Many beverage alcohol retailers build their reputations on fair pricing, wide product selection and stellar customer service. But the Knightly Spirits chain has become a destination for its Central Florida customers by committing to all three practices. “We’re good family people,” says Gary Gianoukos, who cofounded and co-owns the five-unit Orlando-area chain with his brother-in-law, George Knightly. “We’ve never had to worry about things like good customer service. It comes naturally to us.”
Knightly Spirits has been a presence in the Central Florida market for nearly 20 years. The company began as a single shop and expanded to five Orange County locations that range in size from 1,400 to 3,600 square feet. While annual revenue is undisclosed, the owners say spirits, wine and beer sales are all increasing. Spirits account for the lion’s share of company sales at 72 percent, according to George’s son Chris Knightly, who serves as the company’s director of information technology. Wine and beer each contribute 11 percent, while miscellaneous products like tobacco and garnishes comprise the remainder. Knightly Spirits has about 25 workers, including several who’ve been with the company for more than a decade. “They’re a huge part of our business,” George explains. “They’re a part of our family.”
Neighborhood Stores
George and Gianoukos, both New England natives, purchased Lee’s Liquors in the Hunter’s Creek neighborhood of Orlando in 1998. They pooled their resources and talents—George had worked as a rectifier at the former Federal Distillers and White Rock Distilleries in the 1970s and ’80s, while Gianoukos had a career in retail. “It was a gamble,” Gianoukos says. “You never know how successful you’re going to be.” The pair were successful enough to add a second location a few years later in the Williamsburg area, near SeaWorld amusement park, naming it Knightly Spirits. In 2007, they unveiled a store in the affluent community of Windermere, Florida. Two years later, the company’s biggest outlet opened in a former Albertson’s supermarket space on South Orange Blossom Trail in Orlando. In 2011, the company launched its latest location in Ocoee, Florida. That same year, the Hunter’s Creek unit moved slightly down the road and took the Knightly Spirits name.
While the chain is located in one of the most popular vacation destinations in the country, George says most of the company’s units cater to local, moderate-income residents. “These stores are neighborhood shops,” he says. “We don’t charge tourist prices.” George oversees the spirits category, which boasts some 2,400 SKUs priced from $6.99 a 750-ml. bottle of Crystal Palace vodka to $699.99 for John Walker & Sons Private Collection 2014 Edition. As with other retailers these days, the whisk(e)y segment is thriving at Knightly Spirits. “Bourbon is doing incredibly well,” George says. In fact, the chain has partnered recently with such brands as Eagle Rare, Woodford Reserve and Knob Creek to bottle single barrels, with offerings priced between $30 and $45 a 750-ml. bottle.
Scotch whisky—particularly single malt—is also performing well at Knightly Spirits. Rum is a big category in the Florida market, and George notes that with Bourbon prices rising, some customers are shifting to aged rums for a fraction of the cost. Vodka, however, has flat-lined in the wake of the flavor explosion. “The demand for vodka has reverted back to just the original flavors and some fruit variants like citrus and raspberry,” George adds. Among the top-selling SKUs at Knightly Spirits are 1.75-liter bottles of Smirnoff vodka ($19.99), Tito’s Handmade vodka ($27.99) and Captain Morgan’s Spiced rum ($22.99). George says the company is planning to release its own exclusive spirits brands in mid-2017.
Building Trust
George’s other son, Bryan Knightly, has served as director of wine sales for more than 10 years. The wine department stocks about 1,000 SKUs system-wide, generally priced from $8.99 a 750-ml. bottle of Concha y Toro Casillero del Diablo Reserva Chardonnay to $399 for the 2012 Hundred Acre Ark Vineyard Cabernet Sauvignon. California Cabernet is the company’s most popular style. The Windermere store is the most wine-focused location due to its affluent client base and offers about 750 wines, including 50 labels priced at $100 or more a 750-ml. bottle. “Overall, $19.99 wines are the sweet spot,” Bryan says. “Then there’s a void in the $20-to-$50 range.” But the 2014 Caymus Cabernet Sauvignon is a brisk seller at $79.99 a liter. “We sell five times more Caymus than we do wines priced at $30,” Bryan adds.
Customers have come to trust Knightly Spirits for their wine purchases. “With five locations, we’re big enough to get whatever we need from suppliers and to be competitive on price,” Bryan explains. “Yet we’re small enough that nothing falls through the cracks when it comes to customer service.” The chain’s eclectic mix of wine offerings has also built a loyal customer base. “We work with our distributors to find small brands with good values,” he adds. “We cater to both the novice and the connoisseur. Anyone can find something they like in our stores.”
With beer available in so many outlets in Florida, Knightly Spirits has opted to focus on craft brews. The retailer was an early supporter of micro beers more than a decade ago, giving the category a leg up. Today, the beer department—guided by longtime buyer Alan Robey—stocks about 1,200 beer SKUs, priced from $2.99 a six-pack of 12-ounce cans for Genesee non-alcoholic beer to $19.99 for a six-pack of 12-ounce bottles of Bell’s Expedition Russian imperial stout. Top-selling brews include Cigar City Brewing Co.’s Jai Alai IPA ($11.99 a six-pack of 12-ounce cans), Schöfferhofer Grapefruit hefeweizen ($9.99 a six-pack of 330-ml. bottles) and Corona Extra ($9.99 a six-pack of 12-ounce bottles). The spacious South Orange Blossom Trail store offers the widest variety of beer, featuring nine cooler doors and a full aisle of craft brews. “That location is halfway between Disney World and Orlando International Airport,” Robey says. “Many beer geeks arriving in Orlando will make a stop here first.”
Innovative Merchandising
Complimentary in-store sampling events are held at each Knightly Spirits store on Fridays and Saturdays. The units will occasionally host special events, such as an Effen vodka bottle-signing by rapper 50 Cent at the Orange Blossom Trail location in November 2015. The chain’s “2 for $20” wine mix-and-match program has been another successful merchandising practice. “It’s our biggest volume driver,” Bryan notes, adding that the program typically features 100 wines between $12.99 and $14.99. “Our customers see it as a great value. Our suppliers like it. And it gives me the opportunity to blend margins on different wines.”
These days Knightly Spirits relies primarily on digital marketing to communicate with its customers. George and Gianoukos have left execution of the strategy up to the second generation. In fact, one of Chris’ first responsibilities when joining the company full-time in 2008 was to build its website, Knightlyspirits.com. The chain also relies on social media platforms, which Chris says have been a great tool to allow the stores to communicate with their customers via direct messages. “I get notifications on my phone so I can respond immediately,” he explains.
Many of those messages concern the availability of hard-to-find products, and the Knightly Spirits team works hard to deliver on those requests. “We’ve accepted special orders since day one,” George says. “We have a reputation for it.”
That attention to customer service has allowed Knightly Spirits to persist in an increasingly competitive marketplace. “When I started in the business, small independent retailers were probably 60 percent of the market,” George notes. “Now, I’d say we’re 35 percent.” Supermarket chains like Publix have stepped up their presence in beverage alcohol, particularly with spirits. Along with multiunit package store operators like Maryland-based Total Wine & More and Florida’s ABC Fine Wine & Spirits, the environment has made it difficult for small operators to compete on price. George is increasingly concerned that grocery stores and big-box retailers will prevail in their fight to sell spirits alongside general merchandise.
While there are no plans to add stores in the near future, Bryan doesn’t rule out the possibility. “We’re not opposed to expanding down the road if it’s an opportunity that makes sense,” he says. Gianoukos believes that Knightly Spirits has all the necessary attributes to continue to succeed in the Central Florida market. “It can be very frustrating today for small businesses to compete with bigger companies,” he explains. “But small business is the backbone of good customer service. Along with engaged employees, that quality will win out over price any day.”