 million mark in sales before long—perhaps next year.”
An expansion pace of three to five new stores a year is the goal in the near future, but Binstein admits that he’s taking nothing for granted beyond metro Chicago. “When we open a new store in a Chicago suburb like Arlington Heights last week, we have the advantage of everybody recognizing our name,” Binstein said. “In Champaign, we’ll be in a town where hardly anybody knows us. People may not care about what we’ve accomplished in Chicago.”
Binny’s will also go up against a strong local operator in Champaign’s Piccadilly Beverage Shops. Owned by Market Watch Leader Jack B. Troxell, Piccadilly has six stores and an ardent local following. But Piccadilly’s stores are less than half the size of a Binny’s. “Shoppers want selection today, and therefore the size of your stores matters a lot,” Binstein said.
Tagged : Illinois, retailers, Wisconsin