Small liquor stores struggling to compete with big retail

CLINTON, Wash. -- Almost a year after the state privatized liquor sales, more and more small, independent stores around the Puget Sound region are going under. They complain they can't compete with big retail and grocery stores.

"It's aggravating - there's not much we can really do about it," said Sean Niesel.

When Niesel opened Emerald City Spirits in Seattle, he thought he'd rake-in the big bucks.

Instead, "we're just about breaking even here."

Jan Neil says same for her liquor store on Whidbey Island.

Lower prices at nearby grocery stores are driving their stores out of business.

"Out of the association for contract liquor stores, we've lost more than 20 just in the last two quarters," Neil said.

The trouble began last year when voters passed Initiative 1183 to privatize liquor sales. Immediately, liquor manufacturers offered big-box stores and grocery chains huge discounts for buying bulk, while smaller store owners still pay the full wholesale price.

Add on top that 17 percent state tax and store owners say it's impossible to compete.

"We're not like Costco or grocery stores where they can add that 17 percent to bread, eggs, whatever they want," Niesel said.

According to the state Liquor Control Board, 19 small liquor stores have been forced to close their doors since last June, while 21 others never even opened. Two more small liquor stores on Whidbey Island are close to going under while a liquor store in Everett is just days away from closing up shop.

Now desperate, Neil's tried every deal and gimmick. She also gives 3 percent back to her most loyal customers, but that's also money she's taking out her own profits.

Several liquor stores introduced legislation this year to eliminate taxes for small owners.

"Some sort of rule where we can be exempt," Niesel said.

But it failed. For Niesel, the writing is on the wall.

"I think if things stay the way they are, there's not going to many of us left," he said.