Majestic sets out to build customer base and become nation's favourite wine specialist

14 June, 2016

Colley: "previously we didn't put customers first"

Majestic’s new strategy is focused on growing customer numbers, increasing the percentage
 of exclusive lines it stocks, improving its multichannel offering, bringing older stores up to scratch and retaining its staff.

It has undergone major changes of late and the focus 
is now on putting customers first rather than expanding store numbers and chasing the supermarkets, according to new managing director John Colley.

The firm was once the star performer of drinks retailing and upbeat briefings with chief executive Steve Lewis became a regular event as he rattled off impressive growth figures.

But then a shocking Christmas in 2014 rocked the City and Lewis, a lifer at the company, was shown the door. Cracks in the façade started to grow.

It was clear that a change
 in direction was needed, so Majestic bought Naked Wines for £70 million in April 2015 and installed its founder, Rowan Gormley, as chief executive of the combined group.

The management has been overhauled, with a third of the top team replaced, and Colley is in charge of the Majestic side of the group.

Richard Weaver is now buying director after Justin Apthorp stepped down, while buyer Cat Lomax has been brought in from Waitrose to add her expertise to the revolution.

Colley, who joined last October, told OLN: “Rowan’s strategy around growing customers, not necessarily stores, is sensible. The general quality of the estate at Majestic is very good. The previous management got some good stores in the right places, but we have to do that in conjunction with multichannel and growing our customer base.

“Previously we haven’t put the customer first. We have been thinking more around store expansion and the competition and we are very customer centric now.”

Colley had no experience of the wine trade when he joined. Instead he is a retail expert who has worked in senior roles for the likes of Screw Fix and B&Q, so he can bring solid retail practices to complement the wine expertise.

For example, in revamped stores shelving units have rolling pallets underneath, which means staff spend far less time lugging wine around and stacking shelves and more time serving customers.

Colley plans to introduce high-speed wifi into stores 
so shoppers can download a relaunched Majestic app and get personalised recommendations. He is also introducing click
 and collect, which will allow shoppers to get the fine wine 
on offer in Mayfair or St John’s Wood delivered to any store in the country.

Its Marylebone store has no parking, a change in direction for the retailer, and many orders are delivered to homes to make shopping more convenient.

Older stores, such as York,
 St Albans, Cambridge and Nottingham, which had been struggling, have been revamped.

There are currently 211 stores in all and the plan is to possibly bring that up to around the
 230 mark, rather than the 330 stores Lewis’s strategy was based around.

“There is white space in the UK market where we just don’t have a store and we know the demographic is right,” said Colley. “If we can find the right unit we will open a store, but 
we won’t open a store in the wrong place. Firstly, investment is going to get the existing estate up to scratch. We have fantastic stores in fantastic places and momentum has slowed. There are probably 20-30 locations in the UK where we figure we can open a store, but before we think about those let’s stabilise.”

When planning how to overhaul the business, the management surveyed all
 1,100 staff and came up with a strategy based around improving customer experience, developing the product offer, making 
the stores easier to shop and improving prospects for staff.

Shoppers can now buy as many bottles as they like after the minimum six-bottle order was scrapped, and gone are the confusing deals that baffled staff as well as shoppers.

Colley said: “We do some promotions – we had 25% off Champagne, deals on single bottles of Rioja and The Ned. But those multiple complex promotions are gone. We don’t have all that noise any more – the stores are cleaner, which means the staff can focus on selling the wines, rather than the promotions.”

Another major focus is on differentiating Majestic from the multiples. “We are not chasing supermarkets. We might have been a bit guilty of that before.

“My vision is that we become the nation’s favourite wine specialist. Wine is something supermarkets use to sell more turkey at Christmas. It’s
 a commodity. For us it’s not about that. That’s why small 
and medium-sized wineries like working with us. Our product range is known for being one of the best. Because we are not that big we can source product that some others can’t.

“We have a lot of unique wines with stories but we really want to be famous for wines that are exclusive and differentiate us from supermarkets. We have a new range of premium wines that we will launch before Christmas, and that’s looking fantastic.”

He added: “There are a lot
 of Majestic-trained individuals in the industry. I want to make sure that if we are investing in training people we give them an incredible career opportunity in the company, so we keep great people.

“We are putting those guys front and centre. If our brand is around service and experience, which it should be, and not around price and discounts, which it was, they are key to that.

“Majestic is a solid business. It needed to refocus its strategy. We are going to transform ourselves into a customer-focused business. We are in the very early stages of that.”

Perspective: It Might Get Worse Before It Gets Better

It will take time and effort to get Majestic back on track and things might get worse before they get better, according to a company spokesperson.

Majestic enjoyed a strong Christmas trading period, but that followed on from disappointing half-year results as pre-tax profit fell to £4.3 million from £8.5 million a year earlier.

When asked how the City feels about goings-on at the retailer, Gabby Clinkard, who works on public and investor relations at Majestic, told OLN: “The City understands it is going to
be a long process. It might get worse before it gets better. It needs a lot of investment to get it back to sustainable growth, particularly in mature stores that have been declining. It will take time before we can turn it around to make it sustainable again.

“Excitement for investors right now is in Naked’s growth. If we can get Majestic back to a sustainable growth level – probably not as strong as Naked, but if we can – they will be more excited.

“We have a £500 million sales target by 2019 and Majestic is a big part of that. That is where we have set our expectations. It’s a long process. Just because we had a great Christmas, doesn’t mean we've done all the hard work. You can’t turn around a business in six months.” 

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