Alabama ABC Wins with a Well-Rounded Customer Approach

Everything the Alabama Alcoholic Beverage Control Board (ABC) does has one primary end goal: to better serve its customers. The Montgomery- based agency is committed to continuous improvement across all areas in order to stay up-to-date with the latest technology and improve relations with customers and citizens across the state.

Alabama is unique in that the state operates a total of 176 stores, while more than 600 private package goods stores also hold liquor licenses. The first state store opened in 1937, while the private retailers have only been operational since the 1980s. A total of 852 individuals are employed by the agency, the majority of whom work in the state-owned stores. Along with overseeing alcohol sales across the state, the ABC has also regulated the sale of tobacco products in Alabama since 1997.

“There’s room to have both public and private stores in the state and still maintain control,” assures Mac Gipson, Administrator of the Alabama ABC.

One reason why this concept works well is because of the distinction between the two types of stores. In Alabama, the ABC stores generally are only operational between the hours of 11 a.m. and 7 p.m. Private package stores are considered similar to convenience stores, and therefore don’t have the same restrictive operating hours. Also, the ABC stores only carry spirits, while the package goods stores sell spirits, beer, wine, ice and a limited amount of snack food items.

By focusing solely on the spirits category, the ABC also reaps the benefits of the high sales tax imposed on spirits in Alabama, giving the state’s ailing general fund additional revenue. In fiscal year 2016, total ABC retail and licensing sales amounted to $473 million (a $15 million increase from the previous year). Of that figure, $137 million was generated by product sales tax.

Enhancing the Shopping Experience

A primary focus of the agency is to do everything possible to improve the shopping experience for ABC customers. To that end, Chief Operations Officer Neil Graff and his staff are concentrating on product selection, store remodeling and effective merchandising.

Category management has been a top priority for the agency. It’s essential for the ABC to regularly assess which products aren’t selling and also determine what new products consumers are clamoring for. Currently, vodka far surpasses every other spirit category, making up 33% of total sales.

It’s followed by the North American whiskey category, which accounts for 22% of sales. “Like many agencies, we do a listing period and a delisting period, which is when we need to decide how much of our time we want to devote to each category and to particular products,” Graff explains. “We try to pay attention to brands that have good prices and volume. These tend to be our anchor products, and we build each category around those signature items.”

Big changes to the listing and delisting system will take effect in January 2018, when the agency plans to roll out a new color-coded sticker system in stores that will make it easy to identify new products on display. Additionally, Alabama stores have always been marketed as having everyday low prices, and starting in January, the stores will begin featuring sale products for the first time (also identified by a color-coded sticker).

When certain products are delisted by the agency, those items will feature another color-coded sticker in stores in order to identify them as close-out items. Also, Alabama plans to begin highlighting products that were made in-state with another color- coded sticker so customers seeking local items can find them more easily.

Graff reports that a great deal of research went into developing the way the listing and delisting process will be reflected in stores. Alabama also analyzed models used by other control states, and collaborated with the National Alcohol Beverage Control Association (NABCA) and control state partners to get advice and feedback before finalizing the new system for implementation.

Along with making changes to category management processes, the ABC is also investing significant time and effort into renovating each of its state-owned stores. Most ABC stores haven’t been remodeled since the 1980s and share a distinctive red, white and blue interior motif which gives them a distinct government- building vibe. Gipson also points out that the percentage of female consumers purchasing alcohol products continues to climb, emphasizing the the importance of making sure the stores appeal to women.

A movement to overhaul the ABC stores began two years ago. Alabama contracted with an external firm to develop new interior store design plans, new shelving systems and a new retail logo. The new stores feature a more aesthetically pleasing beige/ tan wall color scheme and copper shelves. Linoleum flooring was swapped out for new tile floors, and old fluorescent lighting was removed to make way for LED lights, which has an added benefit of saving the agency a significant amount of money on electric bills.

Additionally, the ABC began analyzing the size and layout of each store and determining which locations would be better off moving into new spaces. Graff notes that it’s important for customers to be able to enter a store and immediately see the key brands on display. To that end, the ABC prefers wider stores that aren’t as deep compared to very long, narrow spaces that some of the current stores are currently in.

Store renovations are currently being implemented on a rolling basis and are timed with when locations’ leases expire. To date, 35 stores have been updated, and at least 20 more are scheduled to be renovated in the coming year. Reaction to the changes thus far has been overwhelmingly positive.

“Customers walk into the new stores and immediately comment on the change,” Graff says. “We’re delivering clean, nicely designed stores with the right products that people can find very easily.”

Improving Internal Operations

In addition to enhancing the consumer shopping experience, the ABC has also worked to improve processes behind the scenes. One of the big changes made to the warehouse management side in the past year is the addition of a logistics manager position, which was created to help improve how product enters the facility, moves through the warehouse and ultimately travels to retail stores. The new role has only been in place since the spring of 2017, but Gipson says there is already evidence of improved warehouse productivity.

Another recently added position is that of a safety officer, who oversees statewide safety issues, including operational safety within the ABC warehouse. Additionally, Alabama plans to implement a new warehouse management system by the end of 2018, which will allow warehouse staff to pick items by section instead of numerically, resulting in increased productivity and reduced margins of error.

An overhaul of the agency’s information technology is also underway, headlined by the implementation of a new point-of-sale (POS) system. After conducting a long bidding process in 2016, the ABC’s IT department began working with the Blue Horseshoe Solutions on the 24-month project in February 2017. The $6 million project involves migrating the existing POS system to Microsoft Dynamics 365, which will merge the agency’s POS, sales, accounting and finance systems into one robust program.

“The new system will give us real-time inventory control in our warehouse and in each of our stores,” says Scott Crews, IT Director. “Right now it’s only updated on a daily basis. The system will also be fully integrated across platforms, so everyone will be extracting data that lives in the same place.”

Other features of the new system include an online ordering system. Retailers will be able to place their orders online (although the new system will not process payments). Orders will be paid for in the store upon delivery.

Migrating to a new system is a very intricate process, so the ABC has designed multiple phases for the rollout. The initial phase is scheduled for March, when the new system will be partially operational in stores. Retail employees will need to utilize both the new and existing systems for several months before the migration is fully completed. Following implementation, the IT department is working on developing a warehouse management module that will affect the way the ABC stocks and manages inventory, resulting in improved efficiencies. The module will launch after all the agency’s retail stores have completely transitioned to the new system, which is expected to happen in early 2019.

Additional technological upgrades include the development of a new mobile app. Designed for internal agency use, the app features detailed directions to every ABC store across the state, revenue insights at both the store and state levels, and a color- coded performance indicator map of all store locations. The pins are either green, yellow or red, which indicates whether each store is on target with its projected revenue goals. Also, a new ABC website is scheduled to launch in January 2018.

“We’ve completely redone our site and taken away information that isn’t as clean or relevant in hopes of making information more accessible for licensees and the general public,” Crews says.

With so many new and improved processes in place across the agency, training for ABC staff has been key. An extensive training initiative is currently underway that entails uniform training for all staff across the agency on products, customer service, warehouse operations cross-training, store management and more. In addition to training administrative and warehouse staff, retail staff members are also undergoing trainings. Not only will it improve internal operations, but the agency thinks it will reduce employee turnover as well.

“Right now we have a somewhat high turnover rate, and we’re trying to mitigate that across the board,” says Tonia Stephens, Personnel Division Director. “Because we are focusing on employee retention, we’re trying to ensure that our team has more face-to-face interaction with employees, and that in addition to training on job-related functions like cash register operations, we’re providing strong professional development opportunities for employees.”

Focusing on Compliance and Education

With so much emphasis on improving operational processes and the customer experience, it should be noted that the ABC’s top priorities continue to be licensing, compliance and education. With more than 8,000 licensed locations throughout the state, the agency is charged with overseeing more than 15,000 licensees. Summer Childers, Licensing and Compliance Division Director, says that her team’s top focus is to educate licensees to prevent violations before they occur.

“The educational aspect has really picked up, and it’s more common to receive requests from existing licensees for question- and-answer forums to supplement the training we already have in place for them,” Childers says.

All new licensee applicants are given an overview of the most common violations and are told what inspectors typically look for during an inspection. This information is shared by the applicant’s ABC inspector in a one-on-one environment. The agency also offers a voluntary responsible vendor training program to licensees that aims to reduce sales to minors and intoxicated persons. An online tobacco training course is also available.

Health and safety issues are another component of education across the state, as is education for the general public. The ABC works closely with local law enforcement in situations where the welfare or safety of the public is at risk. The agency also carefully reviews each new license application to ensure its accuracy, as does each local governing authority prior to the issuance of any license. Various external organizations partner with the ABC to operate a program related to teenage alcohol consumption, along with a drug/alcohol task force. Save-Teens is a longstanding, successful program conducted with teenagers and young adults across the state.

Another program focuses on sending ABC staff out into the schools to educate students about the dangers and repercussions of underage alcohol use. A number of external organizations, including law enforcement agencies, MADD and the Alabama Citizens Action Plan Program, partner with the ABC to operate the “Under Age, Under Arrest” program. The initiative allows the ABC to conduct educational public awareness campaigns in public schools to teach children about the dangers and repercussions of underage drinking. By the end of 2018, the ABC will have taken the program to more than 75 schools, reaching more than 100,000 students.

Additional programming is aimed at college students. The agency has partnerships with two colleges that sponsor the “Under Age, Under Arrest” program at their institutions, and more colleges are expected to jump on board soon.

MELISSA SHERWIN is a freelance writer and marketing communications strategist from Chicago, IL. Her work has appeared in Chicago’s Daily Herald newspaper, Time Out Chicago, Suburban Life newspapers, and various magazines. She is also the author of several children’s books. Follow her on social @MelissaNSherwin.

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