High street chains in battle for share: Oddbins and Majestic go head to head in struggle to recruit consumers
Competition among the high street chains is hotting up as Oddbins and Majestic embark on new strategies and inject fresh investment to bolster their operations.
Oddbins managing director Ayo Akintola told OLN he was significantly ramping up the chain’s online presence and has attempted to woo staff from Naked Wines to manage the upscaled division.
OLN has also learned Majestic has launched a review of its branding with plans afoot to overhaul its image and logo to give it a new feel. It is also widening its recruitment process, opening it up to non-graduates.
Last week it emerged Akintola had sent love letters to staff of Naked – which was bought by Majestic in a £70 million deal in April – along with bottles of wine in a bid to poach them.
Akintola said: “In terms of priorities, the past couple of years have been about focusing on the retail estate and our online proposition hasn’t been strong. The core estate is now stable and moving in the right direction, which means attention can be turned to our digital operations.
“I am on record as saying that Naked Wines is a company I admire in the UK. No one comes anywhere close to it in terms of online consumer engagement and it is my strongly held view that consumer engagement is the fundamental key to having a successful retail wine business.”
He added: “Our growth in the retail estate over the past four years has been driven in large part by consumer engagement in store. So with our focus now on developing the digital side of our business, it stands to reason that we would want these talented individuals to join Oddbins.”
In addition to the branding review, chief executive Rowan Gormley is understood to be repositioning its wholesale division to take on rivals that enjoy strong on-trade footprints, including Bibendum.
Majestic Commercial might
also be renamed as part of Gormley’s focus on and investment in the division.
Last month he set out plans to trial smaller-format stores in London, putting it in direct competition with Oddbins and other high street drinks retailers.
He is also trialling dropping the six-bottle minimum purchase, potentially breaking away from the model it has championed and which delivered enviable average basket spends as it positioned itself as a wine warehouse. He has reduced the new openings
programme as he explores ways to get the chain back in the black. Details of the two chains’ new
strategic directions come after Naked Wines filed figures showing it returned to profit in 2014.
The UK business made an operating profit of £1.4 million in the financial year to December 31, 2014, against a loss of £453,000 in the previous year.
Funds available to invest in winemakers increased from £7.3 million to £8.7 million and there was an increase in turnover of 16.8% to £45.1 million.
The accounts show that the number of UK “angel” customers went up from 141,000 to 158,000, a rise of 12.1%.
The figures represent the last full financial year since Majestic announced it was buying Naked Wines.
Documents lodged at Companies House reveal holding company Naked Wines International – which provides investment to help the country subsidiaries grow in their market – recorded losses of nearly £13 million over the same period as a result of the large costs associated with recruiting new customers.
The directors’ report in the UK accounts – dated after the acquisition and signed by Naked founder Gormley – said: “The business continues to deliver attractive returns from investment in new customers. We intend to continue to expand the range of wines and winemakers we offer to increase the attractiveness of our proposition to our angel base.”
The loss recorded by Naked Wines International was just £4,000 short of the £13 million mark, a big jump on a £174,00 loss posted a year earlier.
The director’s report stated that this was because of the “considerable investment” that had been made to recruit new customers. This resulted in a 34% increase in angels to 290,000.
It added: “The directors are confident that the investment will be returned over the lifetime of the angels recruited, based on the strong retention rates for angels that we are seeing in all markets.”