Yet there are plenty of people in the trade who believe there is no place for the traditional high street off-licence in the post-First Quench and Unwins world.
“I don’t think there is a role for high street off-licence chains,” says Steve Lewis, chief executive of Majestic. “No-one has made any money in recent years operating chains of high street off-licences. But I do think there is a role for specialist off-licences, particularly those run by owner-operators who are completely embedded in their local community.”?Majestic will have opened 12 more shops by the close of this financial year – double the number it opened last year – and plans to open at least as many next financial year.
Lewis says the company’s move to a six-bottle minimum purchase has given it huge impetus, and the collapse of Wine Rack just a few months later also benefited his business. He believes the secret to Majestic’s success lies in its committed, knowledgeable staff and the quality of its range.
“We have more than half a million active customers who purchased at least once in the past year – a very significant improvement on two years ago,” he says. “We are that rare thing – somebody in the drinks industry doing well and making money.”?“If we can grow like-for-like at the rate that we are growing at the moment – in the middle of a recession, with snow all over the ground in December – then I’m quite optimistic about the next 12 months,” Lewis adds, though he admits trading won’t be easy.
Matthew Dickinson, commercial director of Thierry’s and a former Threshers buyer, says: “After the demise of the biggest operator in the sector you would ask whether
it is worth having high street chains per se, but there are lots of signs that consumers want a different offer from online and the supermarkets.
“For the more distressed or convenience purchase which First Quench constituted, I’m not entirely convinced.”?“There is no room for the Threshers concept on the high street,” suggests Wine Rack chairman Laki Christoforou. “All you are offering is the same products people are buying from supermarkets at a higher price,” he adds.
Since taking over 13 Wine Racks he has changed the range to cut back on known wine brands and offer more from niche producers, has introduced a strong spirits offering and has raised interest in the chain’s selection of ales. Like-for-like sales are up 22% and he is planning to expand the chain considerably over the coming years, notably focusing on larger shops.
“I believe there is still a gap in the high street – our shops wouldn’t be doing very well if nobody was visiting them, “ he says. “We are very busy and are taking good money but we are not selling run-of-the mill wines. Customers still come in and want to speak to the manager and get his opinion, they still want service such as glass hire and free local delivery.
“In the future we need to be better and better at what we do. It is impossible to compete like-for-like against supermarkets – they are too big, too powerful, too convenient. There is not enough business on the high street to sustain a profitable shop if that is all you are going to do.”?Eudes Morgan, managing director of French wine specialist Nicolas, which shed its businesses outside London last year, says high street off-licences have split into two camps, or strategies: “Those that want to compete with the supermarkets, sometimes to the detriment of quality, and those that want to accentuate the difference between themselves and supermarkets by being uncompromising on quality and being innovative in their concepts. As a French wine specialist that is very strict on quality, we’re obviously in the second strategy.
“We see no happy ending for the first strategy,” he adds. “Without even talking about buying power, the main difference from supermarkets is that we cannot sacrifice margin on any particular category to be more competitive, while supermarkets can catch up in other categories.
“However, the increase of independents, sometimes with original concepts, is quite in line with the second strategy that we stand for, and gives hope for a healthy and attractive off-licence business in the high street.”?But Morgan fears that rising high street rents could push off-licences out altogether. “If they do not go down now, during this period of recession, they may still rise significantly when we emerge from this crisis, which would be a real disaster since it would completely drive out the specialist – chain or independent – from the high street, however high quality and innovative they may be. There is an ever-increasing number of empty shops in high streets, which is very worrying for the future.”?Former Unwins buyer Bill Rolfe, who now runs a wine and food shop called Market Square, which he hopes to develop into a chain, says: “It would be very difficult for a new chain to emerge doing the same things as the previous ones, just specialising in beverages generally, with the emphasis on wine. I don’t think the Threshers model is sustainable in the future because the consumer has now spread their spend so much, particularly with the supermarkets. I don’t think there is enough business to be had purely on drink.
“Some specialist wine shops or upmarket wine shops can exist in good locations, but to build a chain of outlets? There is no chance, which is why we have gone for this slightly new model of a deli and bakery and still put the emphasis on wines so it looks like a wine shop. There is always going to be room for shops such as Bargain Booze, which offer discounts, particularly on beers, but I would say it’s going to be tough for them in years to come as the supermarkets claw more and more business.”?For Jeremy Rockett, marketing director of Gonzalez Byass, the consumer has changed, forcing a shift in the retail environment.
“There are two types of consumer out there: those who just want to go out, get alcohol at half-price, or buy-one-get-one-free, or three-for-£10, who is not that engaged in the wine market. They are looking for a deal and they just want it as part of their weekly shop,” he says.
“Then we get people who are a fraction more engaged, buying from better-quality retailers, places such as Waitrose, but also buying online and in Majestic and the independent wine merchants.
“Somebody who buys in Majestic and Tesco and Waitrose and local specialists and the Wine Society is not shopping around for price, they are just enjoying the process. They are interested in deals, but they might buy case deals – everyone likes a bargain, but they want quality and they are happy to pay for it. We have put a lot of effort into building up that part of our business and those sales channels, and that is going to be a future focus.”?Spirited Wines, the chain that took over Nicolas’s estate outside London last year, is set to rebrand under its new name in the next month or so, and will spend the spring and summer diversifying its range by one country a month, starting with Spain in March.
Owner Benoit Thouvenin says: “There is definitely a place for off-licences in the high street. But do customers realise that the price we have to put forward is different because we have to support the rent in the high street? “Sometimes the customers’ perception is that we are making a lot of money, but that is not case – we just have to pay the rent for the convenience to be closer to them.”?For Ian Bankier, owner of the Whisky Shop chain, the role of the high street off-licence hasn’t changed. “It suffers a bit from competition with the supermarkets because they are able to put so much on the shelves, but I still think the specialist retailer can deliver a service that no supermarket can do – and people like service.”?Bankier is confident 2011 will bring “more of the same”. “We are in a niche where the consumer isn’t terribly price sensitive and we offer something on the high street they can’t get anywhere else.
“We are a kind of a business that is on the move, doing well, and there is no reason why we shouldn’t continue to do well,” he adds.
Rhythm & Booze owner Martin Swaine agrees that the role of the high street off-licence remains broadly the same. “There is added pressure to be both more competitive and different at the same time – a difficult combination,” he says. “It is becoming increasingly important to develop a strong point of difference between ourselves, supermarkets and convenience stores, otherwise there is no point in visiting a specialist. This means extra attention to range, pricing, service and chill.”?Rhythm & Booze had a better than expected December in spite of the snow. Its older shops were up 4% on the year before, while the 34 shops bought from First Quench in late 2009 were up 60% on the previous year.
Laithwaites’ global wine director Justin Howard-Sneyd comments: “The local off-licence is certainly under threat from the price competition of supermarkets and the convenience of c-stores.
“There is a limited number of wine merchants that the high street can sustain. Good wine merchants who bring wine alive for their customers will thrive.”?