The winds of change are blowing, slowly, through Virginia's state-operated retail liquor stores.
For 50 years, customers have had to march up to the counters in stark, deliberately foreboding stores designed more to encourage temperance than tippling and tell a clerk what they wanted. Finding out what was available and what it cost was a matter of consulting a bound price booklet usually hung from the wall by a string.
The clerks were instructed not to give suggestions to customers, and the merchandise was carefully hidden on deep, dimly lit metal shelves of olive drab behind the counters. The only decorations usually were large black and white signs declaring that you must be 21 to purchase liquor in Virginia.
Radios were banned, and it was even against the rules to have a plant in the front window of the deliberately unnattractive stores.
After all, the purpose of the stores operated by the state's Alcoholic Beverage Control Commission was to control the dispensing of spirits and to discourage their use -- while maximizing the profit in doing so.
"There are those who would argue that we would do our best job if we could dry Virginia up," says J. David Shobe, the member of the ABC Commission in charge of its retail operations.
Over the last few years, the volume of liquor sales has fallen nationwide, and in Virginia. Pressure to generate profits in a declining market has caused the commission to cut back its work force and to try to increase its sales, all the while trying to deflect criticism by disguising attempts to increase volume.
Each time the commission has authorized some tentative step toward behaving like a normal retailer, protests have poured in, particularly from fundamentalist groups opposed to drinking. But, slowly, the changes have proceeded -- particularly in Northern Virginia.
Just over a dozen years ago, a store at Bailey's Crossroads in Fairfax County was the first of the system's nearly 240 stores to be converted to a self-service operation. By this summer, all of the stores in Northern Virginia -- which have the added burden of competing against lower prices in the District of Columbia -- will finally have been converted to self-service. Meanwhile, pending their conversion, temporary shelving has been added behind the counters in the old-style stores so that customers can see at least a portion of the previously hidden goods.
Faced with a clientele that includes many Washington commuters who get home late, ABC stores in the metropolitan area have extended their hours so almost all of them stay open until 9 p.m. six days a week. And to fight the lower prices available in the District, a very limited number of items are placed on sale each week from Thursday through Saturday -- an experimental approach called flex pricing that applies only to Northern Virginia stores.
Each of those actions has met with complaints, and the response continues to temper the commission's moves to begin to act like a retailer. "We have a mixed group in Virginia," explains Shobe, who has worked for the system since 1948. "The temperance movement is not really a big one. . . . But some people feel emotional about it. They are not deranged in any way, but they feel strongly about it.
"Self-service means the product is more available. Shorter hours in stores are regarded as a victory. 'Demon Rum' is still heard."
In Bristol, where the state boundary runs down the middle of State Street separating the city from Bristol, Tenn., Shobe notes, voters just whipped a law that would have allowed the sale of mixed beverages -- that is, the sale of liquor in restaurants -- and that had the effect of keeping out state liquor stores as well. Cities such as Bristol and counties around the state that do not permit the sale of liquor still get their share of the ABC's profits.
But in a situation not unlike that confronting the ABC stores in Northern Virginia, where many residents buy their liquor across the Potomac in Washington, the Bristol, Va., citizens head for one of the five privately operated stores a few blocks away in Bristol, Tenn.
At least seven counties and a few other cities and towns have turned down sales of liquor-by-the-drink in referendums, and in more than one-third of the state's counties such votes have never even been held as a result of strong opposition.
The flex-pricing experiment has generated a new type of complaint. Customers in Richmond, Norfolk and Roanoke want to know why they should have to pay more for their liquor than the folks in Northern Virginia.
The ABC Commission has a monopoly on liquor sales both to individual customers and to restaurants serving liquor by the drink. Until 1982, restaurants had to pay an extra $2 a gallon for the privilege.
The state stores have never sold beer, and when the state legislature decided last year to put them out of the wine business, they had only a little over 7 percent of statewide sales of that product. Both beer and wine are sold in some 7,500 locations, principally grocery and drug stores. Wine will be gone from the state stores by this summer.
The commission argued strenuously to be allowed to continue to sell wine, but Shobe acknowledges, "We were never really aggressive about being in the wine business. Some wholesalers sold more than we did in all our stores. We just were not very sophisticated about it."
The selection of wines, even before the stores started getting rid of their inventories, was quite limited compared with even a medium-sized private liquor store in Washington. Few higher quality wines were available at all.
In any event, just as the commission began to think seriously about marketing its wares, the legislature pulled the plug on wine sales. One of the major arguments was that the state had no business competing with the private sector in wine sales.
With a monopoly that was almost fully effective, except near the borders, the ABC Commission's stores sold 9.6 million gallons of liquor in the fiscal year ended last June 30. Of that total, 1.1 million gallons went to licensees for resale by the drink.
Straight whiskey was the best seller, with vodka not far behind. Gin was third and gaining.
Those sales, plus those of wine and licenses and collections from wine wholesalers, yielded operating revenue of $242.5 million, down from $247.7 million the previous year. The commission's profits dipped from $34.2 million to $32 million despite efforts to reduce costs that included cutting the number of employes by more than 100 to 1,487.
A few of the stores, mainly smaller ones, actually lost money last year. Some stores are so small they have only one employe. The smallest, in the Shenandoah Valley town of Monterey, had sales of only $22,419 on which it lost $1,554. The outlet with the greatest sales is on North Pershing Drive in Arlington. It took in more than $7.6 million, almost entirely on sales to licensees dispensing liquor by the drink.
The commission's profits are only a portion of what the state gets from sales of all alcoholic beverages. There is a 20 percent sales tax on liquor and a 4 percent sales tax on wine and beer. (There is also a 40-cent-per-liter tax on wine that is collected at the wholesale level and included in commission revenue.) Finally, there is a malt beverage tax.
Altogether, these other taxes yielded nearly $94 million in the 1983-'84 fiscal year. That, plus the commission's profits, totaled about $125.7 million, down slightly from the year before.
Some of the commission's expenses actually boost state income. Under a curious arrangement, the commission is not allowed to retain any working capital. At the end of every three months, all of its funds are taken by the state treasury, and the commission must borrow from the treasury, paying interest, to cover its normal working expenses. Later during each three-month period, when the commission has built up a credit through its sales and that money is deposited in the treasury, no offsetting interest payments are made to the commission, according to Shobe.
Meanwhile, the state also requires the commission to hand over its sales-tax collections promptly at the end of each calendar month instead of allowing a 20-day grace period as it does with private merchants, such as grocery stores that sell wine.
There are other peculiarities and rigidities that no private merchant would face. Some employes in the system wonder if it will ever be able to shake loose from its past, when it was supposed to be no more than a dispenser of liquor and never a marketer.
"We're about five years behind, and we're just beginning to catch up," says an unhappy Daniel Tevlin, assistant manager of a small, old-style store on Highland Avenue a couple of blocks from the Clarendon Metro Station in Arlington. "We have said to the people of Northern Virginia, 'screw you.' That's why so much liquor flows across the bridge."
The entire ABC Commission is unhappy about that flow, which it estimated on the basis of a telephone survey of Northern Virginia residents is costing the state about $14 million in lost revenue annually. About 30 percent of those surveyed said they shopped for liquor exclusively in the District because they believed prices to be lower, and to a lesser extent because of convenience.
The commission periodically has attempted to reduce the flow by having its agents stake out major liquor stores in the District, follow customers who have bought large quantities of liquor, wine or beer into Virginia and arrest them. Each adult can legally take no more than one gallon of liquor or wine into the state in a single trip.
The D.C. government, equally interested in holding onto the revenue it gets from various taxes on liquor sales, including that from an 8 percent sales tax, has sought to restrict the stake-outs by requiring ever-longer advance notification. Last year, the D.C. Council passed an emergency bill banning them. The advance notification was set at 72 hours in 1978 and was lengthened to 30 days in 1982.
However, the commission sued, and a federal court voided the ban on the grounds that the council's use of its emergency legislative powers was not acceptable. The court indicated that the council could reenact the bill using its normal procedures. So far, it has not done so, and an ABC Commission official said that only a 72-hour prior notification is now required for a stake-out -- though there have been none since the court acted.
"It is my judgment that it is a great to-do about nothing," declares Shobe. "The statements that we have had 1,500 hours of surveillance are just not true. When they required that we give 30 days' advance notification, we did not know who would go, so we registered lots of people."
Many of the store employes in Northern Virginia, like Tevlin in Clarendon, are sensitive about the attraction of the D.C. stores to their potential customers. And many of them would like to be freer to do more of a selling job and to respond more promptly to the demand for particular products.
Peter D. Morlock, assistant manager of a store on Maple Avenue in Vienna, is happy that he no longer has to bite his tongue and foreswear making suggestions to customers, even about how much should be bought to serve a certain number of guests at a party. Until recently, commission rules forbade such discussions.
"Now it's a lot easier. You feel you can really help someone," says Morlock. "I hope it continues in that vein."
Morlock recalls that until not too long ago, even the self-service stores were organized for the convenience of the employes, not the customers. The items were carefully placed on the shelves in order of their code number in the commission's inventory system. "It was great for taking inventory, but it was not merchandising," he recalls.
With that sort of background, it is hardly surprising that when the commission decided that it did want to test the merchandising waters gingerly, it found it did not have anybody in its system who knew much about how to sell liquor, as opposed to how to dispense it. To get started, the commission invited some of its major suppliers to hold seminars on such basic merchandising techniques as shelf placement -- putting the more expensive and therefore the more profitable products at eye level, grouping similar items with prices not far apart to encourage customers to step up a notch in price, and allocating space according to the proportion of total sales a product represents. In addition, the suppliers showed how to arrange displays of merchandise in cases rather than just on shelves to improve sales.
"We started case stacking last year," says Morlock, "and even if the price is no lower we sell more from the cases than from the shelves."
Meanwhile, the effort at marketing its merchandise in Northern Virginia continues to be hamstrung by the fact that the commission finds it politic not to appear to be actually trying to increase sales. Its weekly ads in The Washington Post and the Virginia editions of the Journal newspapers are deliberately designed to look more like institutional advertisements than those of a retailer trying to boost sales.
"Some people are applauding us for having longer hours and flex pricing, but others say, 'Dave, you are encouraging people to buy more,' " says Shobe. "That's one of our contradictions: We come a little short of saying that we are selling cheap whiskey. Our advertising is almost non-advertising. It's not like a 'hit the bargain' type of thing."
It surely is not. The word "liquor" does not appear in the ads, which carry a logo at the top reading "ABC Virginia." Instead of the words "on sale," the ads use "on price," and it is up to the reader to realize what the ad is all about. There also is no indication of the size of the price reduction.
The effort at increasing sales is also undoubtedly hampered by the fact that the commission generally changes its list of available products and their prices only four times a year, on the first of February, May, August and November. Flex pricing in Northern Virginia and monthlong, systemwide reductions in a few prices are the only exceptions to that.
In addition, every bottle of liquor gets exactly the same pricing treatment, which mitigates against offering bargains. To the cost of a product delivered to its Richmond warehouse, the commission adds a uniform 80-cent-per-case handling charge. It then marks up the item by 43 percent and rounds the price to the next highest multiple of 5 cents. Then it adds the 20 percent state sales tax and again rounds up to the next multiple of 5 cents.
Besides the rigidities in products and pricing, the commission has also followed real estate management policies that could leave it without attractive, high-traffic locations, at least in Northern Virginia. Shobe says the commission is looking for new and better locations. But not everyone, including some landlords, necessarily want a state liquor store as a tenant or even nearby.
In Hybla Valley on U.S. Route 1 south of Alexandria, the commission put a new store in what had been a Ponderosa Steak House. Because it was to be a store that also supplied licensees with liquor for sale by the drink, the commission for once put on a proper label: liquor store.
The protests are still coming in.