Stores must deliver experiences if they are to keep their place in retail for the long-term, says Majestic Wine group chief executive Rowan Gormley.
The retailer had 211 stores at the end of a half-year in which 45% of sales were made online, and as it approaches the end of a three-year retail transformation plan focused on investment in customer relationships rather than stores. It expects store numbers to fall to 205 by year-end. Nonetheless, Gormley sees an important role for stores in the future.
“I believe that physical retail has a long-term future, but it will need to evolve into a much more experiential component of a multichannel experience,” he said. “This is what we have been doing for the last three years and is what we will continue to do.
“Therefore, our challenge is to continuously refine our proposition to benefit from these trends, rather than fall victim to them.”
First half revenue at the retailer, which owns Naked Wines and Lay & Wheeler as well as Majestic Wine, came in at £229.1m in the 26 weeks to October 1, up by 5.4% on the same time last year. At the bottom line it moved into the red, making a pre-tax loss of £0.2m, down from a pre-tax profit of £3.1m last time.
Majestic said the UK market was sluggish, but that a new website combined with a Majestic Wines retail concierge service had helped to lift its online sales by 34%, and total sales by 1.9% at the same time. Some 30,000 customers have signed up to Majestic’s wine concierge service, to receive a discounted case of wine chosen by staff four times a year. Sales generated by the service totalled £4.7m in the half-year.
Majestic Wine saved UK store costs of £1.3m and reinvested £1.1m in online operations and fulfilment. A new online fulfilment warehouse used by both Naked and Majestic Wine went into operation during the first half of the year.
The Naked Wines business saw sales grow by 14% as US sales overtook those in the UK for the first time.
Gormley said: “We were planning for tough times and we’re investing through tough times because we know that’s the route to a more profitable future. As a result, we now have a business that is almost 45% online and over 20% international with both the option, and intention, to invest further in order to drive returns.”
Majestic Wine is a Top150 retailer in IRUK Top500 research, while Naked Wines is ranked Top350.
Image courtesy of Majestic Wine