Majestic hasn’t had the easiest of times in the last decade or so – why? Because the legacy business is fundamentally non-valuable in today’s world. Standalone wine stores no longer have strong USPs, especially since core grocers joined the game – particularly premium stores like Waitrose and M&S – and consumers have become super comfortable with Direct To Customer (DTC) players like Virgin Wines.
It’s why Majestic acquired Naked Wines back in 2015. And, in my opinion, it’s why Majestic is at it again, trying (desperately) to find new growth channels and seizing an opportunity to open a new avenue with an acquisition. While I believe this is a smart move by Majestic, it allows us to shine a spotlight on how businesses can grow into new channels, the “buy or build dilemma,” and what this can tell us about the Age of Experience.
The Buy or Build Dilemma
New Venturing is all about finding new avenues for growth. In this case, wine drinking is shrinking, particularly in younger demographics who are more generally switching to “no and low”.
49% of adults are now regular wine drinkers, compared to 59% 10 years ago (source). With under 34’s now coming in at 26% vs a previous 49%. If you’re Majestic and you sell wine, that’s a problem. And it’s a great example of needing a New Ventures mindset to open up growth.
Choosing to do so via Vagabond – or more specifically, cool and interesting wine bars that put trial and wine discovery at the heart of their proposition – is a great example of a New Venture by Majestic.
Through operating these bars, Majestic can hope to tap into a new demographic of wine drinkers (and I would bet they trend in that younger demographic that is so key to acquire), building affinity with the category generally and utilising wine-bar-visitor drinker’s data to hopefully onboard them to the Majestic retail ecosystem. As a New Venture, it's exciting and makes sense.
The Age of Experience
It also offers us a great example of what I call the “Age of Experience.” For the last 10 years, multiple research studies have demonstrated that consumers are increasingly adopting “post-consumerism.”
That is, “stuff” is less valuable than “experience.” It’s partly about climate-conscious choices, and fundamentally about the impact and influence of social media culture, FOMO and so forth. The current obsession with AI in retail is actually often about providing hyper-personalisation experiences to consumers.
The Majestic acquisition is this theory playing out in real life. Fundamentally, it’s a product business: the brand sells bottles of wine to people. My personal experience with Majestic is transactional.
Vagabond, and wine bars in general, are not product businesses; they’re experience businesses. Very few consumers choose a wine bar based on the wine list. They do so based on the company they’re with, the ambience, how good the snacks are, what the lighting is like, and whether you can hear yourself. It's an experience.
The Challenge
My main challenge to Majestic is the route to getting to this New Venture.
Businesses are often confronted with the “buy or build” dilemma. Having spotted a need for a New Venture activity, does the business invest in the resources required to build it from scratch, or does it seek a partner, acquisition or other relationship to allow it to “buy” the capability?
In this instance, Majestic has chosen “buy.” I almost always think that’s fraught with complexity – there is a massive overhead on day one (in this case taking on nine sites and 170+ people), lots of challenges in integrating two businesses, cultural challenges, as well as the business having to learn a new skill set.
The reason businesses choose to buy is often one of two things; panic to ‘do something’ or a fear that the capability internally does not exist to create something new.
An Agile Way
If I were working with Majestic I’d have loved to challenge the second fear. I get really excited by creating and succeeding with New Ventures, and there are methodologies and expertise out there to make that work in a lean, agile and experimental way.
If you would like to explore more about New Ventures and how we do things at Agile, why not get in touch? Or learn more about what we do here.