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Seattle Retailer Downtown Spirits Carves Out A Niche In Competitive Market

July 9, 2019

In the wake of the privatization of retail spirits sales in Washington State seven years ago, the vast majority of independent operators have shut down as sales increasingly move to chain stores. But Seattle retailer Downtown Spirits has flourished via a varied retail experience, the city’s explosive growth, and the popularity of its online sales.

“We’ve been able to not only keep the doors open, but thrive in this market,” says Marques Warren, owner of Downtown Spirits, which is located close to Amazon’s mammoth Seattle campus in the South Lake Union neighborhood. Warren cites organic brick-and-mortar sales, along with burgeoning e-commerce, as factors driving the business forward.

Downtown Spirits is a subsidiary of Warren’s News & Gifts, a family business that—in partnership with travel retailer Hudson Group—operates 26 stores at Seattle’s Sea-Tac Airport. Warren’s father, Ardie, is president and chairman, while Warren serves as vice president of operations. Sales revenue at Downtown Spirits exceeded $6 million last year. Spirits account for half of the store’s business, with wine and beer each comprising 25%. The 11,000-square-foot store employs 17 workers.

Downtown Spirits opened in 2012—just two months after privatization went into effect. Despite the prospect of competing with big-box stores, Warren saw the opportunity that the leased downtown location offered. Amazon now owns much of the surrounding real estate, and the area has seen an influx of wealth with the addition of upscale apartments and condominiums. The location also provides easy access to local neighborhoods and major highways, key factors for Downtown Spirits’ delivery program.

“Online sales have become an important and fast-growing part of our business,” Warren says, noting that they account for about one-quarter of Downtown Spirits’ total sales. In addition to shipping wine to states where it’s permitted to do so, the store offers local delivery. Key corporate clients include Boeing and Amazon. In such a competitive market as Seattle, “the way we’ve been able to differentiate ourselves is through delivery,” Warren explains. Downtown Spirits teamed with Drizly in 2014, and has become the on-demand provider’s largest retail partner in the Seattle market, Warren says. Drizly orders average $90-$95, and the store fills 50-100 orders a day.

Private label wines like non-vintage Casa Dora Cava ($10 a 750-ml.), 2016 El Jamon Garnacha ($10), and 2017 Silver Beach Sauvignon Blanc ($14) are also a growth area. “Over the next few years we’ll look to deepen our investment in those products,” Warren notes.

Among the key challenges for Downtown Spirits are competition from much larger players like Costco and Total Wine, and finding and retaining talent in Seattle’s tight labor market. The legalization of recreational marijuana in Washington, however, has been a non-issue. “Marijuana was legalized around the same time that liquor was privatized,” Warren explains, and beverage alcohol sales in the state have grown since then. Market Watch has more.—Terri Allan

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