It’s been a tough time recently for high street traders, with the likes of Toys-R-Us shutting up and New Look having to close 60 of its stores, it is a bleak time for the retailers. The hospitality industry isn’t immune to this either. Jamie’s Italian and Prezzo have had to close a number of their stores and now ‘Conviviality’ are (at the time of writing) about to file for administration and by the time we publish this, will more than likely have the administrators in.
For those of you who don’t know who Conviviality are, they are the parent company of Bargain Booze. They also own a distribution company called Matthew Clark and they supply companies such as Weatherspoon’s, Slug & Lettuce and Mitchells & Butlers so with the looming collapse of Conviviality this could spell hard times ahead for these big companies.
The thing is, I don’t know how much of a bad thing this is. Actually, let me rephrase that. Yes it is a bad thing. It’s a bad thing for the people who will lose their jobs and then the knock on effect that it will have but if you look at it from a different perspective then I don’t necessarily see this as such a bad thing, more of an exciting and changing time in the drinks industry.
If we look back to the ‘credit crunch’ 10 years ago, it saw Woolworths completely shut down and the knock on effect of that was ‘Zavvi’ the entertainment retailer shut down because Woolworths were their main supplier. The collapse of Woolworths hit my family as my Dad lost his job and for a long time it was in dispute whether he would receive his pension. The thing with Woolworths is that they fell victim to not adapting to market demands. Supermarkets soaked up Woolworth’s business by offering everything ‘Woolies’ did while being on your ‘Friday big shop’ and they couldn’t compete. This isn’t the only reason why Woolworths went under but it played a big factor. 10 years later and you see the same thing happening with the likes of Toys-R-Us but I find it hard to feel sorry for them as they have had the warning signs but failed to adapt to a changing market.
I know this is a wine blog and this introduction hasn’t had much to do with wine but with Bargain Booze about to suffer the same fate as Woolies and Toys-R-Us I thought it would be good to give my perspective on what this means for the drinks industry.
Bargain Booze’s selling point was the fact that they sold alcohol for rock bottom prices and made it easy for everyone to get their hands on beer, wine and spirits in a no frills, no nonsense way. Again, the only problem is that all the brands you can get in Bargain Booze, you can get in Tesco. Bargain Booze hasn’t adapted. 10 years ago, in the middle of the recession when everyone was seemingly down and out, businesses that offered extremely cheap alternatives boomed. Aldi, Lidl, Home Bargains, B&M etc. In the 2008/2009 financial year Bargain Booze recorded pre tax profits of £11.3m from £356m of sales. It was doing well. If you think that Oddbins, a more upmarket speciality wine store pretty much collapsed during this time then it’s safe to say Bargain Booze was getting it right in 2008/09.
We may be entering a high street crisis but we aren’t in 2008 and one thing that I have noticed and mentioned in this article already is that consumer approaches have changed and these companies who are struggling now haven’t adapted. This is just my opinion but I think consumers are sick of the ‘no frills’ dining experience or the basic bottom of the barrel, cheap wine. Last year I wrote an article about the rise of the craft beer industry (read here) and it highlighted the fact that people were saying “No” to big branded beer and it was challenging a market that has been long dominated by a few major companies. This trend is still going on and businesses need to adapt. I fully endorse these changes and as a consumer I am excited to see the change in these industries develop.
I am a diner. I eat out a lot, I go to the pub and I like to have a glass of wine or bottle of beer in the house. Where do I eat? I eat at gastropubs and informal bar/restaurant settings. Which pubs do I drink in? Local pubs and small bars that offer a concise drinks list. Where do I buy my wine? From small independent shops or independent wholesalers. I know I personally don’t represent everyone, but consuming styles are definitely changing. The other week I was at Magic Rock Brewery in Huddersfield and it was packed, Just like Beavertown Brewery in North London and Sentinel Brewing Company in Sheffield is every Saturday. It’s no coincidence that craft breweries are popping up everywhere, just like it’s no coincidence that Gin has boomed. People are rejecting the standard product and are seeking more quality and variety when they drink.
Going back to Bargain Booze. As mentioned, during the height of the recession they were recording a steady rise in profits but have since ran into trouble. I’ve established that I believe it is because they didn’t adapt their business model and I think something that backs up this theory is Aldi. Aldi saw many shoppers opt for them over the bigger supermarket brands because they offered similar, alternative branded products for much cheaper than their counterparts. The company grew and grew and their advertising also changed as the years went on and started targeting a more middle class demographic. When we think of Aldi now, there isn’t really a stigma surrounding it that may have existed 15-20 years ago. Their premise hasn’t really changed too much either as they still sell their products for rock bottom prices but they are championing high quality produce, for example their wine selection is of a great standard. I don’t know anywhere else that you can get a bottle of St Emilion Grand Cru for under £10. This is where I think Bargain Booze went wrong. They didn’t adapt to the changing styles and wants of custom.
This goes further to hospitality and it is evident that a growing number of people are getting tired of the same old things. Prezzo and Jamie’s Italian are both closing stores. Now there will be more mitigating circumstances as to why they are closing stores but a big part of it is lack of custom. People aren’t boycotting Italian style restaurants. I work for an Italian-style dining establishment, named Veeno. It’s a small but rapidly growing chain that has gone back basics and literally offers, wine, a couple of beers, a few cocktails and food-wise, meats and cheeses. That’s it. It’s a very informal style of dining where people can pick at little bits while sipping from a glass of good quality wine. Every item is reasonably priced and a manageable portion size so you can order as much or as little as you like and can keep adding.
I think that we live in an age where consumer preference is king and this style of dining resonates with a lot of the public because they can pick and choose as much as they want. Don’t get me wrong, I don’t think that this style of dining is going to completely replace the traditional restaurant but I think it will definitely challenge it. I will have to also admit that I am slightly biased towards this style of eating and drinking but I try not to let that influence my judgment too much.
To summarise, I think that since the recession people are still conscious about what they spend their money on and although people are willing to go out they want to ensure that they are getting value for money. I try to instill a great amount of knowledge of wine and food in my staff so they can impart it to the customers. More worth nowadays is placed on the experience of things and I think if retailers and branded restaurant chains are going to ‘weather the storm’ of the current high street crisis they need to adapt to a changing consumer style. As much as I have said people don’t necessarily want the ‘No Frills’ anymore, I think Weatherspoon’s really are tapped into consumer needs. They have a lot of the regular brands but have expanded their gin and craft beer selections while also tapping into the local community as a lot of them are named after local traditional identity like The Sheaf Island’ on Ecclesall Road, Sheffield.
I genuinely feel bad for the people who are going to lose their jobs but I feel excited about the change in the industry and as Wined Up expands, we are talking to more distributors, winemakers and retailers, and we are getting a great idea of what we want to do and the gaps in a changing market.
– J A M E S