What happens when the UK’s biggest specialist wine chain opens one of its warehouses on your doorstep? Five independent merchants discuss how Majestic has affected their businesses. By Graham Holter
Love thy neighbour is not an easy commandment to obey if the neighbour happens to be a £280m retail giant with a razor-sharp marketing department and its sights trained on your customers. For many independents, the prospect of a Majestic opening nearby sounds an understandable note of terror.
The problem is that Majestic just keeps on growing. It now has 181 UK branches, opening a record 16 stores in its most recent financial year. Its customer base grew by 11% to 568,000 over that period. Sales to business customers increased by 7% and now account for almost a quarter of Majestic’s trade.
Majestic was once fairly picky about the locations it selected, prioritising affluent market towns and leafy city suburbs, but as its estate has expanded its tentacles are now spreading into areas it once found unappetising. It has set itself a goal of 330 stores. For those who can bear to look, a list of target locations can be found here.
Nigel Pound, owner of Totnes Wines, knows what it’s like to have Majestic as a neighbour: a store appeared in his part of Devon two years ago. “We have lost a bit of business and we’d rather they weren’t here, but that’s life,” he says. “I know for a fact that four or five customers are now using them rather than me, which is disappointing – fairly decent sized retail customers that would normally buy wine by the case.
“The problem with the UK wine buyer, the general public, is that a lot of people really don’t differentiate between the quality of wine. If they see ‘Chablis’ on the label, it’s Chablis, whether it’s £6.99 or £12.99. One particular customer buys his Prosecco from them, and used to buy it from me. If you taste the wines side by side there’s a vast difference in the quality.”
Has Patrick Rohde, owner of Aitken Wines in Dundee, noticed a downturn since Majestic appeared nearby? “Yes and no. There has been an impact: they’ve been particularly aggressive here on the wholesale side, supplying the on-trade – there’s a lot of undercutting going on and really silly prices being offered, so I’ve lost a couple of wholesale accounts.
“It’s had a slightly detrimental effect on my smaller bottle shop [in Broughty Ferry], but not massive. We’re lucky that they have picked a really terrible location locally so that’s made the impact not as severe. They’re in a spot with restricted parking and the only access is from one direction of the main raid they’re on. It’s not like them at all – I’m pleasantly surprised.
“I’m the only independent in the area and when we heard they were coming I was nervous, but my sales year on year have been on the up.”
Rohde has observed Majestic’s tactics and responded accordingly. “You can spend your life looking at what other people are doing but one thing I’m definitely acting on is tastings,” he says. “In our warehouse shop we have a purpose-built tasting area and I’m doing as much tasting as possible. Majestic do tastings, but in a less personal way.”
BOTH ROHDE AND and Pound have had issues with suppliers since Majestic arrived. “I’m giving them a hard time for not making it apparent what wines Majestic are running with,” says Rohde. “I want the option of going with those wines or not. All suppliers are doing it, there’s not one particularly bad offender, and I think they’re uncomfortable about it.”
Rohde has raised eyebrows at some of the prices Majestic is able to offer, and found suppliers defensive on the issue.
“They all try to maintain they offer a level playing field but I sometimes find that hard to believe,” he says.
Pound has had a particular grumble with Marques de Riscal. “Before Christmas Majestic were knocking it out for £4 a bottle less than me, in fact below my cost. I spoke to the Riscal people in Spain and they said it was part of a long-term agreement they had with them. So I delisted the wine.”
CHRIS BECKETT, OWNER of The Bottleneck in Broadstairs, is relatively laid back about the presence of his new neighbour. “I haven’t noticed any change, really,” he says.
“They opened in February and we had a bad April, but I think everybody did, because of the weather. I think their problem is their minimum purchase of six bottles which might put some people off. Also they’re not in the town centre but on the borders, near a Tesco Extra, Sainsbury’s and Marks & Spencer.”
But presumably news of Majestic’s arrival sent a shiver down the spine? “It did a little bit, with all their advertising. They have had their advert on TV and they did a mailshot around Broadstairs. They’ve been in the local paper advertising tastings every day of the week. But price-wise, bottle for bottle, we’re as competitive as they are. They’re only competitive when you buy two and get a discount.
“We’ve been here 24 years and we’ve got a pretty stable customer base and it’s increasing. Being a seaside town with a lot of elderly people, we do get quite a few people dying. But we also have new people moving in. The people moving out of London for a better lifestyle tend to be shopping in the town, and that definitely helps us. It’s when people go out of town with the car that they will go to Majestic.
“I’ve had two or three people saying if you go there during the week there’s nobody in there. Maybe it’s different at the weekend when people are doing their main shop, but I was losing those people anyway.”
In Clitheroe, the new Majestic competes with D Byrne as well as the more recently established Whalley Wine Shop, managed by Daniel Stevens. But Stevens shrugs off the suggestion that sales have suffered. “Although we’ve only been up and running for two years we’ve got quite a loyal following,” he says. “As far as I’m aware it hasn’t affected us in the slightest. We’re increasing sales week on week.”
It’s a similar story at the Portland Wine Company in Sale. Manager Jamie Mitchell says: “They’ve opened in the last year in Sale and also in Hale Barns. We’ve taken it in our stride, really. I live quite near to the one in Sale and it’s always empty. They go in for high prices and heavy discounts: posters everywhere for 20% or 25% off Chianti.” Portland has dabbled with similar types of promotion, but Mitchell maintains that the company already has a local reputation for keen value.
LIKE A NUMBER of independents who live in the shadow of Majestic, Portland has experienced some benefits.
“We have quite a good relationship with the one near us,” says Mitchell. “One of their staff members comes in for wines and they have sent at least three customers to us that have asked for something Majestic didn’t have.”
Pound at Totnes Wines has also picked up some unexpected business. “The slightly strange positive aspect to it is that because we didn’t have a Majestic near us before – the nearest was 30 miles away – it has brought people into Totnes who used to go to the branch in Exeter,” he says. “People walk up the street and say, ‘crikey, didn’t know you were here’. They still buy their Chablis and Prosecco from Majestic but they buy their dinner party wines from me.”
* This article appeared first in the August 2012 edition of The Wine Merchant.
Since publication we’ve heard the sad news that H Smith – a much loved wine merchant and grocer in Ashbourne, Derbyshire – has closed. The owners warned that the arrival of a Majestic in the town might be enough to tip them over the edge, and petitioned against the opening, but their prediction proved correct.