Joshua and Morgan Hammond reflect the past and look to the future

by Sarah Lacey

Market Watch Leaders, September 2000

The one thing Joshua and Morgan Hammond were sure of

when they entered college was that they didn't want to be in the family business. Only time would prove them wrong.

In 1987, Morgan, now 32, had been attending the University of Memphis Business School off and on for five years, all the while working part-time for his father, Romulus (Rommy) Hammond, a 1989 MARKET WATCH LEADER, and grandfather, Buster Hammond at the Memphis, Tennessee-based Buster's Liquors & Wines. Alienated by the rigid structure of school, Morgan left. At this point, Rommy gave his son an ultimatum: work at the store full-time or seek employment elsewhere. Liquor and wine was what he knew-what was in his blood-so he stayed. "People think it's easy to follow in your dad's footsteps," Morgan says. "But it wasn't easy gaining the respect of management. I have it now, but I had to earn it."

In 1993, when Morgan was promoted to Manager, his younger brother, Joshua, now 30, returned after graduating from the University of Alabama with a degree in business. Like his older brother, Joshua was also given a little fatherly advice: "I told dad I'd taken my last exam, turned in my last paper, and attended my last class and that I was going to Colorado to take a vacation and find myself. [My father said], 'You've been on vacation for five years, you can find yourself at the store tomorrow morning.' I reminded him tomorrow was Saturday. He said, 'Son, it's the biggest day of the week.'" He at least gave me until Monday.

Like most of its competition in Memphis, Buster's has always been family owned. Buster Hammond opened the first store on the turn of a dime. A veteran of the grocery store business at age 44, he decided he was looking for something new. In 1954, Buster's-as it was originally called was born onBellevue Avenue in South Memphis, close to both downtown and what is now Graceland. Encouraged by his father's success, Rommy opened a store nearby in downtown Memphis in 1966. SinceTennessee liquor laws restrict entrepreneurs to owning only one liquor store, the two were technically unaffiliated.

But dad isn't twisting their arms anymore. The two brothers have since developed a love for the business- not to mention knack for it. Progressing from managerial roles- Morgan became a manager in 1990 and Joshua in 1995- to co-owners in 1996, Joshua and Morgan have taken a good store and made it exceptional. Under their watchful eyes, the store has enjoyed a 9.3 percent growth in 1999, hitting 10.2 million.

In the late 1960s, the Hammonds- along with the rest of the country- watched as downtown Memphis was shocked by the assassination of Martin Luther King Jr. and the subsequent civil unrest that ensued. In response to the tumultuous environment, like many downtown merchants, Rommy and Buster decided to sell both locations and start fresh together in what was then East Memphis. "They borrowed $40,000 on a handshake and started from scratch," Joshua says.

In the following years, Memphis benefited from an eastward urban sprawl, so much so that Buster's is now on the border between midtown and East Memphis. But it's till prime real estate, strategically positioned blocks from theUniversity of Memphis along Poplar Avenue, a main thoroughfare that spans the city.

Perhaps the best thing about the location has been the store's ability to expand. What started as 1,000 square feet in 1968 has had seven expansions to reach its current 10,000 square feet. "As spaces opened up in the shopping center, we just took them," Morgan says. "You can see each expansion by looking at all the different tile work in on the floor."

Joshua adds that they are still planning on more growth. "We're watching for El Chico's to leave so we can take that space," he says.

Undoubtedly, the wine side of the store has grown the most. In the tradition of their founding grandfather, Buster, who favored a vast selection of wine, Joshua and Morgan welcomed the wine boom of the 1990's by offering one of the broadest wine options in Memphis.

At 4,500 SKUs and more than 7,000 total brand offerings, wine accounts for 60 percent of Buster's total revenue. The largest varietal category is California Chardonnays, with roughly 400 different brands. The biggest sellers are the usual suspects, including Fetzer ($6.99 a 750-ml bottle; $11.99 a magnum) and Kendall Jackson Chardonnay ($11.99 a 750-ml bottle). The store also carries more than 150 dessert wines and more than 150 Champagnes and sparkling wines, starting with Far Niente Dolce at $139.99 a 750-ml bottle to a Chateau dYquem Sauternes for $400 a 750-ml bottle to a jeroboam of Perrier-Jouët 1995 for $2,000.

Joshua and Morgan extend that never-say-never philosophy to liquor inventory, too, resulting in a selection of more than 100 single-malt Scotches, 75 Tequilas, 100 Cognacs, 100 Bourbons and 200 cordials and liqueurs. Spirits account for 40 percent of sales. Popular brands are Jack Daniels ($29.69 a 1.75-ml bottle), Bacardi ($16.99 a 1.75-ml bottle) and Absolut (25.49 a 1.75-ml bottle). Specialty liquors include Château Lafite-Rothschild Cognac ($600 a 1.75-ml bottle and Porfidos Barrique Tequila ($500

a 750-ml bottle).

Joshua credits much of the Hammond's success to refusing to say no, not only to new products, but to charity, community groups, and customers. Joshua has a thick file of charities and events the store has assisted, whether by donating a high-dollar bottle of Champagne to a silent auction of helping Memphis art museums and theaters buy wine at cost for events. The Dixon Gallery and Gardens, one of Memphis'two art museums, call Buster's for nearly every event. "I try to put them at ease," Joshua says. "I ask what's the budget, how many people are coming and how much do they want to impress them. And we usually come in under budget."

In a market like Memphis, with family owned liquor stores the norm, loyalty is hard to create. Being a community player helps Buster's draw people from the suburbs or downtown a littler further than their corner liquor store. "I try to say yes to everybody and we do enough volume and have the manpower that I can," Joshua says. "That helps us create more relationships. If we help out a group, their members will want to support the store."

"Our customer counts have grown 8 to 9 percent every year the last nine years and there's no new housing around here," Morgan says. "That shows we're pulling from somewhere."

Once they get people in the store, it's up to the staff to make them come back. Joshua and Morgan infuse their just-say-yes attitude into their 40 to 50 employees. "Customer service is what's kept us growing," Morgan says. "Anyone else can have your price and your selection, but good, consistent customer service sets you apart."

And, unlike many retail stores, Buster's has very little turnover. Staff members who've been to hundreds of wine tastings can nurture new employees who barely know a Merlot from a Cabernet. The owners heavily encourage employees to go to restaurant and community wine tastings, as they are legally restricted from having an internal tastings to educate the staff. But to theHammonds, customer service is more than just knowing a good moderately priced white that will go with Chinese food. It's also the good Southern hospitality of opening doors, saying "hello" and walking packages to a customer's car. That's why they staff upwards of 30 on a Friday or Saturday night. "if someone comes in here and wants attention for an hour, we have enough people on staff that they're going to get it," Joshua notes.

While that Southern hospitality goes hand-in-hand with Tennessee's liquor stores, so do many restrictive laws. Retailers have an edge in being the only venue allowed to sell wine and liquor-the catch is thats practically all they can sell. No cigars, gourmet delicacies or even corkscrews are allowed. And no specialty services like catering or delivery are permitted, either. It was only last year that Memphis liquor stores were allowed to sell high-proof beers, such as Salvator double bock at $10.49 a six-pack, which constitute less than 1 percent of Busters sales. As stated, a strict franchising law makes it such that Tennesseeretailers can only own one store at a time. But Morgan and Josh see these limitations as opportunities. "That's what makes our success so much stronger. We've built it in one location with two products," Morgan says, referring to wine and spirits.

The anti-franchise laws also work to the Hammonds' advantage, as they keep corporate chains out of Tennessee. "It levels the playing field," Joshua says.

Joshua and Morgan's refusal to let liquor stifle expansion is evident in Buster's revenue growth. The Hammonds have always been ones to make lemonade out of lemons. "This business isn't for everyone," Joshua says. "You have to love people. What's fun for me is when people come in, I get to quiz them and talk to them about why they like a certain wine or what it is they like about a certain grape and be confident I'm putting a bottle they'll like in their hands." Few would describe the three Hammond generations as timid. Joshua and Morgan don't hold themselves up in the office-they walk the floors joking with staff and talking with the customers.

Rommy and Buster, too, are always at the store the day before holidays or other busy times, greeting people and sharing their expertise and opinions about the products. "Buster is 90 years old and still comes up here, sits on a stool and talks to all the young ladies that come in," Joshua says.

Joshua and Morgan work well together, naturally falling into the ownership roles to which they are suited. Joshua handles employee issues and receiving and Morgan handles purchasing the store's financials. The brothers recently threw their grandfather a 90th birthday party in the store, which the mayor ofMemphis attended.

"In some ways, we're the mirror image of Rommy and Buster working together," Joshua says. "We've expanded on what they've done," Morgan agrees. "They paved the road; we made it a six-lane highway."

Such clever quips are a hallmark of the store, which displays advertisements and signs with comments like "Life's too short to drink cheap wine," and the store's best known catch phrase: "If we don't have it, then you don't need it." The two brothers hope that projects a light, fun atmosphere before people even walk in the door.

And when they do walk in, they are immediately greeted by one of the smiling cashiers. Further, Buster's staff members are always on hand to help with any questions as customers wander through the aisles.

And when they arent talking to customers, employees are joking with one another. "Our head wine guy is the epitome of that," Joshua says. "He has fun and gets people excited." That's not to say that Joshua and Morgan don't take the industry seriously. Joshua sums up his philosophy with one word: responsibility. "Especially being so close to a university, we have to card and sell responsibly," he says.

Now that the "six-lane" road is paved, where are the Hammonds taking Buster's in the future?

They have a Web site, but another Tennessee liquor law prevents them from undertaking any alcohol-related e-commerce. They are currently working toward getting more information on the site to educate people about what they drink, in addition to starting an e-newsletter.

Joshua and Morgan are on the lookout for a second location further east, to open a new store in a Memphis suburb. It cannot be affiliated due to law, but the Hammond way of operating would be infused naturally. Talks are also going on to open a store next to Buster's to sell the accessories and natural cross-marketing products that Tennessee law restricts them from selling.

The two brothers continue to tweak Buster's to make it the best retail store possible, but to the average customer, it's business as usual-great selection, great prices and service with a smile. "Some people are happy to open their mom-and-pop store and do the same amount of business year in and year out," Morgan says. "We never have been."