Majestic Wine chief executive Tim How tells Claire Hu why his chain is thriving while off-licences are having a hard time
Majestic Wine chief executive Tim How likes to spend his lunchtimes prowling round a local supermarket, scrawling down prices from the booze aisles into a notebook. He then hotfoots it back to the office and, by all accounts, gives his buyers and suppliers a hard time about where he thinks they could be giving customers a better deal. It’s a typical example of the obsessional approach of the man who has transformed Majestic into one of the fastest-growing and most profitable wine retailers during his 15 years with the business.
While other specialist off-licence chains buckle under the pressure of competition from supermarkets and a highly competitive trading arena, Majestic is thriving.
The business bucked a gloomy Christmas with a 10.4% increase in like-for-like sales and its profits are up a healthy 27% to £5m [six months to Sept 27, 2004]. Majestic’s policy of asking customers to buy wine by the case has paid dividends, with average spend now at £112. The policy has allowed the business to be keenly competitive on pricing and sourcing of quality wine. Recent increases in customer numbers at the 120 stores show the public is catching on to the Majestic ethos.
“My attitude to business is very similar to sailing,” reflects How, 54, a keen dinghy racer, who owns homes in Norfolk and Hertfordshire, and is married with two daughters. “I’m really into winning and in business that means gaining share and growing like-for-like sales. If you can get those two right you will achieve increasing profitability, which gives you the ability to invest.”
This down-to-earth approach is evident at the no-frills HQ of Majestic on a trading estate in Watford, where cardboard boxes crowd the reception area and casually dressed employees chat about the latest delivery of wine. But there is method in the madness, How is keen to point out, as a large part of Majestic’s success is due to its low cost base. The building acts as both HQ and single national distribution centre, compared to traditional high-street off-licences which use expensive regional stockholding and distribution depots.
“We have a very aggressive attitude to cost control,” explains How. “We only hold stock 12 weeks and the types of stores we operate, on main roads into town centres, are inexpensive. We only spend about £150,000 fitting out sites, and it was only recently that we put in heating!” Majestic instead concentrates on rewarding its staff, offering them share options after three years and the chance to take part in wine education courses. This has paid off, with a relatively low staff turnover.
While acknowledging the might of the supermarkets, How is convinced Majestic can remain a serious challenger. “We operate in a growing market, and our strongly held view is that our differentiated stance means we can grow faster than the market. Looking forward, we are likely to see an increased share of sales going through supermarkets but an increased share also going through Majestic. We really need to focus on interesting wines and continue to encourage our staff to become ever better in enthusiasm and knowledge.”
How takes a hands-on approach, visiting stores every week and helping sniff out bargain parcels of wine from around the world, which included a £1.5m lot of claret from a Swiss wholesaler over Christmas. Majestic takes a rigorous and detailed approach to sourcing and marketing its wines. Flexible space in stores and a good level of staff education - employees sit the Wine and Spirit Education Trust Advanced Certificate and many also the Diploma - mean the business can respond quickly to good deals and sell those wines on to the customer. There are 800 lines in a typical store, of which a third are one-off purchases. “We make sure everyone is continuing to taste the existing range as well as well as the new wines,” says How. “We are able to purchase a lot of small parcels because we have the staff to explain those wines to the customer. It means we can give our customers interesting new wines and great value.”
How has big ambitions. He aims to open eight more stores this year, starting with the next new site in Horsham in March, and has visions of 200 stores within the next decade. The only limit will be finding suitable sites, which must have at least 3,000 sq ft floorspace and customer parking, but the business is becoming more inventive and has opened new stores in former pubs and even churches. “We’re looking in the north west around Manchester, but also around the M25,” reveals How. “It is a challenge, but the most important driver to the business is going to be the acquisition of new sites.”
Growing internet and corporate sales, and more importantly fine wine sales at £20-plus a bottle, are other priorities. Majestic may look into setting up another fine wines store similar to the one in operation in St John’s Wood, London, but more important will be increasing availability of more expensive wines in existing stores. How recently appointed a fine wines buyer to handle this growing side of the business.
Three months ago, How sold almost half his stake in Majestic, raising more than £800,000. The company chairman, John Apthorp, who bought Majestic and with whom How has worked for 21 years, has announced his retirement later this year. As for How, he insists:“I’m not going anywhere - I’m not quite ready to go sailing round the world yet.”
Majestic Wine chief executive Tim How likes to spend his lunchtimes prowling round a local supermarket, scrawling down prices from the booze aisles into a notebook. He then hotfoots it back to the office and, by all accounts, gives his buyers and suppliers a hard time about where he thinks they could be giving customers a better deal. It’s a typical example of the obsessional approach of the man who has transformed Majestic into one of the fastest-growing and most profitable wine retailers during his 15 years with the business.
While other specialist off-licence chains buckle under the pressure of competition from supermarkets and a highly competitive trading arena, Majestic is thriving.
The business bucked a gloomy Christmas with a 10.4% increase in like-for-like sales and its profits are up a healthy 27% to £5m [six months to Sept 27, 2004]. Majestic’s policy of asking customers to buy wine by the case has paid dividends, with average spend now at £112. The policy has allowed the business to be keenly competitive on pricing and sourcing of quality wine. Recent increases in customer numbers at the 120 stores show the public is catching on to the Majestic ethos.
“My attitude to business is very similar to sailing,” reflects How, 54, a keen dinghy racer, who owns homes in Norfolk and Hertfordshire, and is married with two daughters. “I’m really into winning and in business that means gaining share and growing like-for-like sales. If you can get those two right you will achieve increasing profitability, which gives you the ability to invest.”
This down-to-earth approach is evident at the no-frills HQ of Majestic on a trading estate in Watford, where cardboard boxes crowd the reception area and casually dressed employees chat about the latest delivery of wine. But there is method in the madness, How is keen to point out, as a large part of Majestic’s success is due to its low cost base. The building acts as both HQ and single national distribution centre, compared to traditional high-street off-licences which use expensive regional stockholding and distribution depots.
“We have a very aggressive attitude to cost control,” explains How. “We only hold stock 12 weeks and the types of stores we operate, on main roads into town centres, are inexpensive. We only spend about £150,000 fitting out sites, and it was only recently that we put in heating!” Majestic instead concentrates on rewarding its staff, offering them share options after three years and the chance to take part in wine education courses. This has paid off, with a relatively low staff turnover.
While acknowledging the might of the supermarkets, How is convinced Majestic can remain a serious challenger. “We operate in a growing market, and our strongly held view is that our differentiated stance means we can grow faster than the market. Looking forward, we are likely to see an increased share of sales going through supermarkets but an increased share also going through Majestic. We really need to focus on interesting wines and continue to encourage our staff to become ever better in enthusiasm and knowledge.”
How takes a hands-on approach, visiting stores every week and helping sniff out bargain parcels of wine from around the world, which included a £1.5m lot of claret from a Swiss wholesaler over Christmas. Majestic takes a rigorous and detailed approach to sourcing and marketing its wines. Flexible space in stores and a good level of staff education - employees sit the Wine and Spirit Education Trust Advanced Certificate and many also the Diploma - mean the business can respond quickly to good deals and sell those wines on to the customer. There are 800 lines in a typical store, of which a third are one-off purchases. “We make sure everyone is continuing to taste the existing range as well as well as the new wines,” says How. “We are able to purchase a lot of small parcels because we have the staff to explain those wines to the customer. It means we can give our customers interesting new wines and great value.”
How has big ambitions. He aims to open eight more stores this year, starting with the next new site in Horsham in March, and has visions of 200 stores within the next decade. The only limit will be finding suitable sites, which must have at least 3,000 sq ft floorspace and customer parking, but the business is becoming more inventive and has opened new stores in former pubs and even churches. “We’re looking in the north west around Manchester, but also around the M25,” reveals How. “It is a challenge, but the most important driver to the business is going to be the acquisition of new sites.”
Growing internet and corporate sales, and more importantly fine wine sales at £20-plus a bottle, are other priorities. Majestic may look into setting up another fine wines store similar to the one in operation in St John’s Wood, London, but more important will be increasing availability of more expensive wines in existing stores. How recently appointed a fine wines buyer to handle this growing side of the business.
Three months ago, How sold almost half his stake in Majestic, raising more than £800,000. The company chairman, John Apthorp, who bought Majestic and with whom How has worked for 21 years, has announced his retirement later this year. As for How, he insists:“I’m not going anywhere - I’m not quite ready to go sailing round the world yet.”
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