Selling Booze in Lake Forest - Redux

99 Cents Stores proposes to add beer and wine sales in two of their stores in Lake Forest – one near the Freeway and the other in Foothill Ranch.

Both stores are in census tracts that are classified by the State’s Alcohol and Beverage Commission (ABC) as “oversaturated” – meaning, there are already too many such stores in these area given their population.

In addition to being in oversaturated tracts, the physical location of both these stores is within walking distance of a half dozen other stores that sell beer and wine, many of which are small businesses who depend on the income from beer and wine sales to survive.

Research shows that in addition to the menace of drunken driving, alcohol is a major contributor to crime in general, and violent crimes in particular. In South Orange County, cities with the highest concentrations of alcohol outlets have the highest  serious crimes per capita, while cities with the lowest concentrations have the lowest crimes. Similarly, cities with the highest number of outlets have the highest DUI arrest rates.

For the past few years Lake Forest averaged more than 200 DUI arrests per year and more than 30 accidents resulting in fatalities/serious injuries. Many of the murders in Lake Forest in recent years have been alcohol-involved.

Research shows clearly that for each additional retail outlet there is a corresponding increase in crime in general, and violent crime in particular.

Research shows that as price goes down, drinking goes up. This relationship is stronger for underage and younger adults.

Because 99 Cents Stores is a discount/dollar store, adding beer and wine sales to two of their stores increases the chances of crime in general and violent crime in particular not only because of the mere increase in retail numbers, but also as a result of their cheaper prices.

In addition, discount beer and wine sales are most attractive to underage drinkers and young adults, for whom the risks of drunken driving and violent crime are even higher.

Allowing 99 Cents Stores to add beer and wine sales will not increase the City’s revenue, since the location of these stores, so close to other stores with Type 20 licenses, will undoubtedly cannibalize the current sales.

In addition, allowing 99 Cents Stores to sell beer and wine in tracts that are oversaturated will take away sales from existing businesses around them, which include nearly a dozen small businesses. This may cause some small businesses to close down, resulting in a loss of revenue for the City.

On this basis, 99 Cents Stores should not be allowed to sell beer and wine, in order to protect the community from the increase in drunken driving, crime in general, and violent crime in particular.

To offset the damage to the health and safety, 99 Cents Stores argues that they need to sell beer and wine to stay competitive, which is untrue. 99 Cents Stores is highly profitable. They started with one store in Lake Forest (without selling beer and wine) and expanded to three stores. Selling beer and wine is not a part of the 8 major corner stones of their corporate marketing strategy (e.g., economy of scale, smaller stores, lower prices, etc.)

99 Cents Stores also argues that by selling beer and wine they will contribute to a growing shopper preference for one-stop shopping, however, research shows that one-stop shopping only appeals to a very small part of the population in general, and an even smaller percent in Lake Forest where only 10% of the population consider it important.

In terms of convenience, there are already much larger retailers within walking distance of both these locations who currently sell beer and wine, and 2 of the 4 are discount retailers. Hence, 99 Cents Stores has nothing unique to offer.

In terms of the City’s absolute quota, we have only 9 more outlets that can receive Type 20 licenses before no more can be allowed. 99 Cents Stores offers nothing unique to warrant using up 2 (and possibly 3) of these licenses which can be used to attract new and desirable businesses to the City.

Most damaging of all, 99 Cents Stores has only 5 stores in Orange County that sell beer and wine, and yet they have been cited twice for violating alcohol laws. This demonstrates that 99 Cents Stores does not take the responsibility of managing their sales seriously.

Commissioners worry that if they deny 99 Cents Stores a license, this will discourage other retailers from moving to Lake Forest, and in particular, Trader Joe’s has been singled out. However, each application is considered on a case-by-case basis, so any decision made regarding 99 Cents Stores is not applicable to any other application. Moreover, Trader Joe’s is vastly different from 99 Cents Stores (e.g., smaller, more profitable more organic, more local sourcing, etc.)