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The Wine House Carves Out Growth In Competitive Los Angeles Retail Market

August 29, 2017

Southern California remains a highly competitive retail market for wine and spirits, but single-unit Los Angeles store The Wine House has adapted to the shifting trends of recent years, and owners the Knight family tell SND that the business continues to expand.

At around 25,000 square feet, The Wine House carries between 6,000 and 7,000 SKUs, depending on the season. Wine accounts for about 86% of sales by value. Another 9% is in spirits, while beer accounts for 1%, and revenue from classes and seminars makes up the remaining 4%. The store has annual revenue of $18 million to $20 million, and is growing at about 5% annually, according to founder Bill Knight.

“Southern California is one of the most difficult markets in the nation,” says Jim Knight, Bill’s son and the store’s Old World wine buyer. “It’s so densely populated with wine stores now, much more so than when my father started (in 1972),” and the grocery and chain stores weren’t so numerous. “The biggest thing in Los Angeles is that the traffic just gets worse and worse. We used to be a destination spot, but that’s no longer the case. We’ve had to make sure we have a huge internet presence. A lot of people shop online, then come in on Saturday or Sunday to pick up their order.” Online orders account for about 20% to 25% of volume, and a high percentage of those sales are within California. The store also delivers locally.

The Wine House is also investing in Wine Ring, an app that matches wines with consumer taste preferences. “Basically, you rate a wine, and after you’ve done a bunch of ratings, the app can figure out your tasting profile,” Jim explains. “We’re trying to lessen the intimidation factor for wine. It’s also a way for us to see what people are buying, and in turn sell them the right wine instead of just blasting them via email.”

To further differentiate itself from the competition, The Wine House holds numerous tastings, classes and seminars for wine drinkers of all levels at its restaurant and wine bar, called Upstairs 2. “With all of our events, we try to tie them in with either the winemaker or owner, not a national sales manager or brand ambassador,” says Glen Knight, Jim’s brother and the store’s New World wine buyer. “Our consumers want to see, talk to and feel the real thing. People love it.”

Several years ago, Bill Knight tried to expand with a second Wine House location in the Valley east of Los Angeles. “It was a disaster, and I’ll never do it again,” he says, noting the less-premium purchasing patterns of clientele in the region. Bill’s sons haven’t embarked on any expansion, although they note that a smaller satellite store, perhaps in the city’s burgeoning Echo Park neighborhood, could potentially be an option looking ahead.

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