• Mike Turner: think of Majestic staff in time of uncertainty

    The Majestic Wine saga continues to throw up twists and turns as chief executive, Rowan Gormley, looks to reshape and rebrand as a strong and sustainable Naked Wines business into the new financial year. Discussions will be ongoing and the future will likely be uncertain for employees up until, and even potentially after, the investor presentation on June 13. Mike Turner experienced first hand during his days in the City the plight as an employee seeing his livelihood discussed and deliberated in the press, and offers some well meant advice to Gormley and Naked Wines about how it handles its communications and support to its staff during this time of uncertainty.

    The Majestic Wine saga continues to throw up twists and turns as chief executive, Rowan Gormley, looks to reshape and rebrand as a strong and sustainable Naked Wines business into the new financial year. Discussions will be ongoing and the future will likely be uncertain for employees up until, and even potentially after, the investor presentation on June 13. Mike Turner experienced first hand during his days in the City the plight as an employee seeing his livelihood discussed and deliberated in the press, and offers some well meant advice to Gormley and Naked Wines about how it handles its communications and support to its staff during this time of uncertainty.

    mm By April 30, 2019

    Staff are the number one asset that any firm can have, argues Turner, which makes it doubly important to consider for businesses when going through periods of change, upheaval and uncertainty.

     

    Majestic
    The Railway Tavern… do not go there on a Thursday night!! © Pub History

    I can remember it like it was yesterday. I was rocking up to work at 6.20am to the office near Liverpool Street Station, as I’d done most days for the last few years, but this particular morning something seemed off.

    Randomly I met two guys on the way in who were there the day I started in 2005 which, given the post-2007-whoops-what’s-subprime climate, was extremely rare. In my team of 25, I’d worked with 147 different people in those seven years.

    The three of us approached the security gates, we all tapped our passes as usual, I went through, as did one of the other two, but the third fella was struggling to make it work.  After the third or fourth time of swiping, a security guard wandered over, asked if he could step this way, and he was ushered over to a sectioned off area of the corridor and that was that.

    I later found out he was led to a lift, taken down to the parking lot under the bank and shown out the fire escape with a letter entitled “Dear Employee, you are no longer required to come to work.” He’d worked there for over 20 years.  “Dear Employee…” It still makes me angry even now.

    The man who did particularly well that morning was the owner of the Railway Tavern on the corner by Liverpool Street Station. Noticing something funny was going on at the bank across the road, he popped out of bed and opened the doors, to be greeted by a throng of bewildered and unemployed boys and girls rather desperate for a drink at 6.30am. We found all this out because reporters from the financial papers joined our ex-colleagues for a few swifties with the bacon and eggs and reported it all in the press before we, in the office across the road, knew what was happening.

    The bank made thousands of people redundant that morning in exactly the same way. They showed up to work, their passes didn’t work, here’s your letter, out you go. The date was 31stOctober 2012. Halloween, would you believe?

    This was definitely the most unfeeling and cruel thing that my ex-employer did to its staff in my time there. But it wasn’t without warning. For the previous five years our jobs were played out in the press and in boardrooms, and every day you were fully aware could be the day you get THAT letter. Every day. For five years. Most of the staff were in absolute bits, but the company couldn’t have given less of a collective fuck.

    Now that might seem a funny way to open up a piece about what’s going on with Majestic or Naked or whichever we need to use, but wander into any Majestic store and ask the staff on the ground how they’re feeling about it all right now. I’m sure there are a few of you that are “yeah, great, the future, let’s bring it on”, but not the ones I’ve spoken to in the last two weeks. The ones who are desperately uncertain about their jobs and what this will mean for their futures.

    The ones who are feeling like they are the last to know what’s happening with their own livelihoods.

    The current situation

    The first new look re-branded Majestic Wine shop as Naked Wines in Wakefield. Picture David Cartwright.

    Rowan Gormley, chief executive of Majestic Wine, started with last month’s announcement that some Majestic stores will close and the overall operations will be rebranded as Naked Wines throwing a big question mark over the future of Majestic Wine in its current guise.

    Majestic means a lot to the wine trade. Chances are either you or the person you’re sitting next to worked for them at some point. There’s a lot of affection there, lots of good memories, and I’d concur as someone who used to shop at the already closed Chalk Farm site, it is or was a great place to buy wines.

    The future strategy though was one I also agreed with. Times move on. The large overheads of bricks and mortar retailing versus the higher margin internet world can’t be ignored. The government is burying its heads in the sand over rates. Landlords are treating rents like it’s still 2005. The staff costs of controlling 200+ stores countrywide versus a smaller centralised team to run the sales and logistics online. It all points to the initial strategy being a sensible one.

    Weirdly it made me think of Screwfix. You know the DIY/Trade chain? They’ve successfully moved their business to an online platform, with click-and-collect facilities across the country, whilst maintaining the specialised knowledge of staff and the loyalty of their customers. I think that sounds the dream for Mr Gormley about now.

    Last week, however, it was announced that they’ve employed the services of Rothschild & Co. Investment Bank, to look at the option of selling all the 200+ stores and moving to a purely online business.

    Again, it would make sense for shareholders. Majestic Wines hit £263m in revenue in H1 and expected to coast to its full year revenue target of £500m. But it still lacks the growth seen by Naked Wines in the UK, Australia, and the US.

    It’s rumoured that private equity firms are looking into it, but a Drinks Business interview with Jonathan Pritchard of Peel Hunt Consulting revealed that “everyone wants the same 20 stores, less keen on the other 180″.

    Full year results will be announced on June 13, which is also the day that Mr Gormley will announce the business strategy going forward.

    In the meantime, the future of Majestic Wine will be picked at by both the financial and the drinks press. The staff on the ground can only sit and wait, and read the ifs and buts like the rest of us.

    Business motives expected to play out

    Majestic
    Majestic share price has been a concern, but this move could turn the corner. © BT

    It’s important that we state that the chances of all the Majestic stores being sold off with the loss of every job in the company is zero. It will not happen.

    Rowan Gormley has already stated that job losses would be minimised by transferring what staff they possibly can to the new Naked Wines operation. He’s also stated that regardless of how the sale goes ahead, Naked want to keep some form of store presence.

    Andrij Jurkiw, a name common to all those in the twitteratti of the UK wine world, has been proudly showing off the new look of the Naked Wines store in Wakefield.

    Investors don’t like uncertainty. A swift glance at the UK economy will tell you that. But given Majestic’s share price has dropped nearly 50% in 12 months, and that the costs involved in exiting retail sites “can be largely recouped by the disposal of assets”, I’d fully expect to see Mr Gormley’s affirmative action in the coming weeks to be taken positively by the market and expect plenty of “buy” recommendations to follow.

    Staff and reputation

    Majestic
    Your number one asset in any firm. ©Mind Moose

    My ongoing concern is for the staff.  OK, it’s for three months, not five years, but the anxiety created for people having to pay rents and provide for their families is hugely regrettable.

    I’ve already had four people from Majestic in the last 10 days, two of whom I’ve never spoken to before, reaching out asking me for advice. I don’t know what they think I can tell them. I used to say to myself that no matter what, I was going to go in, do my job, be as professional as possible, and keep dancing until someone turned the music off. What I actually did was turn up, be a grumpy sod all day, come home, and cry into my penne ragú. Maybe do as I say, not as I do.

    The future Naked Wines also needs to think about how it plays on their reputation. The good feeling enjoyed by Majestic due to positive memories from a large section of the wine trade is likely to erode pretty quickly if they keep their staff in the dark.

    The demise of Conviviality and all it stood for was greeted by warm applause in some corners due to its disdain for its rivals, its staff, and its environment that promoted sycophants and politicians. That Mr Saunders is back at Bibendum and it’s becoming the company it once was is the cherry on the cake.

    Now, I’m not suggesting that’s where Naked Wines are, but it’s a warning. Reputations take years to build and seconds to damage. The Naked Wine ethos to help winemakers get a start in life is admirable and leaves their millennial customer base eager to part with their £20 a month. I was a member, had a wonderful experience as a member, and I expect hundreds of thousands of current and future members and winemakers to enjoy what this company means.

    But don’t ignore your staff. Treat them like adults, and treat them with respect. Of course it’s inevitable that, as a company floated on the stock exchange, investors and the financial press will do everything they can to be the first people to know what’s going on. It’s your duty, however, to protect the people on the coalface from living with anxiety and uncertainty as far as humanly possible.

    Please remember that in the coming weeks.

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