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Liquor Store Start Up?

Discussion in 'General Entrepreneur Discussion' started by Lilly P, Aug 11, 2017.

  1. Lilly P
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    Lilly P New Contributor

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    I recently moved to a vacation destination where, like most vacation spots, alcohol plays a big part of locals and tourists having a good time. There is a building that I can assume a reasonable lease on if I buy the current business (which has not operated in over 1 year) and modify the building. There are over 15 bars and 2 liquor stores already in this few square miles. I've never so much as worked in a liquor store. My background is in web development (so I can market it like crazy myself). I also have an idea to make it unique. The two existing liquor stores are the same chain, I don't know if they have the same owner. I've looked at the liquor sales for the bars and they range between 12k and 165k per month. What do I need to know????


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  2. Scot
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    Have you looked up what a liquor distribution license looks like or costs in that state?

    Also, check the liquor laws for that state. The sales at bars are irrelevant to what sales at a store are.

    Right now, with the info you've given us there's no real answer to give you here.

    Other things to think about. Liquor stores are very capital intensive. You have to stock a lot of inventory too. Maybe @MidwestLandlord can help since I'm assuming you sell some sort of adult beverages in your stores. Also @Patrick R any ideas here?
     
  3. Patrick R
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    Patrick R Shwizzle Shwazzle Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    Thabjs for the tag!

    I've got quite a few ideas for this actually. But as @Scot said we would need some more info here. Some details you may not want to post so feel free to PM me.

    Firstly if this business hasn't operated in a year are you just taking over the location and licenses? Or do they have current stock you would take over as well?

    Do the two current liquor stores supply the local bars or do they do through a different distributor?

    What are the margins like when tourist season isn't in full swing? I.e. can the locals support three liquor stores if tourism dries up?

    Are you able to rebrand the business or are you stuck with what you are buying? If you are stuck what is the current reputation on the brand you are inheriting? Why did it close in the first place?

    I would love to help you out with this as much as is possible via the forum. But definitely going to need some more details before anyone will know if it will be worth it, fastlane, etc.

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  4. Invictus
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    In addition, perhaps you could pick up a part-time job working at a local one? Would give you more hands-on experience with the industry. Maybe give you a glimpse at margins and chance at profit.

    But like Scot said, the sales at a bar are different. Tourists may go to a bar and blow a shit-ton of cash there because they're getting an 'experience'. Bit of a different dynamic.

    Also, did you recently move states? If so, double check your local alcohol laws. Some states require all alcohol be sold at liquor stores (or bars). Others are okay with certain areas. Other states are okay with almost any legitimate business.

    For example, liquor stores are almost non-existent in my state because I just drive to the gas station for my basics (including the local microbrew). If I need something fancy, I go to Walmart. If I need something super exotic/fancy, I'll do a bit of diggin'.
     
  5. lowtek
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    1) learn whose wheels you gotta grease - getting a liquor licence is costly and time consuming
    2) why did the past business close? Is the location awful?
    3) what about security? Yours wouldn't be the first liquor store to be held up at gun point
     
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  6. MidwestLandlord
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    MidwestLandlord Legendary Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Not sure what the OP's question actually is though...

    So I'll just ramble a bit haha.

    Most people decide they want to sell alcohol because it's usually high margin, which is a selfish reason to sell, well, anything.

    So, is there a need?

    Have you thought of WHO would buy from you and WHY?

    Ignore bars as a competitor. But pay attention to bars as a source of traffic. Selling beer to people leaving bars is pretty common.

    Take a look at anywhere that off-site sells alcohol. Why do people shop there?

    Residential near by?
    Near commercial or industrial (where people work), but on a traffic route home?
    Are they piggybacking off of other sales? (petroleum, grocery)
    Near hotels?

    See, in retail sales of virtually anything, there are 2 types of stores.

    #1 are "destination" stores. These are stores people will go out of their way to shop at for whatever reason. It's novel, cool, has a specific item they need, whatever. High-end grocery stores (wholefoods), fancy restaurants, IKEA, Cabela's, Basspros, etc...

    People get in the car to "go to IKEA" for example.

    #2 are stores that are NOT a destination by themselves OR are brand agnostic destinations. Stores that fit this category are c-stores, grocery stores (wal-mart), fast food, liquor stores, etc...

    You might get in the car to "go to the liquor store" but that means you are going to the closest, most convenient one available.

    With few exceptions:

    You WILL drive across town to go to IKEA.

    You WON'T drive across town to get to "Betty Lou's Liquor" when "Suzie Q's Liquor" is right down the street.

    That's because liquor is a commodity. You can't get an IKEA bookshelf with a weird name from just any furniture store, but you can get Budweiser ANYWHERE. So why would you go out of your way to get it?

    Selling a commodity comes down to 3 things:

    1) Price
    2) Location
    3) Service (service has to be just good enough to not turn people off so much they would rather drive farther)

    So again, WHY would people shop with YOU?

    The answer should look like "behind the location is 1500 housing units, the location is on a corner with 30,000 daily vehicles on one street and 50,000 daily vehicles on the other, the location has good customer access and ease of use, the neighboring property is a grocery store that only carries beer/wine/soft beverages, and there is light competition available to said housing"

    Many, many people have lost a lot of money trying to turn a liquor store into a "destination" because they don't realize how people actually shop for commodities.

    "I'll grab a twelve pack on the way home from work"
    "I need vodka for the party. I'll grab that at the liquor store next to Wal-Mart when I go shopping"
    "This is such a romantic vacation. I'll surprise the wife and grab a bottle of wine from the store next to the hotel"
    "Gah! It's beer Friday at work and I'm supposed to bring the beer this time. I'll just hit up that c-store on the way to work and get gas too"
    "Leaving the bar alone, again...I'll grab a six pack on the way home"

    Hope something in there helps!
     
  7. MidwestLandlord
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    MidwestLandlord Legendary Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Proves my point above about how people actually buy a commodity.

    Convenience over all else for the basics.
    Combined shopping trips at Walmart.
    Finding a destination "do a bit of diggin'" for the stuff a normal liquor store wouldn't carry.

    Perfect, thank you.
     
  8. MidwestLandlord
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    MidwestLandlord Legendary Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    I want to expand on this.

    When selling commodities at the retail level, you can't look at competitors that give terrible service and think "there's a need for better service here! I'll do it better and people will buy from me instead!"

    You're likely wrong.

    People do not expect good service from retailers such as a liquor store. They expect mediocre service at best.

    If they remember your service for being good, you MIGHT get brownie points with them. But what's so spectacular about your service that it would get them to drive out of their way for beer? Likely nothing.

    If they remember your service for being terrible, then yes, you will lose customers. But, how bad does it have to be? A retailer that sells a commodity, and has an excellent location, would darn near have to tell every customer to go to hell before it's bad enough for people to quit them.

    In fact, at the retail level, the goal in my company is to give service that is not memorable at all.

    Look at it this way;

    You have 2 McDonald's. One is a couple blocks away, the other is 10 miles away.

    The one closest to you gives decent service. Not friendly, but not rude either. Fast enough and they usually don't give you the wrong food. A typical McDonald's experience...good enough.

    The one 10 miles away has wonderful service. Smiling faces, great attitudes, they treat you like a friend. The rest is the same. Same food, same speed of service, accurate orders.

    Are you really going to drive 10 miles out of your way, or will you pick "good enough"?
     
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  9. G-Man
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    G-Man Legendary Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Rep+++ for truest statements ever.

    Even worse, in some environments, people don't even expect good products. That's the reason the worst place to sell food products, ironically, is in the supermarket. Something happens in people's minds that when they're in the aisle at Kroger, all of a sudden everyone's a damn economist price comparing and waiting for your product to go on sale.

    Would hope that selling hooch in a tourist spot you'd be immune, but you should do your research.
     
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  10. Lilly P
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    Lilly P New Contributor

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    Thank you all for the quick responses! I will try to give you what I know.
    This is a beach destination.

    My location is on the main drag. I have two reasons I think people would come to my location. (below)

    Also, there are only two distributors in this state and looks like no hope of adding more. Bars have to buy their liquor from liquor stores but beer somewhere else.
    I would only be assuming the lease and the building, no name, inventory or license.

    I would cater to the beach goers, making it bet very easy and a one stop shop for them. Free cooler bags and ice with x $ purchase. My employees would grab product and load it without people having to leave their vehicle.

    The business was sold and the land owner sold the parking lot. The new owner could not get a CO from the city with no parking. My design doesn't require parking.

    The location has 4000 year round residents. In the summer upwards of 100k people on the weekends and I'll have to look up how many snowbirds in the winter. My model shuts down when the beach is too cold so would probably operate 9 months or so out of the year.

    I would completely rebrand it. Leaving only the "drive safe" sign as a tribute to the previous business which some of the locals and annual tourists loved.



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  11. Lilly P
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    Lilly P New Contributor

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    You can buy beer and wine at gas stations here. If you want liquor you have to go to a liquor store. Mine is something that everyone is going to drive past anyway because it's on the main drag and offers the convenience of not having to get out of the vehicle and also a way to carry it to the beach and keep it cool at no additional charge. Obviously the charge would be built in but wouldn't be obvious to the end user. I'm also friends with a few of the bar owners which may give me some buying power but I've heard from them that you're not going to get a discount from the distributors in the state. I believe both the state and city will issue liquor permits so I don't know the cost of those yet.

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  12. Philip Marlowe
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    What's your purpose for this liquor store? By that I mean, are you looking to create a 9-5 for yourself? Are you eventually looking to sell it or expand? "Start up" seems kinds of generous here if your plan is to open a season-dependent store.

    Unless you somehow engage in online retail (if that's possible for liquor?) you're automatically limited to the number of people who walk through your door on any given day. And what's the margin on a bottle of Jack Daniels?

    It seems like the liquor store idea is "accessible" and "available" to you, but I think it'll end-up just being a 9-5 JOB. If that's what you want than go for it, but I don't think that's what I took from TMF/Unscripted.

    Don't mean to be harsh, but selling bottles of vodka seems to avoid both serious margin and any significant kind of magnitude (EDIT: Unless you're Tito's or the actual maker/distributor - not saying there's no money in booze). Maybe I'm wrong?

    Also, be sure your competition can't destroy you with major price cuts long enough to force you out. If it's a chain, they may have that ability to do deep discounts for six months.
     
    Last edited: Aug 11, 2017
  13. amp0193
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    amp0193 Legendary Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Am I right in thinking that it'd be best to compete in the specialty / health space, where people aren't as price conscious?
     
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    This sounds like Florida. If it is (even if it isn't), then keep in mind the State Senate narrowly approved SB 106 which made it legal for grocery stores, WalMart, etc. to sell liquor. Rick Scott vetoed it so it didn't become law, but it did pass the Senate. Rick Scott gets term limited out next year.

    Food for thought.
     
  15. Lilly P
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    It's not Florida, above mentioned bill is not applicable here. My end goal would be to expand or get bought out by the competition. I have considered that they could force me out by undercutting me but I don't think they have much more buying power than I do considering the two distributors in this state have a bi-opoly and don't negotiate. I may need at least three to really even earn a livable wage unless my design blows my competition out of the water. The town that I am in will not allow a big business or chain to open here... but the two liquor stores that are the same chain that are here are grandfathered in and originated in this area. They won't allow a Starbucks or McDonald's or Walmart for example. This is the redneck Riviera and the tourists seem to be pretty frugal. But most of them buy liquor and drink on the beach. I think my design that includes them not having to get out of their vehicle, free ice and cooler or cooler bag will seem like a lot of value and they will opt for the easy/ convenient option.

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  16. G-Man
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    You can, but in a lot of instances it gets you relegated to a much lower traffic part of the store.

    This article about the Chobani founder is great in general, and touches on that.
    How Chobani’s Hamdi Ulukaya Is Winning America’s Culture War
     
  17. MidwestLandlord
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    MidwestLandlord Legendary Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Drive-by shootings are proof American's are lazy, hell, they won't even get out of their car to murder someone! haha

    Anyway, some things to think about:

    What are you giving up with being drive thru only?

    1) Product selection

    When people buy hard liquor, a lot of them don't know what they want. They browse, they look around. They study prices, bottle labels, and perception of quality based off each product AND based off other brands of the same type liquor. You would be seriously limiting this option for people, which might be a deal breaker for them.

    In fact, you would need to check with distributors. They may not sell to you if they can't display their items in store. Product selection, presentation, and placement strategy is a science to distributors and taken very seriously.

    2) Pricing Strategies

    See my thread here: Notable! - The Basics of Pricing

    3) Advertising and Point of Presentation Materials

    A lot of municipalities have tightened up rules regarding POP materials being displayed in windows and such especially with controlled items like tobacco and alcohol. You may have very few ways to advertise.

    4) Impulse Items

    A conventional liquor store has impulse items on end-caps, on the front counter, and around the store. Mixers next to the tequila for instance, or Coke next to the rum. You would not have these. Don't underestimate how much impulse items add to the bottom line for your competitors, which is something you would not have.

    5) Complimentary Items

    Some of these are impulse too, but some are not. Tobacco, alcohol free alternatives (near beer and the like), sun-screen, snacks, etc...

    6) Suggestive Selling & Up-Sells

    You can suggestive sell at the window, sure. But suggestive selling is MUCH more effective inside where the product is in sight versus not.

    A real life example: In my restaurant days, suggestive selling to a larger size drink was 200%+ more effective inside than at the drive-thru. Why? Because my inside help would pick up the larger size cup and say "would you like this size for only 50 cents more?" and they could SEE the size they were getting. Also, it is harder to say "NO" to someone when they are standing in front of you. A lot of people buy suggestive sells simply because they hate saying "NO"

    None of that is nearly as effective at a window because they are in their car, which is their "territory" or "personal space", so it is easier to say no. (which is why the typical up-sell at a drive thru window is "would you like medium or large?" and leaves out the option for "small". It gets people to default to the smallest size, medium, that they were offered, which is still an up-sell)

    Your USP

    Free ice and a cooler or cooler bag.

    Good idea. However, what does that accomplish? I'm assuming that there would be a minimum purchase to get the free stuff, no?

    Value propositions like yours are typically used to drive an increase in ticket average NOT to drive traffic. It's an up-sell to someone that is already a customer by getting them to buy more.

    In other words, let's say your value proposition kicks in at $20.00. Billy over here has $15 worth of liquor he wants to buy, but see's the minimum is $20.00, so he adds $5 worth of stuff (high margin impulse items at the front counter) so that he gets his free stuff.

    (notice how it is "his" free stuff? That's how people think. Your copy should say something like "Get your free cooler and ice with a $20 purchase!")

    So if you were to use this value proposition to drive traffic TO your location, how would you do that?

    Where will the traffic go?

    If I understand correctly, you would have no parking. So where would the traffic sit in line if they have to wait for their turn at the window? Who's property would they be on, and would that be acceptable to the owner? Would they block anything? Is there any risk of blocking public access such as sidewalks or streets? (that's a quick way to get shut down by the police, been there, done that)

    Has your traffic already bought their alcohol?

    You are AT the beach, right?

    Have people already bought their drinks BEFORE they get there? Where does the traffic come from, and are there competitors between them and you?

    Are there liquor stores between the hotels and the beach?

    If they have already bought their alcohol, you run the risk of only getting the customers that didn't buy enough and come to you later.

    Distributors

    Don't overestimate your ability to get products cheap, and don't underestimate your competitors ability to get products cheap.

    If there are only 2 distributors in the area, and limited competition, the distributors will protect the known entities over you. In other words, you'd be the new seller in town with no history of supplying your distributors with sales. Your distributors WILL protect them over you if they have too. Why wouldn't they?

    Hope that helps.

    I'm not saying "don't do this" but just trying to get you to see the whole picture.
     
    Last edited: Aug 12, 2017
  18. MidwestLandlord
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    Man, I love talking about this stuff!

    To expand on this part...

    Why is there a front counter in retail locations?

    Partly, obviously, it's to have a place for the transaction. But it's also a control and influence issue. The person behind the counter is "in charge" which makes it easier to suggestive sell and such, because people hate saying "NO" to someone in charge, even if it's a tiny 16 year old female cashier.

    Why do you think most bosses sit behind a desk?

    (which is the reason, as a boss myself, I don't sit behind a desk. My office allows my employees to sit face to face with me, with nothing in between, so they are more comfortable. This works well for interviews too, as the interviewee is more relaxed)

    Ever seen c-stores where the cashier behind the counter is on a raised platform? Same principal, control and influence. (in this case it reduces belligerence and theft)

    Someone in their car is in "their space", not yours.
     
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  19. Lilly P
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    Thank you! I've considered many of the things that you mentioned above @MidwestLandlord. I don't have solutions for all of them yet. There is a back alley behind the store that traffic could queue up in and it would exit my location on to the main drag. I don't think the city is going to have an issue with us. I haven't found a solution for browsing or product placement. You're right on the money with the bonus items being with purchase. I wonder if I could use that Ali to display advertising material. These are all good thoughts and I really appreciate your input. I'm going to send you a p.m.


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  20. Lilly P
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    Could you send me one Midwestlandlord? It says that I'm not allowed to send one to you.

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  21. SinisterLex
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    I hate dealing with people at the liquor store. Just want to come in, browse, and if something catches my fancy I'll buy. I'm not there for small talk, chit chat, or customer service. But I'd only go to a drive-thru liquor store if I knew what I wanted and was really in a hurry, and that never happens.

    I say buy the place and get rid of everything inside. Nothing but kiosks for wine, beer, and liquor. To get in, you have to swipe your credit card or ID or something at the door for age verification. Cameras all over the place. No employees. Just gotta keep the kiosks stocked. I'd drive out of my way for that place.

    Probably has just as many challenges as any other liquor store. Would at least be worthy of the title "startup." A second option is minimal staff and self-checkout. Someone to keep the shelves stocked, and a security guard. No b.s. smalltalk required. Yeah. That's my dream liquor store. Almost cried when we moved and I found out Target here doesn't have self-checkout. Wtf.
     
  22. MidwestLandlord
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    No problem, happy to help.

    Blocking a public, government controlled alley is illegal. Whether the city will take exception to it is debatable, but they CAN if they want to.

    You lose control that way, as the city could take away your queue space at anytime.

    (an alley is typically a permanent public easement, meaning someone else owns the actual dirt underneath, but the city [the public] has all legal rights and responsibilities for it's upkeep and use. It's spelled out on the property deed this way as well)
     
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    In this little town you can grease Wheels to get just about anything done. That being said the alleys only purpose is access to the building that I'm at where the employee parking is. I will double check that though and see if it allows for access to other properties between the next Road and my building. Good thinking!

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  24. Lilly P
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    Lilly P New Contributor

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    A business owner that I'm friends with uses a different section of that same alley actually, further down it's broken up, for customer parking and my other friend actually repaved it for him. The city said something to both and with a little rebuttal they quieted down immediately. They're pretty good about working with small businesses in this little town.


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  25. Patrick R
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    Patrick R Shwizzle Shwazzle Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    Just make sure to check fire code and ordinances too! It could be there for emergency services and if there are cars lined up blocking access that could be an issue.

    That being said I think Lex is on to something. One security guard and one stocker/manager. Something akin to the new Amazon stores way of doing things.

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