Majestic Wine toast another vintage year

Amongst the retail doom and gloom Majestic Wine are a notable success. They recently reported annual like-for-like sales up 2.6%, and pre-tax profits up 15% (Subscription needed).  And this in a sector where still wine sales fell 1.3% in Britain, and two competitors went bust (Threshers and Oddbins). So, how did they pull this off?

1. Distinctive customer experience

At the heart of Majestic Wine's success is a great customer experience, that I tried out myself last weekend. It starts with the easy and ample parking, made possible by locations away from busy high streets. The stores themselves are airy and spacious, and so easy to shop. And the staff are well trained to be real experts in wine. To top it off, the store does regular wine tastings and other wine-related events

2. Premium focus

Majestic focuses at the higher end of the market, where people are less price sensitive and where there is more interest in service and advice. This is reflected in an Majestic's average bottle price being £7.34, almost 50% higher than the market average of £4.93. And top-end wine over £20 a bottle now makes up 6.2% of sales, up from 5% two years ago.

3. Distinctive business model

The higher end, premium wine focus helps increase revenue and gross profit. And the out-of-town location keeps rent costs down. The combination of these two is a sound business model which is working well. Now the model is well tuned, Majestic plans to expand from 181 stores today to 330 over the next 10 years.

4. Driving penetration

The final part of Majestic's success has been the simple but highly effective move to reduce the minimum case size from 12 to 6 bottles. As I posted on last year, this has had the effect of boosting consumer numbers significantly. And the increase in penetration has more than off-set slightly lower value per customer.

In conclusion, Majestic shows that even in the toughest of times a distinctive business model and customer experience can help drive growth. Cheers.