Majestic digital transformation “on track”

Majestic Wine bought the e-tailer, Naked Wines, two years ago which kick-started its digital transformation project. Now at the half-way point with 56% of orders already coming from multichannel, the plan is to move Majestic’s outsourced eCommerce infrastructure onto the Naked Wines platform, with plans for this to happen sometime in the current financial year.

Speaking to Essential Retail, the retailer’s buying and merchandising director, Richard Weaver, couldn’t confirm when Majestic’s replatform would happen, but he said the last year has been spent working with Naked Wines, preparing to relaunch the consumer website and app.

“We’ve put a lot of work into taking the platform, which runs the Naked Wines business and website, and making it capable of being multi-tenant,” he said, describing how the retailer has been improving back-end capabilities and online fulfilment, while next year will be spent working on customer-facing digital initiatives.

“We’re using third-party software [for Majestic] at the moment and there are a whole load of other third parties plugged into it,” he added, saying the retailer is reducing its suppliers from 23 down to three. “This will result in cost savings and we will be able to become the master of our own destiny.”

IT processes are not just helping the retailer to eventually improve its website. Bringing IT systems in house and replacing out-dated, outsourced systems has had a “huge impact on store labour”, eliminating 76,000 hours, by improving manual tasks so store assistants don’t have to double type online orders and inter-brand transfers. Meanwhile bringing analytics and eCommerce management in-house has also helped to improve active Majestic customer numbers by 7%.

Transformation impacts bottom line

Today, the retailer reported its financial results for the year ending April 3 2017. Profits overall took a hit, with a pre-tax loss of £1.5 million, compared to a profit of £4.7 million last year, which the business puts down to transformation costs. But the second half of the year was brighter, with adjusted EBIT up 51% year-on-year, as the technology investment begins to pay off.

Weaver said the company is pleased with the results and looks at them as a “tale of two halves”, pointing to the positive figures from the second half of the year.

He also said the company was “past the tipping point” of the transformational programme.

Majestic’s CEO, Rowan Gormley, described in the financial statement how the business is “moving out of the ‘test and learn phase’ of the plan and into the ‘roll out’ phase – which comes with less risk and lower investment.”

Sales, on the other hand, are bubbling along nicely with revenue increasing 11.4% on an underlying basis to £465.4 million. And in what Weaver called a flat market, Majestic managed to increase market share by upping its customer numbers by 12% overall (7% growth from Majestic and 21% growth from Naked Wines).

Gormley added: “Operationally, we are through the most risky and cost intensive phase of our transformation plan. Together these mean we have a business that is better able to weather the uncertain trading environment, with a sustainable growth model, the big strategic questions answered, a better paid and rewarded workforce and more effective systems and processes.

“We remain confident about the medium term outlook, despite tough economic conditions, as transformation benefits are coming through and our costs are naturally coming down as a result of us reaching the next stage of the transformation plan. We are therefore reiterating our £500 million sales goal by 2019 and affirming current analyst profit expectations.”