Selling Luxury

As it celebrates 50 years, Los Angeles-based Wally’s Wine & Spirits embraces modern convenience and a progressive, integrated retail model.

Christian Navarro, who took over California-based Wally’s Wine & Spirits in 2013, revamps the store’s website every few years. Today, Wallywine.com accounts for 30% of all sales.
Christian Navarro, who took over California-based Wally’s Wine & Spirits in 2013, revamps the store’s website every few years. Today, Wallywine.com accounts for 30% of all sales.

Christian Navarro doesn’t pretend to be anyone but himself. A former homeless man who never graduated from high school, the president and principal of Wally’s Wine & Spirits in Los Angeles is, by all accounts, living the good life. But that doesn’t mean he’s settled down. Since taking over Wally’s in 2013, Navarro has completely reshaped the venerable store’s image and business model. Today, Wally’s is a top-notch, lavish retail concept with a list of wealthy client names spanning the globe. The store’s website and its partnership with luxury auction house Christie’s, which hosts quarterly online auctions with Wally’s, have helped it connect with a wide swath of upscale consumers. Navarro’s ongoing reinvestment in Wallywine.com has earned him the 2018 Market Watch Leaders Alumni Award for “Best Website”.

Navarro is blunt about his target consumer. Not someone aiming to compete on price or discounting, he seeks luxury, prestige clients who are willing to pay more for selection and service. This is true in his brick-and-mortar stores and online. “We can’t be everything to everyone,” Navarro says. “I’m not chasing the bottom dollar. I want people who aspire for the best, whatever it may be. It’s a small segment, but if I get half of that small segment, I’ll be in great shape.”

Revenues for Wally’s top an estimated $50 million annually. The company currently has a location in Beverly Hills and, at press time, a unit opening in Santa Monica, California in the fall. The original Wally’s in Westwood closed during the summer. Wine dominates sales at 80%, while spirits comprise 10%. The remaining 10% is split between beer and gourmet foods. Online transactions make up 30% of total sales. “The internet portion is growing,” Navarro says. “It’s a challenge to convey luxury online, but we’re working on it and working hard to expand that segment every day. Internet revenues are growing for us by double-digit rates every year.”

Wally’s Wine & Spirits (spirits shelf  at Beverly Hills location top) prides itself on making clients feel at home when they visit, which is why the company is working toward implementing personalized online chats for its website.
Wally’s Wine & Spirits (spirits shelf at Beverly Hills location top) prides itself on making clients feel at home when they visit, which is why the company is working toward implementing personalized online chats for its website.

Embracing Technology

Navarro invests heavily in his online business, conducting a major upgrade of the website every few years. Last year, he spent millions to revamp Wallywine.com. “It’s still not exactly where we want to be, but the new site has given us a good base,” Navarro explains. “We’re an image-driven company and that overhaul really affected our business. People now get an idea of what we’re trying to say and do. That’s the most important thing for our website. That, and for the customer who visits the site but may not know who we are, to have faith and trust that they’ll receive their products in a timely manner.”

Navarro notes that wine is organized in three different ways online: by price, selection, or reputation. “The internet is very interesting,” he adds. “We’re never going to be the lowest price. We build brands and traditions. We’re not trying to sell products cheap to make a couple bucks. Because of that, many wine estates reward us by giving us giant allocations, so we have products that others don’t. And we’ve been open for 50 years. We’ve delivered on all of our customers’ expectations.”

Visual elements are key for Wallywine.com. Navarro says the look and feel of the site needs to convey luxury. He accomplishes that by highlighting ultra-premium products, showcasing photos that portray the upscale nature of his stores, and detailing the high level of service he provides. He also emphasizes interaction, and is working to further that portion of the online business. Navarro notes that wine dominates his web sales and says his internet consumers are global, adding that a lot of sales come from wealthy clients in Asia and South America.

Wally’s is moving away from a traditional wine store model toward a modernized hybrid restaurant-retail business. The first iteration of this concept is based in Beverly Hills (exterior pictured) and showcases high-end luxury products, with seating for 160 people.
Wally’s is moving away from a traditional wine store model toward a modernized hybrid restaurant-retail business. The first iteration of this concept is based in Beverly Hills (exterior pictured) and showcases high-end luxury products, with seating for 160 people.

“We have the trust of the community, which is why we get great allocations,” Navarro says. “Our next goal is to come up with live interactive help for our online clients. When you walk into our stores you feel like you’re at home talking to a friend who’s giving you good advice. Now, I’m working to get experts online to create a personalized live chat. We want to have that human touch online and create the ability for true interactive online purchasing.”

And although Navarro isn’t convinced that he needs a mobile app, he’s working on updating and refining the mobile website platform for Wally’s to make it more user-friendly for modern shoppers. He’s also nurturing his partnership with global auction house Christie’s. That endeavor has been very lucrative, Navarro says, as the two companies share a similar global and high-end client base. Christie’s hosts online auctions quarterly with Wally’s. The internet events include live video auctions and online bidding formats.

“Our partnership with Christie’s has worked out very well,” Navarro says. “We’re now able to get products that we don’t otherwise have access to and it makes our customers happy.” Along with Christie’s, Navarro has aligned Wally’s with Delta Airlines and Hawaii’s Four Seasons Resort Maui at Wailea, which results in residual online marketing opportunities. “We all help each other reach people who like our products,” he explains. “We work together on all sides, sharing customers and databases to give the people we interact with what they want in a trusted, safe environment.”

With the hybrid on- and off-premise Wally's venues, Navarro is looking to change the idea of retail entirely, turning the company into a 21st century hospitality, food, and beverage company.
With the hybrid on- and off-premise Wally's venues, Navarro is looking to change the idea of retail entirely, turning the company into a 21st century hospitality, food, and beverage company.

All-Inclusive Model

Much of Wally’s success in recent years can be attributed to Navarro’s reshaping of the business. The company has undergone a massive shift since 2013, when Navarro, along with other investors, bought out founder and Market Watch Leader Steve Wallace. Navarro worked for Wallace for more than 20 years, joining him in 1991. As Navarro recalls, he approached Wallace back then, touting his already star-studded client base and promising to help him grow his business.

Navarro started working in beverage retail as a teenager in the 1980s and compiled an impressive contact list of Hollywood clients that he brought to Wally’s. It’s something he maintains today, as he has direct accounts with heads of major movie studios and talent agencies and with Hollywood actors, directors, and producers. When Wallace retired in 2013, Navarro took over with investment help from brothers Maurice and Paul Marciano, the founders of Guess Jeans. They serve as his mentors and help oversee the business. “They’re incredible entrepreneurs,” Navarro says of the Marcianos. “They’ve done well in their other businesses. They’re risk-takers, they’ve got the deepest business acumen, and they love food and wine. They believed in what I was trying to do.”

Together, the trio created Wally’s Beverly Hills, a retail-restaurant hybrid that has been incredibly successful since debuting in 2014. The venue showcases upper-end luxury products on its shelves and houses a 160-seat restaurant that has wait times of upwards of three hours on Friday and Saturday nights. The space aims to be a fully integrated dining and shopping experience, and Navarro will replicate it this year when he opens a venue in Santa Monica. It shares the same modernized on- and off-premise hybrid format and essentially replaces the original Wally’s location in Westwood, California, which closed over the summer.

“We created this experiential retail concept that compels people to come in and have a one-on-one connection,” Navarro says. “This concept grows the company and reinvigorates people into retail. We’re thinking now about retail in the 21st century. It’s an interactive, experiential retail dining model and we’ll use it going forward. It’s a wine store, spirits store, cheese store, and restaurant all in one. Everything you’re eating and drinking can be bought. Everything you’re buying can be eaten.” He adds that the space is integrated like interlocking fingers so that the retail component isn’t separated from the restaurant, but rather, they’re completely immersive. “It’s a vision of everything wine and food,” Navarro says. “People visiting for the first time walk in and say ‘Oh my god.’ We have 13-foot walls of wine and specialized, hand-crafted tables. We have caviar displays and people slicing Iberico ham. We have 125 wines by the glass. It’s nirvana for people who enjoy wine and food.”

Wally's stocks roughly 7,000 wine SKUs in its venues (Beverly Hills location above), and high-end labels from Bordeaux, California, Champagne, and Burgundy are some of the most popular.
Wally's stocks roughly 7,000 wine SKUs in its venues (Beverly Hills location above), and high-end labels from Bordeaux, California, Champagne, and Burgundy are some of the most popular.

The Wally’s venues span from 6,500 to 9,500 square feet and stock roughly 8,000 SKUs, dominated by wine. Overall, Wally’s offers 7,000 wine SKUs and Navarro says upper-end labels from Bordeaux, Burgundy, California, and Champagne do well. Some of the store’s top movers include Dom Pérignon ($170 a 750-ml. for the 2009 vintage), Château Margaux ($475 for the 2013 vintage), Château Mouton Rothschild ($500 for the 2014 vintage), Tenuta San Guido Sassicaia ($185 for the 2014 vintage), and Marchesi Antinori Tignanello ($135 for the 2015 vintage).

Top-tier products also dominate spirits sales at Wally’s. The stores carry 1,000 spirits SKUs, and Navarro says ultra-premium Scotches and Cognacs are popular, as are Tequilas. The company’s top-moving spirits include Don Julio 1942 Añejo Tequila ($150 a 750-ml.), Casa Dragones Blanco ($75) and Joven ($275) Tequilas, and the Casamigos Tequila lineup ($50 for Blanco and Reposado; $70 for Añejo). Beer isn’t a major player at Wally’s, though the stores offer a variety of craft brews and Navarro notes that IPAs move well.

As exclusivity is key for Wally’s, the company offers many products that are hard to find elsewhere. Partner Maurice Marciano owns a well-respected wine estate in Napa and the stores boast his full lineup, along with specialty cuvées and labels from other producers that are made specifically for Wally’s. Similarly, in spirits, Wally’s offers hand-selected single barrel products and blends.

“We’re getting rid of the traditional retail model,” Navarro says. “We’re changing Wally’s from a liquor store, which we were, into a 21st-century hospitality, food, and beverage company. We’re changing the idea of retail completely.”

As with wine, spirits sales (shelves pictured) are dominated by top-tier products, with Scotch, Cognac, and Tequila being the best-selling categories.
As with wine, spirits sales (shelves pictured) are dominated by top-tier products, with Scotch, Cognac, and Tequila being the best-selling categories.

Future Growth

Navarro opened the latest Wally’s unit this fall in Santa Monica, California, and says further growth is in the works. He and his partners are interested in New York, and have also looked at international opportunities, though he notes that there’s no rush to add units. “Our goal is to expand to places that have a need for our product,” he explains. “But we’re not in a hurry.”

In the interim, Navarro continues to focus on his revolutionary retail-restaurant model, which he believes is the future of successful business. “Everything we do is targeted,” he says. “When you enter our business, whatever it is—the restaurant, store, internet—you’re the only thing that exists. We want customers to get really immersed in everything we’re doing and to be pulled to our website to experience it. My real goal is for products and people to clasp together.”