CASE STUDY :: LONGEVITY
Aging well
Slow growth, strong service are key to Haskell?s long run
by Carla Solberg
THE CASE
Sustaining business for years
- Wine wasn?t popular in Minnesota when Jack Farrell bought an ownership stake in Haskell?s 38 years ago. He wrote a business plan and stuck to it.
- Customer service is key, he says. Haskell?s carries about 12,000 SKUs, or stock-keeping units; many of its competitors stock around 2,000.
- Helping customers navigate the enormous inventory is what Haskell?s employees do best, Farrell says.
- They?ll find it or order it, they?ll make recommendations based on customer preference for all price ranges, they?ll make suggestions for pairings.
- For those without a wine cellar, temperature-controlled storage is available for a fee.
- Getting employees to stay is an important part of a customer-service strategy, so Haskell?s pays attention to competitive wages and benefits, managers say.
- A wine club started in the 1970s is another way that Haskell?s developed its customers? taste for fine wine. Members receive tastings and wine trips.
- A conservative approach to growth means Haskell?s is opening only its 11th store, in Burnsville, the 10th location to be added during a period of almost four decades.
- Locations are chosen based on demographics and each store has a different design.
- Next on the agenda is to develop a succession strategy. The company?s chief operating officer is taking over many day-to-day duties.
JACK FARRELL has traveled the world in search of fine wine. But it?s not the vineyards of France, Italy or Spain that have been on his mind. Lately he?s been thinking a lot about Burnsville.
As the chairman, CEO and owner of Haskell?s, Farrell has long pondered a presence ?south of the river,? but he?s a man who?s careful about these decisions. Even as he approaches an incredibly comfortable retirement, he ponders how easy it is to lose what years of hard work and patience have won.
Burnsville will be Haskell?s 11th location, the 10th to open since Farrell first bought an ownership stake in a downtown Minneapolis liquor store 38 years ago. Revenue has grown from $1.5 million in 1970 to more than $35 million in 2007.
Along the way, customer service and a huge selection built a reputation for Haskell?s as the Twin Cities' source for fine wine and for Farrell as the go-to guy when celebrities, royalty and heads of state were throwing a dinner party.
Part of it was luck, he says. Today, all kinds of people are interested in wine, but that wasn?t the case in the 1960s, when he first set out to learn about it. By the time Twin Cities restaurants started including wine glasses in basic table settings, Farrell had long since cultivated his palate and built a wide and solid knowledge base of wine through years of tasting and travel.
Farrell?s wine sense earned Haskell?s a seat at the table, or more accurately a glass on the table, at many a white-tie affair. Haskell?s selected and provided the wines for the Gorbachevs? 1990 visit to Minnesota and saved the day for Princess Anne when French winemaker Chateau Batailley ran short a few cases for her wedding reception.
And when Frank Sinatra, Princess Margaret or Chief Justice Warren Burger were in town, it was Haskell?s that filled their glasses.
Not always red carpet
But the path hasn?t always been covered with a red carpet. There were recessions and import tax changes that affected buyers, and droughts and floods that affected vintners. The state?s drinking age was raised twice.
Raised too, was awareness about the dangers of alcoholism and drunk driving. And early on, Farrell says, there was a perception that there was something seedy about the business that caused some to look down their noses at him.
?I resented that. I felt I was as good a businessman as anyone else in the community,? he says.
Farrell grew up on the west side of Chicago, the eldest of seven children. He graduated from Butler University in Indianapolis with a degree in pharmacy in 1963 and took a sales job with Gold Seal Co., a Chicago maker of household cleaning products.
On a business trip to Minnesota, he met Cathy Rice and soon after they were married. Cathy?s father, Erling, who ran the Twin Cities grocery chain Red Owl, became a mentor for Farrell. It was Rice who taught Farrell about the retail business and Rice who, 38 years ago, offered him an investment opportunity in a Minneapolis liquor store.
Fritzi and Benny Haskell founded Haskell?s in 1934. After Benny died in 1968, Fritzi ran the store on her own for two years and then decided to sell. Initially, there were four partners: Erling Rice, his son Rex, Farrell and former basketball player George Mikan. Over time, Farrell bought out all of them and became the sole owner in 1995.
?I used to take orders from Benny Haskell himself back in 1953, so in effect, we?ve been doing business with them for 55 years, and with Jack Farrell since about 1974,? says Lynn Johnson, chairman of the board, Johnson Brothers Liquor Co., a St. Paul-based distributor. Farrell, says Johnson, ?has always demonstrated great integrity. When you shake hands with him to make a deal, his word is as good as gold.?
Haskell?s is a success today for one reason, Johnson says.
?Jack Farrell had a vision and a business plan and they stuck to it. Back in the early days, not many folks in these parts drank wine,? he says, referring to Minnesota. ?It was not a widely understood product and frankly just wasn?t very popular with consumers.
?But Haskell?s believed in wine, believed in the concept of a fine wine shop, and that over time, people would come to appreciate and enjoy wine. As it turns out, they were right and it has obviously paid off for them,? Johnson says.
Enormous inventory
From the beginning, customer service has been the priority at Haskell?s. ?It?s what sets us apart from the competition,? Farrell says. ?The customer is king at Haskell?s.?
Haskell?s carries about 12,000 SKUs, or stock-keeping units; many of its competitors stock around 2,000. Helping customers navigate the enormous inventory is what Haskell?s employees do best.
They?ll find it or order it, they?ll make recommendations based on customer preference for all price ranges, they?ll make suggestions for pairings. For those without a wine cellar, temperature-controlled storage is available for a fee.
More than 50,000 Haskell?s customers are members of The Bacchus Food and Wine Society, a group Farrell founded in 1972 for those who want to learn about wine and how it complements food. For a small fee, members receive invitations to tastings and gourmet dinners, discounts on wine and liquor and group rates on winery tours in California, Italy, France, Germany and Australia.
Haskell?s is also the home of what?s billed as the world?s largest wine sale, the Nickel Sale, during which over amillion bottles are sold every year. Started in 1984 to commemorate the company?s 50th anniversary, the sale runs for about three weeks in late April and early May. The pace is brisk, but most employees have years of Nickel Sale experience.
Competitive wages
For Haskell?s, loyal employees have been just as important as loyal customers. COO Dan Manning has been with the company as long as Farrell. He?s the detail guy, while Farrell is the public face.
Competitive wages and benefits are the tangible part of building employee loyalty, Manning says. The other piece is creating a family atmosphere, he says.
Years ago, Manning says, he and three other Haskell?s employees were out for dinner and added up the years of experience they had with the company. ?Between the four of us we tallied 96 years,? he says. ?I count my blessings in the people we?ve hired over the years.?
Haskell?s employs 145 people at 10 locations; nine in Minnesota and one in Naples, Florida, where Haskell?s name recognition is huge because of the large number of Minnesotans who vacation or retire there. Together it?s about 70,000 square feet of retail space where more than 2.5 million bottles are sold in a half-million transactions every year.
Locations are chosen based on demographics and each store has a different design, Manning says. ?We?re not a big believer in having a cookie-cutter operation.?
Burnsville will be the 11th location, the 10th to be added during a period of almost four decades. ?It?s a very conservative strategy,? Manning says. ?We never wanted to open 100 stores. We want every store we open to be a success.?
Over the last 12 years, Manning has taken on more responsibility for day-to-day operations as Farrell has stepped back a little. At some point there will be a leadership transition, first to Manning and then, most likely, to another Farrell.
Three of Farrell?s sons work for the company. Brian is president, Ted is vice president/general manager, and Beau is Web site manager.
Regardless of who carries the title of CEO, it?s hard to imagine Farrell retiring completely, Manning says.
?He loves the business, he loves the lifestyle. He?ll always be involved.?
[contact] Jack Farrell, Dan Manning, Haskell's: 612.342.2437; www.haskells.com. Lynn Johnson, Johnson Brothers Liquor: www.johnsonbrothers.com; 651.649.5800
