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The case of Majestic’s big small announcement

1 Sep 2009

I just heard via two sources on Twitter (isn’t it great?) that Majestic are about to radically change their business model and potentially make them an even greater player in the world of wine retailing.

Now Majestic’s minimum purchase it to be halved to only 6 bottles

Until now, Majestic required consumers to buy a minimum of 12 bottles at a time. Their “warehouse” model of large stores, plenty parking and knowledgable staff had  made them a favourite of keen wine drinkers.

However, the vast majority of UK wine drinkers do not buy 12 bottles at a time. Most buy 1 bottle for a specific evening, or maybe 2-3 if on a promotion. This made them a ’specialist’ as opposed to a regular ‘wine shop’ in the minds of most consumers.

The theory has been that by buying in larger quantities, you could take advantage of more volume deals and get a better price overall for your wine. In practice I wonder quite how much better that price was unless you were really picking the promoted lines, but …

Despite targeting a relatively small number of wine drinkers, Majestic has been enormously successful in the last few years, especially if you compare them to their peers; Oddbins, Wine Rack/Threshers and pretty much any other high street wine retail name. It makes a BIG difference to have 1 customer walk into your shop and buy 12 bottles with an average price around £6-£8 and therefore spending £70-£100 instead of them walking out with a single bottle, no matter how expensive.

… spare a thought for the independent wine merchant struggling to survive

Now Majestic’s minimum purchase it to be halved to only 6 bottles. Clever, or crazy?

  • On one side, getting consumers to move up to buying 6 bottles is easier than jumping from 3 to 12.
  • It means that the wine consumer on a budget who already buys at Majestic might feel less guilty about going back to the store to “only” buy 6
  • Many modern flats do not have space for storing 12 bottles at a time (sad to say)
  • Majestic is obviously hoping that their “£2 off per bottle if you buy 2 or more” type discounts will encourage shoppers to buy more than 6 anyway (I always seemed to buy more than 12 I admit)

However, it risks upsetting the delicate balance they have achieved that has made them successful.

12 bottles was not a ‘legal’ requirement, at least not once you could mix & match your own. It was simply the business saying “you will buy 12 bottles or we won’t sell to you”.

People accepted that, in part because 12 bottles was a psychologically significant number (as the number of bottles in a standard case measure). How will consumers react to this being changed? Happy that it is now “only” 6? Or will they wonder why they have to buy 6 at all, and why they can’t just buy 3, or 1?

Also, I’m certain there were those who bought extra bottles to fill their 12 bottle quota. What happens to those purchases?

It is a bold move that will hopefully attract some of those customers who like wine and knew of Majestic but for whom 12 bottles and the thought of £75-a-visit were a substantial barrier.

Let’s also hope it encourages more consumers to make wine drinking a more planned activity.  A little research can make the appreciation of the wine so much greater.

Finally, spare a thought for the independent wine merchant struggling to survive in your town, village or high street. This potentially makes their life even harder, but maybe you could learn about new wines with Majestic’s offers and education, then go exploring the wines of smaller wineries and regions with the help of your local merchant?

Good luck in your wine adventures!

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This entry was posted on Tuesday, September 1st, 2009 at 9:23 am and is filed under Consumer marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

  • I see it more as a revealing move. Majestic is changing the very foundation of its original business plan to stay on top of today’s game. In fact, it is somewhat respectable - what other wine retailers are attempting these sorts of changes? I guess M&S with their £10 meal (or was it Waitrose that started that?) Saying that however (and as you say at the end) it is really about the independents…let’s not forget them!
  • For anyone running wine tastings for wine clubs, courses or even corporate events this change is indeed of interest.

    Certainly when I've selected wines for these types of events, I've usually sourced them from several retailers - usually ones I can get to easily and not mail-order where I need to wait in for a delivery. Often I've only needed one or two bottles of 2 or 3 particular wines from Majestic, then have been 'forced' to make up to the dozen with wines for my own use!

    It's a brave move and I hope that it works for Majestic and doesn't diminish their image in any way.
  • then it is working, at least for you

    look forward to hearing more of your thoughts on wine, I did enjoy your previous posts
  • That's welcome news to me. I find Majestic a stimulating place to shop and managed to work up sets of 12 bottles when I was doing my tasting explorations last year. However, while I've been in the process of moving up to Oxford, 12 bottles is too much to find a space for and I'm not enough of a drinker to get through a dozen that quickly.

    Dropping the limit to 6 bottles is just the kind of thing that will make it easier for me to head back there and be more purposeful about my vinology than just picking up a bottle or two when I visit the supermarket.
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