Liquor privatization good but McDonnell plan needs work, retail federation says
The Virginia Retail Federation, which represents small and independent retailers, wants major modifications to Gov. Bob McDonnell's proposal to privatize state-run liquor stores but has endorsed the idea in concept.
In a statement released Friday, the group indicates that its membership has agreed that replacing the state's 332 government-owned liquor shops with privately owned stores is a good idea.
But the group says it will support the proposal advanced by McDonnell to accomplish the goal only if five major changes are made.
For one, the group calls for increasing the number of licenses auctioned to private retailers to sell distilled spirits. McDonnell has called for 1,000 licenses. The group's request could be difficult because some legislators have said they believe 1,000 is too high already.
But the group says it wants the General Assembly's audit arm to conduct a market analysis to determine how many licenses the market will bear and that limiting licenses will give big stores an advantage.
"There are currently more than 6,600 businesses in Virginia licensed to sell beer and wine off-premises," said Retail Merchants Association President and Chief Executive Nancy Thomas in a statement. "Restricting the sale of distilled spirits to such as small percentage of these businesses creates a serious competitive imbalance.
McDonnell has altered his plan once in hopes of drawing support from small-business owners.
He had originally proposed dividing the licenses into three categories -- 600 for big-box stores,150 for freestanding package stores and 250 for convenience and drug stores. Licenses would be auctioned to private businesses, with proceeds going to improve state roads.
Late last month, he proposed a fourth license category, taking 100 of the 250 licenses proposed for convenience and drug stores and earmarking them for stores that have no more than 3,000 square feet of total retail space, 200 feet of liquor shelves and 50 employees in the state.
The idea was to allow convenience stores, many of which are locally franchised, to better compete with nationally owned drug store chains.
He also suggested letting smaller retailers pay for licenses over several years.
But the retailers said today that more adjustments are needed to help smaller store owners. They want more licenses reserved for small and independent retailers and lower minimum bids.
McDonnell has proposed setting minimum bids using a formula that takes into account the state's geography and the profitability of existing stores. But even the cheapest licenses would cost more than $100,000 under his plan.
The Federation says minimum bids for small businesses should be no more than $25,000.
Big grocery chains have enthusiastically supported the proposal. Smaller retailers have expressed fears that they could be shut out of a newly privatized system.
Still, the group's decision to endorse the privatization concept could give McDonnell a boost. He has always said he's willing to negotiate over the details of his proposal. The Federation, which is the advocacy arm of the Retail Alliance and the Retail Merchants Association, had called for a legislative study of privatization.
| October 15, 2010; 12:00 PM ET
Categories: Robert F. McDonnell, Rosalind Helderman
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