Marques Warren concedes that his foray into beverage alcohol retailing took a serious leap of faith. The owner of Downtown Spirits in Seattle points to the city’s South Lake Union neighborhood of seven years ago—largely populated with old warehouses, motels, and parking lots, and plagued with rampant homelessness—and says, “It wasn’t a viable location to open a business. It took imagination.”
But Warren wasn’t alone in seeing the opportunity that downtown Seattle offered in 2012. Amazon had moved its corporate headquarters there just a few years prior and was in the beginning stages of its massive build-out of the neighborhood. With spirits sales newly privatized in Washington State, Warren says, “We identified a niche, as that downtown location was far enough from big-box competition. We dove in head first.”
Seven years later, Warren’s decision can be considered nothing short of brilliant. Downtown Spirits has emerged as a notable and growing beverage alcohol retailer in the Emerald City. While Warren had only limited exposure to beverage alcohol before opening the store, he had amassed years of experience in retail; he worked in his family-operated network of gift shops at Seattle-Tacoma International Airport from a young age. Today, Warren’s News & Gifts operates 26 stores at the Seattle airport, in partnership with Dufry AG’s Hudson Group. Downtown Spirits, Warren’s News & Gifts, and Cougar Mountain Financial—a financial services firm for airport concession operators—are all subsidiaries of The Warren Group, of which Warren’s father Ardie is president and chairman, while Marques serves as vice president of operations. The younger Warren says he splits his time equally among the three businesses.
Warren notes that there are key similarities between airport gift shops and liquor stores. “They’re both fast-paced, convenience-based businesses,” he explains. “They require a certain level of service.” Warren adds that his travel retail experience has aided him in developing Downtown Spirits’ customer-centric business model. Members of the Wine & Spirits Guild of America—which Downtown Spirits joined four years ago—have also been a great resource. “They’ve provided me with a lot of advice and best practices,” Warren says.
Outside advice notwithstanding, Warren is responsible for building Downtown Spirits into the force it is today—with sales revenue of $6.1 million last year. “I’m proud of our ability to hang in there during the challenging times and eke out a successful business model,” he says, pointing to the many Washington liquor stores that opened after privatization, but have since folded due to the competition. For his foresight, business acumen, and ability to successfully compete against some of the largest players in beverage alcohol retailing, Marques Warren has been named a 2019 Market Watch Leader.
The South Lake Union neighborhood and much of Seattle have changed dramatically since Downtown Spirits’ early days. Amazon’s campus comprises several downtown city blocks and virtually surrounds the liquor store space, which is leased. Along with office space, an influx of high-end apartments and condominiums has ushered in a more affluent consumer base. Of course, the neighborhood construction has challenged foot traffic at retail stores like Downtown Spirits, and Warren is pleased that the projects are nearing completion.
In keeping up with neighborhood improvements, the 11,000-square-foot liquor store is being renovated. According to Warren, Downtown Spirits’ beer and wine bar—currently located in the back of the shop—will be moved to the entry area “to create a dynamic events space.” The wine department will be moved to the space currently featuring the bar, closer to the spirits and beer departments. “The renovation will enhance our store presentation just as the critical mass of pedestrians increases due to the completion of the multi-year Amazon project,” Warren says. “We’re the only independent store around here with a beer and wine bar on-site, so the move will only help to highlight its presence.” The renovation also includes upgrades to an existing kitchen—with plans to eventually offer a tapas menu—as well as outdoor seating. Once remodeled, the beer and wine bar will have space for nearly 100 guests.
Spirits comprise half of the store’s sales, with wine and beer each accounting for 25%. The shop offers about 2,500 different spirits, priced from $2 a 50-ml. of Fireball cinnamon-flavored whisky to $1,949 a 750-ml. of The Macallan 25-year-old single malt Scotch. Top-selling spirits include Tito’s Handmade vodka ($46 a 1.75-liter), Maker’s Mark Bourbon ($35 a 750-ml.), and Jack Daniel’s Tennessee whiskey ($28). Whisk(e)y, including Bourbon and Scotch, are thriving, Warren says, noting that Downtown Spirits has partnered with brands like Woodford Reserve, Eagle Rare, and Buffalo Trace on exclusive single-barrel offerings.
Approximately 1,000 wine SKUs are available, priced from $6 a 187-ml. of La Marca Prosecco to $1,500 a 750-ml. of the 2015 Domaine de la Romanée-Conti Romanée-Conti, although wines priced between $13-$20 are the store’s sweet spot. Washington State Cabernet Sauvignons, such as the 2016 Chateau Ste. Michelle Cabernet Sauvignon ($16 a 750-ml.) and the 2016 Substance Cabernet Sauvignon ($20), are among the store’s top-selling wines. In addition to branded wines, Downtown Spirits has access to proprietary wines sourced through the Wine and Spirits Guild of America. Warren notes that these wines have performed well at the store, and typically provide better margins than larger brands.
The store offers about 400 beer SKUs, generally priced at $10-$12 a 6-pack of 12-ounce cans or bottles. Craft brews represent the lion’s share of the shop’s beer sales, with local brews like Black Raven Updraft pale ale ($12 a 6-pack of 12-ounce cans) and Deschutes Fresh Squeezed IPA ($12 a 6-pack of 12-ounce bottles) among the top sellers. In an effort to keep up with fast-changing trends, Downtown Spirits keeps turnover tight; up to 30 new beers are brought in each week, while slower-trending brews are removed.
Perhaps not surprisingly, e-commerce represents a significant and growing share of sales for the store based in tech-savvy Seattle. According to Warren, about 25% of Downtown Spirits’ sales are via the internet and corporate accounts, which encompass large clients like Boeing and Amazon as well as cruise ships and event planners. “We try to provide a white-glove service to those customers,” including delivery, Warren says. As such, the store operates three delivery vans, and by year-end, two more may be added. “Delivery has been one of our focuses, considering the neighborhood around us,” Warren says. “With such heavy development, we’ve had to think outside the box on how to grow the business while it’s underway.” Downtown Spirits was the first Seattle beverage alcohol retailer to sign on with Drizly five years ago, a move Warren calls “a tremendous partnership.”
While Downtown Spirits utilized traditional print and outdoor advertising in its early days, today’s marketing methods largely revolve around social media and in-store events. In-store tastings—often complimentary—are held frequently. For Seattle Beer Week in May, the store hosted six tastings in ten days. Larger-scale events that require a fee (usually $20 or less) include annual Champagne and rosé showcases.
The Warren Group gives back to the local community through its support of charitable organizations such as YouthCare—a non-profit that works to end homelessness among young people—and the Carolyn Downs Family Medical Center, which provides healthcare to underserved community members.
Ready For Growth
With development around the store nearing completion, Warren sees plenty of room for growth at Downtown Spirits, driven by “the critical mass of people who will walk by every day.” To gear up for the increased foot traffic, Warren recently launched his own wine and spirits distributorship, Cherry Hill Wine, which will provide the store with exclusive high-margin labels.
Just as he demonstrated seven years ago, Marques Warren has lofty ambitions for Downtown Spirits. “I’d like to see us double our sales before 2022,” he proclaims. “Then we’ll look to open additional sites in the downtown area.” Given Warren’s early success, Downtown Spirits is likely to remain a force in the Seattle beverage alcohol business for some time.