Three-for-two booms but franchising falters

26 January, 2007

It's all change for Thresher going into 2007 - trading director Alex Anson, who mastermind ed the three-for-two offer, has quit the company for a new career in Switzerland.

Stepping into his shoes is ex-Gallo UK sales director Lloyd Stephens, who sa ys he w ill take time to understand the challenges facing the business before deciding on a strategy . "I certainly don't have any preconceptions that I'm going to go in and create massive changes," he sa ys.

As 2006 drew to a close, one of the biggest talking points in the off-trade was Thresher's pre-Christmas promotion . Sparking frenzied excitement among the online community, its 40 per cent-off voucher circulated across the internet at astounding speed. While some mistakenly berated Thresher for downright stupidity, chief executive Roger Whiteside insisted it was "no cock-up" - and the deal, which gave the chain a 60 per cent sales lift in its first three days, proved to be a stroke of marketing genius.

Thresher opened its first franchise store, run by the shop's former manager, in June. But although it announced "impressive first-quarter figures" for the scheme , the group faced mounting opposition from store managers, and by the time this report was compiled had only opened 22 franchises. Despite the low number of participating stores, Thresher maintains there are big benefits in giving managers a personal stake in their stores and will continue to push the scheme .

Scottish retailers joined the chorus of disillusioned Threshers managers, slamming a cutback on hours which forced some shops to close on Sundays. The group ended months of speculation when it announced it would not be selling its Scottish shops having failed to strike a deal with interested parties in September. Thresher said it would retain its Haddows brand, but rebrand other shops as Threshers or Wine Rack. A "robust Scottish brand" is a top priority for the group in 2007, Anson said.

The outlook was brighter for Thresher in December when it announced it was close to selling all its freeholds. Looking to raise up to £15 million by selling the freeholds of 41 shops and leasing back the premises from the new owners, the company had taken advantage of a buoyant commercial real estate market. "We're nearly 90 per cent done. There are a few left but we'll be clear by the spring," Whiteside sa ys.

In November the group decided to reduc e the amount of space devoted to beers and wine in some The Local stores, and experimenting with categories such as milk, ­greetings cards and children's confectionery. Anson denied this signalled a retreat from pure drinks retailing.

Promotions includ ed buy six bottles of French wine and save 40 per cent, and the ongoing three-for-two initiative. Celebrity chef Gordon Ramsay was signed up as the face of Threshers in October. Building on Threshers' sponsorship of Ramsay's Hell's Kitchen USA, window displays showed the infamously hot-tempered cook alongside the strapline: Wines You Can Swear By. The group also launched a wine club , On Taste .

In July,Thresher slimmed down its 15-strong Origin own-label, and relaunched some wines with organic or Fairtrade labels in a bid to cash in on the trend towards ethical shopping. Anson said the Origin brand will eventually be entirely Fairtrade.

Thresher will be launching 150-200 wines in the coming year. The retailer's focus on South Africa will extend into 2007, and Champagne and Spain will also be in the spotlight. Increasing sales of malt whisky and premium impulse spirit brands will be a chief concern and the BWS team will carry out a category review . The team is also gearing up for a total overhaul of its local ales and world beers .

Threshers has committed to sending all staff from general assistant level upwards on a one-day wine training course .

Thresher Group

Enjoyment Hall, Bessemer Road,

Welwyn Garden City, Herts AL7 1BL

01707 387200

www.threshergroup.com

Current size of estate: 1,961 shops

Key personnel: chief executive, Roger Whiteside; chief financial officer, Harvey Ainley; director of property and retail services, Steven Masters; supply chain and buying director, Stuart Higgins; trading director, Lloyd Stephens; retail operations for Thresher, Mark Dence; retail operations The Local, Alun Johnson

Year founded: 1998 (as First Quench)

Number of employees: Around 13,000

Shop formats: Threshers, The Local, Wine Rack, Bottoms Up, Victoria Wine and Haddows in Scotland

Turnover: £1.1 billion to July 2, 2005

Most recent pre-tax profit: £2.4 million before exceptionals to July 2, 2005 £1.1 million loss after exceptionals to July 2, 2005

Developments in 2006

Decision to franchise 600 branches - seven converted by September

No sale of Scottish shops and Haddows brand retained

Reduction of space devoted to beer and wine in The Local stores

Gordon Ramsay signed up as the new face of Threshers

Gallo UK sales director Lloyd Stephens takes over as trading director.

Challenges in 2007

Extensions planned to wine and spirits range

Overhaul of ales and world beers

Reposition own-label Origin range as Fairtrade

Push franchise scheme.




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