Yahoo Finance Majestic Wine banks on bricks-and-mortar as it plots 50 more stores
The boss of Majestic Wine has vowed to double down on Britain’s high streets as he revealed plans to open dozens of new stores.
John Colley, chief executive of Majestic, has said brick-and-mortar outlets will remain “sacrosanct” at the company while he is at the helm.
Over the past four years, Majestic has opened 15 new stores after it was bought by US private equity firm Fortress.
However, Colley now wants to ramp up this expansion, targeting suburbs that have been largely sheltered from the cost of living crisis.
“I think we can open another 50 or so stores in the next four or five years, which is a significant investment,” he says.
Britain’s market towns, such as Henley and Marlow, are the focus of Majestic’s expansion, while the business also aims to roll out smaller stores as well as its better-known warehouse-style outlets.
“We’re an island of shopkeepers and we like the shopping experience,” Colley says.
Majestic has spent the past four years pursuing a turnaround designed to restore its reputation among the middle classes after it split from Naked Wines in 2019.
Ironically, Majestic’s expansion comes as Naked Wines faces a cash crunch due to a vast amount of spending during the pandemic.
Unlike Majestic, Naked Wines’ business model is built on online sales, which have plummeted in recent years and led to its shares falling by 70pc over the past year.
Colley said this proves digital retail isn’t always what it’s cracked up to be, and shows how Majestic’s turnaround is bearing fruit after he was parachuted back in four years ago.
“It’s a bit ironic that we’re now growing and opening shops while that digital business is finding it a bit more challenging,” says Colley.
“[Majestic] has gone from a company losing money, turning over circa £300m, to making more than £380m and investing significantly every year.”
Colley, a former director at Argos and B&Q, was tasked with turning Majestic around for the second time in his career after Fortress took control.
The 52-year-old first ran the retailer in 2015 after it had been bought by Naked in a £70m reverse takeover.
However, he stepped down after just two years to spend more time with his children.
It was only once Fortress acquired the business that Colley was lured back.
He says: “I guess I’ve always been a big fan of Majestic and retail that has an experiential aspect to what it does. That’s why Majestic has been around since the 1980s. I think the Naked bit just confused all of that completely.”
Majestic was founded in 1980 by Sheldon Graner, a former John Lewis merchandiser, who identified a way around the UK’s tight restrictions on selling alcohol.
Rather than selling single bottles, Graner marketed cases of 12 from warehouse-style stores in London’s Harringay and Battersea, while also offering expert tastings – meaning Majestic was able to trade throughout the day.
This bulk-buying warehouse approach, combined with wine tastings, helped the business thrive among the middle classes, fuelling its expansion to more than 200 stores over the next two decades.
It also opened two stores in Calais which became a famous draw for ‘booze cruises’ – where shoppers flocked across the channel to take advantage of lower prices in France.
However, by 2015, the company was struggling amid fierce competition from supermarkets, which offered steep discounts to regain market share.
This led to Majestic buying Naked for £70m eight years ago as the pair sought to combine physical and online retail.
Yet, despite combining resources, the new venture failed to achieve the desired success and led to a split after just four years.
When asked about the failure, Colley says it was driven by long-standing customers falling by the wayside as the business went digital.
“[Naked] very much saw online being the future because it was a digital business. And I was like ‘That’s not Majestic’,” says Colley.
“I think they genuinely were trying to make it make more money but to do that you’ve got to be very clear about what the business is.”
Colley insists his turnaround plan does not involve rowing back on digital retailing, but he says in-store expansion will be his priority.
Another move taken by Colley of late has been to ramp up a ‘white glove’ delivery service for customers, which is done through their Majestic vans rather than third-party couriers.
He says: “You can’t do glass hire with a courier, they won’t do it. You can’t rent an ice bucket with ice through a courier, and you can’t bring the wine back after your party – if you’ve got a few left, we take it back.”
Majestic has also hired Rob Cooke, Tesco’s former head of beers, wines and spirits as chief operating officer, in a bid to fight back against supermarkets.
He has been tasked with seeking out high-end wines that customers can find in Majestic rather than at local retailers.
As for whether his investment plans will be scuppered by younger people giving up alcohol, Colley remains confident.
“When I started at Majestic in 2015, people would say to me ‘You’re going to run out of customers’,” he says. “Well, we haven’t. We’ve got more customers now than we’ve ever had.”
Yet, despite his optimism, Colley is urging the Government to do more to help the nation’s high streets.
“I know so many retail leaders that have left this country to work in places like the Middle East and Australia because it’s easier there,” he says. “They don’t operate at the level we are operating at.
“I’m sad to say this but you look at some high streets across the country and there’s empty units – I think that’s a challenge for the Government. They are not making it easy for retailers to invest in business.”
And while Majestic’s customers have been less affected by the cost of living crisis, he says they are not immune to current economic pressures.
“People are being more price sensitive,” he says. “We’re not seeing a specific down trade, but somebody might be buying one less bottle. That is very similar to the trends that we saw back in 2008 in the financial crisis.”
Life has not been made easier by the Government’s new alcohol tax, he adds, which has forced Majestic to raise prices in its stores.
“We all know that when you go to a restaurant, you order some wine,” he says. “When you get married, you order some wine.
“It is the UK’s most popular alcoholic beverage, so why would you put the tax up at a level that is going to be prohibitive to some businesses?”
