Monday, July 7, 2014

The PLCB conundrum

The PLCB, not known for their problem solving ability, continues to create problems caused by their own inefficient business model and inability to adapt.  The bloated overhead, incompetence, top heavy management, and lockstep mentality prevents them either coming up with solutions that a real business would, or varying from their "one size fits all" systemic thinking.

An example of this is being played out in a corner of Westmoreland county.  The PLCB has two stores in Belle Vernon, PA. One is actually in the town, while the other is in what is called the tri-county area. where most of the retail stores are. The store at 321 Tri-county Lane, which they want to replace, is about 120 feet from the entrance to the Giant Eagle grocery store, which follows the current publicly expressed desire to have stores in or near a grocery store.

They want to move it someplace within a mile of the current location -- how convenient.

They are also going to make the new store bigger, going from about 3,000 square feet of retail and warehouse space to 4,500 square feet and they say that this will happen by the fall of 2015. Or it might be like Lebanon, which inexplicably took 3 years to move and upgrade (and it still isn't done yet), or like the store in Mountaintop which took over 2 years to move less than 100 feet, or the one in Philly near Penn that took over a year. You get the picture. We'll see at some point if they hold true on this one. If you want to see what it will supposedly look like, the PLCB used the exact same plans for store 4027 at Pittston Crossings in Pittston Township. Seriously, they didn't even change the store number on the plans to reflect the different store.

So there is the conundrum.  Do you keep the stated goal of customer convenience, or do you put some lipstick on the pig of a state store and make it larger but carry less different products per square foot, as all the remodeled stores do? Also, with this larger store, will the smaller store in Belle Vernon stay open, or close? I can't find an answer to that, but the PLCB has closed 20% of their stores in the union era. It apparently just got too expensive to keep them open.

What would real businesses do? To start with, one owner probably wouldn't have the only two locations in town! It turns out the parcel of land directly behind the current store is empty and not owned by the shopping center. That would be the first thing I would look into, if the zoning would allow a store to be built and what kind of deal could be made with the current owner. However, the PLCB doesn't want to own their stores and makes no permanent investment in the locations they are in (I don't think redecorating counts), so unless the owner wanted to do everything up front and then lease it -- the PLCB isn't interested.

The next thing would be to look at the market. Would a real specialty store be profitable? I don't mean a PLCB "specialty" store (which is just a regular PLCB store with Chairman's Selections), but a store that caters to the harder-to-find items in wine and liquor. The PLCB could do that if they weren't so locked into the cookie cutter approach (and if they knew how to sell product), but the biggest reason they don't do it is that they can't afford it.  The less expensive the item, the more profit margin they make. As I showed in this story, they can make over 80% and sometimes near 100% margin (including the JFT) on an $9-11 bottle of wine but only about 50% on a $100 bottle of wine.  When you don't know how to sell good wine, and the majority of wine you do sell is lower priced, that can be a problem.

Of course, this whole problem goes away under privatization. Grocery stores could be selling wine, and if you did want something they didn't have, you could go to a real liquor store or order it -- most likely online -- from another PA store. You can be sure they wouldn't tell you it will take 2 to 3 weeks to arrive like the current SLO system. (I love that, it shows at least one person in the PLCB knew what they were doing -- SLO(w) system indeed!)

Lastly, remember how the Union says that they provide rents to local property owners as a so-called benefit of the state store system? In this case, the Glimcher Group whom they rent the current store from is a multi-state corporation with properties in 13 states.


Anonymous said...

I've worked with a wine store in Boston when I have been up there and if they don't have what I want in th store, they usually have it to me, AT MY FRONT DOOR, later that day or the next day at most. And Massachusetts is hardly a free liquor state.

Albert Brooks said...

I deal with Atlas Liquors whenever I get up to MA and they have been very accommodating to me. However, if I have the time and they have what I want I'll go to NH.

Anonymous said...

As previously stated the selection of real estate has more to do with political referrals than it does customer service. PLCB is routinely pressured by the pols to do business with developers in their districts. There is money to be made in real estate.

Lew Bryson said...

Which is, duh, just another good reason to privatize. Thanks!

412Libertarian said...

Al- this may be of interest to you:

Nice work by the way.

Albert Brooks said...

Thanks, it is a team effort.

I didn't know about Daily's being made in PA but you are right, it is easier to find in other places than a state store.