Majestic: putting the fun into wine
In 2008, the UK was plunged into a full financial meltdown by the global credit crunch and Brits clung to their jobs as panic set in. Amid this testing backdrop, Rowan Gormley made the bold decision to leave a stable business, Virgin Wines, and set up a new one called Naked Wines.
It is a mark of the man’s magnetism that he convinced 17 staff to follow him out the door. One acolyte was 24-year-old Joshua Lincoln, who had been working at Virgin for three years. He says: “You’d be an idiot to leave a stable business and join a start-up, but I was young and naïve enough to give it a go, I had complete trust in Rowan, and I loved working with the people leaving with him.”
It turned out to be an inspired decision. Ten years later, following a long and varied career under Gormley’s wing, Lincoln has just been promoted to managing director of Majestic Wine, one of the biggest jobs in the UK wine trade. His enthusiasm about the future of bricks-and-mortar retailing is infectious and it is easy to see why he has risen up the ranks so quickly.
“Retail isn’t dead, but boring retail is dead,” he says. “We’ve got an opportunity. Wine is such an exciting product. You can buy it online, and our online arm is growing and that’s great, but you only know you like it when you taste it, so the experience we are giving in store, opening wines, letting you taste wines, that community feel when you come in, that will never be boring, that will never be dead. That’s what we are starting to push more and more.
“Come in, taste through the wines we’ve got open, have some fun, try something brand new. You look at some other companies that haven’t done so well recently – Toys R Us, for example [the chain recently went bust]. It’s similar, it’s a warehouse for toys. It could have done some really cool stuff, it could have made its stores come to life. It could have had Lego world championships or Flubber centres or whatever. It became boring. We need to make sure we don’t become boring.
“We’ve done a lot of heavy lifting in the background, and now we know what we are. We know we’re moving towards being a specialist, we know what we’re going to do with our range, and we need to make sure our store is worth visiting. With any retailer, the ones that are popping up, they are fun stores to be in, they are doing something.
“It has to be experiential, otherwise why would you bother leaving your sofa? You can do it cheaper and quicker and you can carry on watching Coronation Street. You need a reason to get up and go out and go into a store, and that has to be the experience. I am excited about retail. It has to evolve in that way, or it will die. Boring retail will die. Some will do it and some won’t, but retail as a whole will move in that way, and that will make the shopping experience better for everybody.”
Importance of ratings
Lincoln initially ran the Naked Wines sales team in the UK, then took on the service team too. As Naked expanded into the US and Australia, he ended up looking after all three countries’ call centres as sales and service director. The firm identified the importance of securing five-star ratings from customers, realising they are worth twice as much as shoppers who give one to four-star ratings, so his job was to make sure each country had a 90% record of five-star reviews. He achieved that goal, and Majestic Wine then bought Naked Wines, installing Gormley as the chief executive of the overall group. Lincoln moved over to Majestic as customer director, then he took on the retail scheme and developed two big initiatives – its franchise-lite system and a strategy focused on meritocracy – before landing the top job this spring.
“My next job is to make sure I’m a great managing director,” he says. “It might sound a little bit cheesy, but I want Majestic to be a really happy company. There is some serious stuff that comes off that. I am really passionate about people. I want them to be developing, growing, getting opportunities, getting progression, taking on challenges and feeling successful and so on. To do that the company has to grow. Without growing, it doesn’t have the opportunity and the space to grow and take more on.”
Previously Majestic achieved strong year-on-year growth based on opening new stores, but the strategy faltered and Gormley was tasked with resurrecting the retailer’s fortunes. The key goal now is to grow customer numbers. “We have a big job to do on growing customer numbers,” says Lincoln. “We have stores out there and we want to fill them. Let’s do that first, and then absolutely, we will look at growing store numbers. But at the moment, we’re not really even talking about it, because that’s not the focus. The plan is to grow our customer base, not our stores.”
He adds: “It’s taking control of our own growth. If you believe everything you read, there’s no margin in wine any more, because Brexit has sucked it all out and retail is dying. The reality is people are still going to buy wine, and they’re still going to go to a shop and buy it. We need to make sure we are one of those businesses that wins and thrives in the current market.
“You can argue it’s an opportunity rather than a problem. Some businesses will struggle, some will really thrive and grow, and we want to make sure we’re one of the ones that does the latter.”
Scrapping the six-bottle minimum purchase rule was one of the biggest changes during Gormley’s reign, but the franchise-lite concept is also up there as an important shift in the business’ strategy.
“Our retention wasn’t where we wanted it to be, but it was average for retail,” says Lincoln. “We wanted to make it much better. That is why we brought in franchise-lite. If we are going to be successful as a business, our not-so-secret weapon is our store teams. We know that whenever a store manager leaves, customers are like, where’s him or her gone? They mourn them. It takes a little while for a manager to build that relationship when they come into a new store. It’s absolutely important, from a business point of view, that we are keeping experienced store managers, and for that to happen they need to know that they can build their careers at Majestic. That’s why we built this layer in.”
This is where the concept of meritocracy comes in – store managers are assessed on
how many five-star ratings they get, rather than just cold, hard numbers. The idea is that if shoppers are looked after, everything else will flow from there.
“If customers are happy they’ll keep coming back, you’ll have more customers, they’ll spend more money, your store will grow,” says Lincoln. “If you’re not looking after your customers, you start not hitting your sales targets any more. We put that framework in to make sure stores are focusing on the right things and pushing in the right direction.
“If you are absolutely nailing it, that’s where the sexy stuff comes for store managers, because they can become a partner in the business, where you get more autonomy, you make more decisions, you are empowered to drive your own business forward. Your bonus is based on the contribution growth of your store, and it compounds over a rolling three-year period. Instead of being measured against targets we’ve given you, you are measured against what you actually did last year. And then over two years and three years. If you grow at 10% a year, the second year you are getting benefits at 20% growth, not just the 10% growth. Store managers’ earning potential has dramatically increased, which is fantastic. On top of that, their responsibility has increased, which you want. It’s not just about money, you want to feel trusted and empowered. They also have more control over their range.
“Local store managers are encouraged to build relationships with local distilleries and breweries and work with the buying team to bring in a range that’s exclusive to them. The other day we got them all in and tasted through our WIGIG parcels. The partners could taste all of them and put in their orders for how many bottles of each one they want. They know their customer base, the price points of their customers, the tastes of their customers, and it’s great watching it, because it was like they weren’t just talking to our buyers, they were buying wine from a supplier in a way. The behaviour change we have seen in them as a result is amazing. They are taking pride in
Store managers who have been trusted to take on the franchise-lite model are called partners, and there are now around 50, representing a quarter of the estate. “Getting the whole estate there is the goal, but not so it’s a tick-box exercise to make them all partners, job done,” says Lincoln. “They need to be the right people, they need to have the right experience, and the training and development we are giving them
to get there means that, no matter where you are in the business, if you work hard and are dedicated then you’ve got the potential to become a partner.
“They get really good wine training, which they always have done, which is why we’re regarded as such a good wine specialist. The training we’ve really evolved in the past year or so is called Wine Lover to Partner. There’s now as much energy going into training you to run your store and being a leader of people and using your data to make strategic decisions as the energy that’s going into learning about wine.”
Around 9% of Majestic’s wine sales now come from retailer exclusives and the aim is to grow that figure. The chain is bidding to become more of a specialist retailer, a collection of stores that all have their own character and personality. “We are going more and more in the specialist direction,” says Lincoln. “The customer is at the heart of every decision we make. The fact we now do single-bottle purchases rather than it having to be six or more – or 12 or more back in the day – the fact we always have wines open to taste so that customers don’t have to buy wine unless they love it already, those sort of things have come from us listening to customers.
“That’s led us in a direction where we’re not just a warehouse for wine any more. We’re not just somewhere you fill up your car and off you go. If you want to evolve your knowledge of wine or your taste buds and try new things, Majestic is the place to do that.
“I’m not sure if it was part of our strategy, but having a range of individual stores is what we’ve got, and it’s part of our charm. I don’t think people look at us as a nationwide wine specialist, they look at us as their local wine specialist, and that’s because of the relationships people build, and also because each of our stores has its individuality. I’d hate to lose that.”
When asked how big the opportunity is to win new customers and drive them into Majestic stores around the country, he says: “The opportunity is huge. The early signs are very encouraging. We really can grow through customers rather than through store openings. Expect more to come. We don’t want to make any mistakes, so we are making sure the numbers are solid before we come out and do loads of stuff, but there is stuff bubbling under the surface.”
With Gormely in charge, there is little danger of the retailer becoming boring, and Lincoln is confident it will thrive in the years ahead. “We are run by an entrepreneur, which is incredibly exciting,” he says. “I’ve worked for him for about 13 years now and I don’t think there’s ever been a boring day. It’s incredibly exciting and inspiring and fun.”