Interview: Majestic Wine's Naked truth

A year has now passed since Majestic Wine bought online retailer Naked Wines for around £70 million in a move that also saw the acquired business's founder, Rowan Gormley, installed as CEO of the enlarged group.

Since then, other new recruits have arrived at the business, with the organisation's revamped internal structure starting to take shape and the key aim of the new senior management team being to create a customer-centric model aided by investment in new systems, refreshed stores and the development of a unique product proposition.

Naked Wines's expertise in all things technical is set to play a major part in the modernisation process, according to Majestic's managing director for retail, John Colley, who himself is only seven months into his career with the retailer.

Colley told Essential Retail there are many reasons why he thinks the Naked acquisition will prove to be positive news for Majestic, not least because of the capability of the developers and IT teams working at the digital business which are expected to be harnessed to take the larger group towards its goal of customer centricity.

A project is already under way, which will result in the re-platforming of the Majestic web and mobile offering in the months ahead, with the target to allow customers to shop and access the brand on any device “whenever and wherever they are”, noted Colley.

“We're doing a lot of IT development in house, leveraging the Naked team's knowledge and experience. Those teams are going to be heavily involved in that project of re-platforming,” he explained.

Other more systemic development will also see Majestic “very heavily” tap into the skillset of the staff recruited as part of last year's acquisition.

“They are our outsourced development team and they are building our back-end infrastructure around the CRM, and they will build some front-end applications for us as well for staff and customers,” noted Colley, who opted not to name the tech partners Majestic is working alongside as part of the equipment and software refresh.

“For some things we'll buy off the shelf and plug them into the core system – we may well buy a replenishment system. We're not going to design something where we don't have the expertise but it's fair to say that Naked has a wealth of experience in building digital back-end CRM platforms."

Staff tablets are set to feature in Majestic stores in the not-too-distant future, with the new management team acknowledging that its current systems in shops and across the business are “functional, not state of the art”. There is an appetite to empower employees to serve shoppers away from a fixed till point and ramp up customers' overall experience and engagement levels with staff when they enter a store.

Majestic clearly was not the only player in the drinks retailing sector to identify the capability of the Naked team. In the months directly following the merger, the managing director of high street rival, Oddbins, sent 'love letters' to key figures in the Naked IT team, in an attempt to attract them to his organisation.

Ayo Akintola's thinking was that he could tap into any potential insecurities surrounding the coming together of Majestic and Naked, and tempt some of the main protagonists in the Naked success story to join his company and be part of the plans he has established to create a new online social platform and a more digitally-enabled operation at Oddbins.

It does not appear to have had any major impact on the Majestic team, though, with Colley – who was not working for Majestic at the time of Oddbins' approach – saying: “It was probably more of a disruptive stunt.

“If he'd done his research he'd have probably realised that the team up there are highly engaged in the Naked journey which is continuing to grow – not just here, but in Australia and the US as well.”

With so much change in the pipeline at Majestic, as is the case for many players in the global retail space, Colley's arrival in October 2015 after spells as commercial director and then CEO of Dutch DIY retailers Maxeda and Praxis, respectively, was part of an overall revamp of the senior management structure. New regimes tend to appoint new management teams – it's a natural move for freshly appointed CEOs to recruit their own people – and Colley is one of four managing directors reporting into Gormley.

While Colley focuses on the retail operation, which is the largest part of the organisation, there are divisional heads for commercial, Naked Wines and the group's fine wine division, Lay & Wheeler. Before his start date at Majestic, Colley and Gormley had decided to bring in a customer director too, as seems to be the fashion in retail these days. They recruited Benjy Meyer from Marks & Spencer at the turn of the year to take on this new position in the business.

Colley said the move was a natural one because of the way the two separate functions of marketing and digital are now becoming so closely aligned.

“We've brought together the dotcom part of the business, the marketing function which includes direct mailing and traditional PoS, and customer communications in store.

“All three areas sit under Benjy and his role is to make sure everything we want to communicate to our customers is filtered into the organisation from a store, online and direct mail point of view – the customers are getting one view of what we're trying to sell.”

He added: “If you think about a traditionally busy time for us, such as bank holiday BBQ season, if you visited a store, went online or picked up a leaflet you'll get a consistent message. Before, we would have had two people running it, and maybe it wasn't exactly the same messaging – we now have it under one umbrella.”

The marketing team beneath Meyer is now in place and it is expected that by the end of the summer Majestic will be in a position to do “some pretty exciting things on testing different elements of our mailing plans”. The exact nature of that strategy remains unclear for now, but some of the ways the retailer has been trying to acquire new customers have revolved around its newfound partnership with Naked Wines.

“We're doing Naked Wines click & collect from Majestic stores. I'm sure the teams will want to get those customers to the tasting counter so they experience Majestic's offering, too, but fundamentally we're seeing they are quite separate customers.

“We've started to do a little testing on customers who Naked tried to acquire, but who didn't get on with the brand. We've gone to them to say 'OK, Naked wasn't for you, are you interested in the Majestic proposition?'. We've done some very early customer tests on that.”

Many of the changes at the business are being wrapped up in a four-pronged mission statement that includes improving the customer experience, making it easier for staff to do their jobs, refining the product offer and ensuring the business is progressing its multichannel development. More in-depth information on these plans are set to be detailed in late June, when the retailer announces its full-year results.

Colley and Majestic will be hoping to see a continuation of the results achieved over Christmas, when it reported 12% pro-forma sales growth and an increase in retail trading of 7.3% for the ten weeks to 4 January 2016, which compared favourably to the 1.7% decline one year before.

Typically, around 30% of the company's annual sales are conducted over this short but busy period, and it provided a real baptism of fire for Colley, whose focus during the first couple of months of his time at Majestic was to get the retailer's 214 stores and 1,000 colleagues ready and aligned to deliver a successful peak season.

Up and down sales, the growing of the store estate, a 2014 profit warning and a major battle for market share with the supermarkets could be deemed to have represented the talking points of previous CEO, Steve Lewis's, six-year tenure at Majestic Wine before he departed at the start of last year. It is clear now that the business is looking to get obsessed by its customers by placing their needs at the heart of each board decision and the overall strategy.

Colley said: "Before, it was all about stores – more and more stores, and growth through store acquisition.

“It's now a case of growth through customer acquisition, getting more customers, getting them coming back more frequently and getting them to spend more.”