Majestic move to the top
Steve Lewis has taken charge of the retailer which has been in the safe hands of Tim How. So how will he fare in these tough times? Rosie Davenport reports
Tim How remembers to the precise hour when the keys to the Majestic chain officially passed into his hands - a moment that would define his future in a way he never expected. It was late evening on Friday September 13, 1991 - a date that also made a lasting impression on Steve Lewis as it was the first time he met the man he would eventually succeed. Neither could have predicted what a retailing roller coaster
the next 17 years would take them on - nor the level of success the company would achieve.
Lewis was one of the Majestic originals, joining straight from university in 1985, just four years after it opened its doors. Fuelled by his passion for wine, he quickly rose up the ranks from store manager to regional manager and, finally, retail director. Meanwhile, How was managing director of Bejam, a frozen food group, which also owned Wizard Wine Warehouses. In 1991 How and his backers seized the chance to merge the wine division with Majestic, taking it over when it hit financial problems.
The deal not only breathed new life into Majestic,
it also marked the beginning of a long working relationship - one
How would find
Lewis increasingly indispensable.
"I could never have done the job of chief exec if Steve hadn't been retail director," he says with genuine admiration for Lewis's talent, which marked him out as a suitable candidate for the top job as early as 2001, and
in 2006 saw him promoted to chief operating officer in readiness for that final step up the ladder.
adds: "First and foremost Steve is a fantastic retailer . He starts with a fantastic knowledge of the business. One of the truisms of retail, and one of the pitfalls of inadequate retailers, is that they never grapple with the real detail. The good ones do and the bad ones don't. Steve clearly comes right at the top of the ranking of the ones that do.
"He also has a much better product knowledge than I do. Steve joined the business because of his interest in wine. I joined because I thought it would be an interesting business to grow. That stands the business in
How is the first to admit that his skills lie in retailing rather than wine - yet he has made a remarkable success at combining both, and Lewis certainly inherits the business in great shape. Under his leadership, How has steered Majestic into its
15th consecutive year of profit, to the tune of £16.7 million pre-tax this March - up 3.4% on 2007.
But it has not always been plain sailing. How recalls the
economic crisis of the 1990s when
his aspirations for the chain were nearly destroyed
- not dissimilar to
the current downturn which
Lewis in the hot seat.
"When I started in 1989 with Wizard Wine it was pretty tough. We're heading into a recession of similar depth now. As Steve will also remember, the first 18 months weren't very easy. I think if we could have had a wax model of Norman Lamont and stick pins in it we would. Our view was that we could put the two businesses together and break even in our first year, then along came Black Wednesday and it all changed."
But How argues that
initial tough times can set
a true course
for a business . "There is a sense in which it never does a business any harm to go through adversity," he reflects. "Our business is stronger because I think some of the disciplines of cost control we have never lost. It is built on great customer service and fabulous staff. "
Given that Lewis was instrumental in implementing some of the retail disciplines which helped Majestic become as strong as it is today, he is understandably circumspect about suggestions that his appointment should signal a shake-up to the status quo. "As I've been at the heart of the business for such a long time, it would be unusual if I thought there needed to be radical change," he says . "I just want to keep a real focus on the things that we do well ."
How nods in agreement: "I think if you have a really successful business, the last thing you do is change the formula."
There are areas of development over the next 18 months, such as extending fine wine into more stores. We have the buyers who can buy these wines effectively and we've got the staff who can sell them as well."
Lewis's vision is also to ramp up Majestic's online presence. "We need to use our database of active customers more effectively
While How can clearly appreciate the web's commercial benefits, his enthusiasm seems somewhat overshadowed by
a clear passion for the retail model he has spent so much of his working life building. "Our web sales are just under 8% at the moment and the web is just under a per cent more important to our sales now than it was a year ago, so if you carry that trend forward it will be 9% in a year and 10% in two. I'm actually quite torn because I think you get the best out of Majestic by talking to our fantastic staff, but on the other hand, the web is incredible convenient ."
they are unanimous in their view of Majestic's challenge ahead as it attempts to
build on its 3% market share amid
competition from the multiples.
Lewis says: "There is an obvious trend for customers to trade up . But I don't think we as a business
should put all our emphasis on trying to increase bottle price, the key thing is to grow our customer numbers
and increase loyalty."
How agrees: "We are still
in comparison to the big supermarkets. We continue to see a growing wine market, but building share is a challenge. Four to 4.5% would be a significant move forward. If I could look back and Steve had taken the share to 4.5% then I would take my hat off to him."
Lewis smiles: " Looks like he's still setting me targets."
Majestic in figures
£16.7 million pre-tax profits in the year to March - up 3.4% on 2007
£197 million sales - up 3.1%
£5.98 average bottle price - up from £5.75 in 2007
£133 average transaction spend - up from £123 in 2007
145 UK stores