Majestic launches ‘Franchise-lite’ model for store partners

 Rowan Gormley, CEO Majestic Wine PLC 

Tough times are ahead.  Politically, sociologically, economically. That toughness maps directly onto customers and their buying behaviour. So do we invest or cut back to drive returns? We’ve decided to invest using a ‘franchise-lite’ model, we are going to trust our store managers and turn them into partners.

This is our logic. There are always winners and losers in retail and we aim to win via a long term growth strategy to drive customer loyalty and retention. As a wine business, we grow by helping our customers discover new wines and we can only achieve this by having experienced, engaged staff.

For Majestic there is a store manager gestation period:  it takes around two years for them to get to know their local customers, understand our product range and develop the confidence to make horizon-broadening wine recommendations to our customers. And this is based on the principle of ‘I see you like that, we think you might like this…’, not bike saddles at the nose.

Our staff learn how to make our customers feel good when it comes to wine choices. Think of the embarrassment and humiliation meted out by sommeliers, now reverse it.

At Majestic, we have invested £8m during our transformation plan. As a result, product availability, wine quality and customer service are all orders of magnitude better than when we started – but our biggest challenge was a human challenge. Some of our best in-store retailers saw their futures out of our stores and inside offices. Why? Simple, they wanted more influence and more money.

This goes to the heart of the problem that all retailers who invest in their people face and our solution is one that would spark fear and loathing in the boardrooms of most PLCs. We are going to hand over store control to our people and give them the chance to -quite literally – run their own shop, just as they would in a franchise but without the up-front payment and with them sitting at the centre of our business instead of in satellites.

These ‘franchise-lite’ partners will move from the traditional ‘earn a percentage of sales’ model to earning significantly larger proportions of their store’s contribution.  This gives them the chance to grow their income materially in comparison to a store manager – in fact, up to £50,000 per year, compared to the average store manager salary of £30,000.

Second, we’re turning the traditional retail ‘command and control’ style of management on its head, giving them more control over their stores. This will extend from selecting their own staff and products to choosing opening times and discount levels. This means staff can be rewarded for their customer service levels and profit contribution, which we believe will deliver more sustainable growth in our business.

During, the past few months we have been testing this model with 21 pioneers. We’re now rolling out the whole programme and expect to move at least 50% – 60% of our branches over the next year, leaving only new managers with the career trajectory of a traditional store manager.

Majestic was falling into a familiar trap where we were asking our people to do one thing (great service) and rewarding them for doing something else (sales). This move re-aligns us. It also has the potential to pay for itself multiple times over.

So, going back to the point I made at the beginning: if you want to be a winner, then your employees need to be the ones that are dragging you to the finishing line, not the other way round.