Our CEO, Rowan Gormley regularly gets asked for his views on the Group and why he took the job as CEO, here he answers some of those frequently asked questions:
What’s your background and why did you choose to do the Majestic deal?
My first job was training as an accountant in South Africa. I then moved to the UK and worked in Private Equity before starting at Virgin where I set up Virgin Money and then Virgin Wines. After Virgin Wines was sold to Laithwaites we parted ways and I decided to set up my own wine company.
Setting up a company in 2008 forced us to be radical and come up with a proposition that was overwhelmingly better. To do that we had to help the wine makers and what they needed the most in 2008 was money, this is how we came up with the crowd-funding model years before it was made popular.
In 2015 Majestic Wine approached Naked about doing a deal. We needed funding and Majestic needed a fresh approach. A lot of the things Naked do really well, like building IT systems and focusing on customer loyalty Majestic could learn from and a lot of the things Majestic did well like product knowledge and training Naked could also use. The acquisition seemed a brilliant transfer of knowledge.
Before accepting the acquisition and role as Group CEO I spent the weekend travelling around Majestic stores. It was clear Majestic had done all the hard stuff really well, like training and hiring such fantastic staff but had forgotten how to do the simple stuff. This is where our “back to Retail Basics” plan came from and why I thought we could make a real impact on this business.
What have been your main achievements in your first year as CEO?
All four of our businesses have had a huge year in 2016 and the team has made some brilliant initial progress with our transformation plan.
In my first week at Majestic I got an email from a member of staff saying that they are “underpaid, over worked and treated like monkeys” – it was a fair point and that’s why we’ve focused on the simple things that make a big difference; Old stock was cleared out and stores were refurbished. We’ve made the stores easier to shop in by doing things like changing the signs to help customers find what they want. Signs used to say ‘Spain’ or ‘Italy’ have been changed to ‘Rioja’ or a ‘Prosecco.’ We removed the caps on managers bonuses and launched new share schemes for everyone in the Company. The main thing I’m proud of is just how much has been done in such a short amount of time and the people around me who have made it happen.
In Naked we’ve been able to re-focus our business and prepare for the future now we have the funding. We’ve made great steps in improving wine quality and customer service and already we can see the positive effects of this investment.
What makes the Group different?
At Naked our job is to hunt out the unsung heroes, the real people behind great wines. All our wine makers need to do is make great wine, they don’t need to be great sales men, worry about regulation or cash, we do all of that. A lot of the best wine makers aren’t the most famous or well-known because they tend to be people that spend time in the cellar rather than on television.
We use this principle combined with our belief that by doing the “right thing” for our people, customers and suppliers will lead to a more sustainable growth business. People have lost faith in the church, government and the banks. We are out to offer a business model that is different, we believe that we will deliver a better business in the long term. We look for ways to make sure our businesses do this, for example, the six million customer reviews that we are able to collate on the Naked Wines platform are a better indicator of whether the wine really is good, and is much more honest than what you could get out of marketing or shop assistants on commission.
What do I need to know about the transformation plan?
- It’s a three year plan – we have made great initial progress this year but we need to make sure the positive impact the changes we’ve made are a real trend before we get too excited4
- The Majestic Retail plan is to “get back to basics” first, then rebuild the supply chain to make sure we can deliver the right product at the right time, and lastly delivering a joined up IT and multi-channel system. A lot of these projects won’t be externally visible for a while yet.
- Our ambition is to reach £500m of sales by 2019 with growth from all four of our businesses
Tell us about the team you’ve hired to deliver your strategy?
I believe my role is to find the right people, make sure they are pointed in the right direction with the right resources — then get out of the way. I am very proud we’ve been able to attract such talented people to implement our plans:
John Colley has over 20 years of senior retail experience. Prior to joining Majestic he was Chief Executive of Praxis Netherlands, a Dutch based DIY chain. He also held senior positions at Kingfisher plc. He brings fantastic levels of energy and people leadership – two qualities we sorely needed. John has had a huge impact in his first six months, and in his words “I haven’t even started yet!”
Luke Jecks launched Naked Australia in 2012 and was promoted to MD of Naked Wines International in April 2015. He has over 19 years’ experience within the industry across five different countries. Prior to Naked Wines he was the Sales and Marketing Director at Cellarmaster Wines (Australia’s largest Direct Wine company). Luke has done a brilliant job at Naked Wines, over-delivering against the investment case at the time of acquisition, but more importantly, positioning Naked Wines for future growth by developing the team and building the business in some challenging and competitive markets.
Ben Nichol has over 20 years of experience at Majestic Wine. After heading up the London sales team for 10 years Ben became Commercial Director in 2012 and was appointed Managing Director of Majestic Commercial in July 2015.Ben Nicholl knows his business back to front, has done a fantastic job of establishing the Commercial division as a separate business and I believe he will take this division from strength to strength.
James became CFO of Majestic Wine PLC in August 2015. Previously he was Finance Director of Naked Wines which he joined following a 13 year career with Diageo PLC. He combines a firm grasp of the financial detail with the ability to apply that strategically. His 13 years at Diageo give him a truly fresh perspective on the business, making him a huge asset to the team.
What are you most worried about?
Competition – The wine market is hugely competitive, and we expect it to become more so as the industry consolidates. Our strategy is to focus on doing what we do, and to do it better than anyone else. In the case of Naked Wines, it is inevitable that the Naked Wines model will attract attention and competitors, who will be looking to innovate to erode our competitive advantage. So what do we do about it? Our plan is to continue to innovate, and execute brilliantly by: a) Improving value for money – improve our quality of wines by putting more wine in the bottle b) Improve service levels c) Attract and retain the best winemakers on the planet. If we can make our business so good that the best winemakers in the world want to get Naked, we will be in a strong position to deal with the competitive pressures.
Regulation – We are confident that our regulatory position is robust. However, competitors who fail to beat us in the market, may well resort to trying to use US regulation to limit our growth. Our approach to this is: a) Accept that it is inevitable, b) Ensure we pay all taxes on time and in full, c) Ensure that all our paperwork is squeaky clean
Ultimately the wine market will do whatever the wine market is going to do; I just can’t worry about that too much. My focus is on building the customer service, make sure people never want to shop anywhere else and the sales will look after themselves. After all: “It’s too important to mess around with bad wine.”
What are you most excited about?
Naked USA – We’ve now got the people, model and cash to turn Naked USA into something very special, we saw growth rates of 49% last year and we’ve spent a lot of time working on our customer acquisition and improving our service to support this.