Bruce Dierking is a man with many jobs. The Colorado entrepreneur, already a successful lawyer and real estate developer, is on his third career, having entered the beverage alcohol retail business in 2012 with the opening of Hazel’s Beverage World in Boulder. In just five years, the store has grown into the No.-1 drinks retailer by sales volume in its market and risen to become the state’s No.-3 store by the same metric. What started as a gamble has since reaped big-time rewards for Dierking and his business partners.
A 2014 Market Watch Leader, Dierking says Hazel’s has benefited from double-digit annual sales growth almost every year since it opened. The retail outlet’s annual revenues top $30 million, with wine comprising 39 percent of sales, spirits making up 33 percent and beer contributing 27 percent; the remaining 1 percent comes from tobacco, specialty foods and general non-alcoholic merchandise. As the store’s newness wears off and the retail outlet reaches maturity, the company’s management team is boosting sales and expanding its reach using modern technologies. For his business savvy and eye for innovation, Bruce Dierking has earned the 2017 Market Watch Leaders Alumni Award for “Best Website.”
“We’ve experienced tremendous growth,” Dierking says. “We’re thrilled with how the store has gone. It has been better than we thought or hoped. Our challenge now is to stay where we are at the top and still grow as a mature store. Today, we see a trend toward consumers wanting convenience and on-demand service, and they appreciate delivery. To that end, we’ve seen a lot of growth in our website.” Dierking notes that when Hazel’s opened, the retailer had a brochure-type website. A shopping feature was added after a couple of years, but it was designed for desktop computers and wasn’t mobile-optimized. “That’s our focus now: the mobile website,” Dierking says. “The vast majority of our online traffic is coming from mobile users.”
Past, Present, Future
Hazel’s Beverage World had an unlikely start. As a real estate developer, Dierking and a business partner, Jim Loftus, own the shopping center and building where Hazel’s is now located. While the space is in a high-traffic area, it sat empty with no renter in 2011. After months of paying the mortgage and taxes on an empty space, Dierking and Loftus decided to open their own business. The pair did a market assessment to determine what type of store was missing in the region and agreed on a large-format, higher-end beverage alcohol concept.
“We thought this type of store was something our community needed,” Dierking says. “We didn’t have a retail background though, so we tried to learn and figure out as much as we could. Because we weren’t in the business before, we brought a lot of different ideas and did a lot of things that were unorthodox. But it’s been proven that a lot of our ideas were actually good. We brought a fresh perspective.”
To launch the 35,000-square-foot store, Dierking and Loftus each put up a significant investment, and they also sought outside capital from friends, family and key community members. The result is a business that had public backing, both financially and emotionally, from its start. Today, the key management team at Hazel’s includes Dierking and his wife, Carleen, and their general manager James Dean. As cofounder and general manager, Dierking handles investor relations, banking and overall store management, while Carleen serves as CFO, overseeing accounting and financial reporting. Dean runs daily operations as store manager.
Carleen was integral in creating the overall vision for Hazel’s Beverage World. The Dierkings wanted the store to have a vintage feel and appeal to female shoppers. They created a branding platform centered around World War II aviation-themed art and graphics featuring female pilots. Their store mascot is Hazel, the pilot of a 1940s Corsair fighter plane. The store features a large replica plane hanging from its ceiling, and it boasts a clean, well-lit interior with low shelving and wide aisles.
“Our branding is super important,” Dierking says. “We went out of our way to create a strong brand so customers could have an emotional connection to the store. It’s a really visual brand. We created this character and every bit of our artwork is a digital original created for us by an artist in Norway. We use it on our website too, to the extent that we can.”
The company expanded its online marketing and branding this summer with the launch of a new slogan and digital campaign designed specifically for the website and mobile technologies. Featuring the tag-line “Shop on the Fly” to play into its prevailing aviation theme, the initiative includes images of the Hazel character using a tablet and smart phone to shop. The imagery appears on the store’s website, Hazelsboulder.com, and on social media platforms, as well as in emails and print advertisements in local Boulder publications. Dierking says the overall goal for the campaign is to increase awareness for the store’s website and encourage people to visit it and give online shopping a try.
While e-commerce is a small contributor to total revenues for Hazel’s Beverage World, Dierking hopes it will be a big growth area going forward. The company is committed to Colorado and only ships merchandise within its home state. “Increasingly, even just for relatively small routine purchases, customers want to do it online,” Dierking says. “They buy online and either pick it up in store or have it delivered. We don’t ever intend to become primarily an e-commerce retailer because we’re really focused on the local community. The in-store experience is most important, but our online business is a way to complement that. We’re going to focus on the internet more because there’s an opportunity for it to grow.”
The Hazel’s website is a constant work in progress. Dierking collaborates with a national web design company to oversee the site, particularly the coding and technical aspects of e-commerce. The online visual presentation and overall experience is directed by the Hazel’s team. Content is updated regularly, especially for in-store events, and the site is linked to the store’s p-o-s technology so that its product inventory can be updated in real time as items sell in the physical store.
Mobile platforms have been a major focus recently. The company updated its mobile website last year to make it more consumer-friendly and easy to navigate, and Dierking says the store’s management is evaluating the need for a mobile application beyond just the website. He notes that there’s no app in development currently, but adds that if it makes business sense for the long term he’s open to exploring it. The desktop computer website hasn’t seen a major refresh in a couple years, though Dierking says it may get an update soon.
“The focus for us is on making the website an efficient shopping experience for our customers,” Dierking says. “We want it to work effectively so people can buy wine, spirits and beer from us online. We’re driving business to the site and increasing awareness that it’s an option. There’s more chance for growth with the online segment now than the brick-and-mortar store.”
Nearly all of Hazel’s in-store inventory is listed online, with the only exceptions being allocated and limited-release products and closeouts priced at deep discount. The store stocks approximately 12,000 SKUs, including 7,000 wine SKUs, 2,000 spirits SKUs, 2,000 beer SKUs and 1,000 additional SKUs spread between cigars and tobacco, specialty foods, and general merchandise.
Wine comprises roughly 40 percent of the sales floor at Hazel’s Beverage World and is positioned in the middle of the space in a variety of display racks. The store also houses a locked and climate-controlled cellar for ultra-premium wines and showcases highly rated labels and high-value wines in its featured product section near the entrance. Popular wines include Kendall-Jackson Vintner’s Reserve Chardonnay ($11.98 a 750-ml.), Veuve Clicquot Brut Champagne ($47.98) and La Marca Prosecco ($13.98). Dierking notes that five of his store’s top 10 best-selling wines are sparkling selections, and he says dry rosés are also doing well.
In spirits, whiskies dominate consumer interest. Dierking says small-batch Bourbons and ryes stand out and he adds that since he moved the store’s ultra-premium spirits out of the wine cellar and into their own locked display in the spirits section, sales of those upper-tier products have also accelerated. Hazel’s top-selling spirits include Tito’s Handmade vodka ($29.98 a 1.75-liter), Skyy vodka ($19.98) and Jameson Irish whiskey ($19.98 a 750-ml.)
Craft beer is also moving fast at Hazel’s, though Dierking says his consumers are starting to veer away from gimmicky labels and toward trusted local producers like Boulder’s Avery Brewing Co. Sour beers and ciders still garner interest, even as imports and mainstream domestics regain ground. The store boasts a whopping 76 cooler doors and its best-selling craft brews include Upslope Brewing Co.’s mixed case ($14.98 a 12-pack of cans) and Bootstrap Brewing Co.’s Insane Rush IPA ($9.98 a six-pack of cans). The top-performing big-name domestics are Keystone Light ($13.98 a 30-pack of cans) and Pabst Blue Ribbon ($14.98), while Stella Artois ($12.98 a 12-pack of bottles) is a leading imported brew.
Hazel’s boasts a robust cigar business as well. The store houses a walk-in humidor and has a loyal customer base that shops the category. Dierking notes that Colorado’s legalization of marijuana a few years ago has negatively impacted cigar sales, but he says he’s committed to the business.
Colorado’s recent legislative changes that allow beverage retailers in the state to operate more than one unit may have an impact on the future of Hazel’s Beverage World. Dierking says he and his business partners have given some thought to adding another store in the state, but there are no plans in the works and he’s not motivated to move quickly on expansion. For now, his attention is on maintaining and improving the current location and upgrading the store’s online profile and mobile technologies.
“We’re bringing in more food and accessories and working on moving the cart corral to the outside vestibule so we can free up more sales space,” Dierking says. “We have a lot of highly educated, foodie types in Boulder who are big on craft, authentic and local products, so we’re tapping into that culture.” His goal is to make sure the Hazel’s shopping experience stays fresh and interesting. “Our philosophy is everyday low prices, and our margins are thin,” Dierking says. “Growing from a start-up to a mature store has required us to change our mind-set and we have to make sure the customer experience remains a key part of what we do.”