"On Special" is a monthly look at top store categories and the retailers that specialize in them.

Pennsylvania's strict alcohol laws prohibit any store outside of 600 state-run stores from selling wine. But Giant Food Stores was determined to find a way that would allow it to sell bottles of popular reds and whites along with beer, which came to stores in 2011 following lobbying from the company.

The solution: In-store eateries, where the company falls into compliance by offering single-serve, ready-to-eat foods like wraps, sandwiches and salads in addition to beer and wine. 

The decision has paid off for Giant. Since opening its first Beer and Wine Eatery in 2016, the retailer has expanded into 107 locations and hopes to open more inside its Pennsylvania stores as regulations loosen. Giant currently operates 164 stores in the state and does not have plans to open eateries outside the state because customers can already purchase beer and wine at these locations. 

What's trending?

Craft and seasonal beers are sales drivers at the eateries, Colin Heap, manager of special projects at Giant Food Stores, told Grocery Dive. The grocer also sees high interest in local offerings from brewers like Troegs or wineries like Allegro. The retailer brings in local vendors to perform tastings so shoppers can become more familiar with its assortment. 

Some stores see stronger wine sales, while others cater more to beer lovers, said Manuel Haro, vice president of strategy for Giant Food Stores. The company's merchandising team looks at each store and adjusts its assortment accordingly.

Best-sellers

The Beer and Wine Eatery's best-selling SKU is its "mix-a-six" collection, which allows customers to create their own six-packs from a variety of craft beers, according to Heap.

Boxed wine has also been hot lately, particularly the brand Black Box. Prosecco has also seen a spike in sales this past year, he noted. 

"A lot of that is driven by vendors doing demos and sampling," said Heap. 

In addition, malt beverages like Seagram's and spiked seltzers like Truly and White Claw, which have rocketed in popularity nationwide, see strong demand among younger shoppers. 

Carving out space

Only after in-store assessments from a variety of teams that oversee the eateries, including merchandising, format, construction and operations, does Giant decide to plant a Beer and Wine Eatery. This helps the retailer visualize the format, layout and identify any challenges and how it could combat them. 

Haro says the retailer's biggest challenge is finding space inside each store for its eateries without compromising the assortment, shopping experience or traffic flow. ​

"We started with our larger stores, but our smaller stores now have limited space and we have to get creative in how do we put it in," said Haro. The eateries are situated differently at every location, with the focus on placement that's prominent but not disruptive. In its Warrington, Pennsylvania location, for example, the eatery is behind the produce section whereas in a Lebanon store the eatery is next to the deli. 

Staying on top of trends is also top of mind for Giant. Heap says the retailer wants to be first to market with new ideas and not look outdated. 

"The challenge is to not get left behind by having a tired old display of Bud Light while others are carrying something new and exciting," he said. 

Working with regulations

Despite Pennsylvania's strict alcohol laws, Heap says that Giant hasn't had any citations at its eateries.

"We thought that if we were going to be in the alcohol sales category here, we wanted to do it responsibly," he explained. 

To do that, the retailer puts its associates through a rigorous training program to better assist customers and help them with beer and wine pairings, as well as complete a sale following ID enforcement practices. The eateries have a transaction limit of 192 ounces of beer or 3,000 milliliters of wine per transaction for each customer, Heap told Grocery Dive. 

Giant Food Store's push to amend alcohol regulations has made it a first-mover in numerous markets. In Broomall, Pennsylvania, the location of Giant's newest eatery, alcohol sales were prohibited until just recently. Heap said the retailer's department has capitalized on pent-up demand and become a destination for customers.

Store crossover

When opening its Beer and Wine Eatery, Giant takes pains to make sure the department gels with the rest of the store. 

Its food selections mirror those found in other departments, promoting cross-selling. A beer cheese that's sold in its deli department, for instance, is made with the Troegenator beer found in its eatery. And sandwiches and salads for purchase can also be found in the prepared food aisle, said Heap. 

The eateries also have no doors, walls or physical separation from the rest of the store, Heap explained.

"It’s so customers don't feel like the beer garden is a completely separate area and that it is integrated into the store," Heap said.

Overall, the Beer and Wine Eatery has brought in incremental sales, Heap added, and helped increase customer loyalty. 

"It satisfies the customers need to get more done in a single shopping trip so it has resulted in trip occasions for our customers," he said.