Retail Report: Champers in hampers

Tim French wants people to treat Fortnum & Mason as a normal wine merchant, but Margaret Rand wonders if Fortnum’s could be merely normal at anything

What an odd place Fortnum & Mason is. It’s chock-a-block with things you don’t need, its customers appear to be a mixture of dowagers in good tailoring and American tourists in plastic macs, and if you venture above the food floor the staff seem to outnumber the customers by about 10 to one. The only other shop in London that was even close to it in weirdness was Simpsons, also in Piccadilly; and look what happened to that.

Well, Fortnum’s probably has been looking rather closely at the fate of Simpsons, and has no ambition to have to sell its premises to Waterstone’s. And so it’s spending £24 million on a makeover in which everything except food, wine, and departments pertaining to “entertainment and celebration” will be jettisoned. “Entertainment and celebration” covers things like china, table linen, the cookshop, perfumery, leather goods, lingerie, and new-baby gifts. Food and wine will have two entire floors to themselves: on the lower ground there’ll be fresh food, and on the ground floor tea, coffee, chocolates and the like will expand, and there’ll be a wine bar selling dozens of wines by the glass. And the wine department, currently an indigestible jumble of extremely grand names with hardly enough space to swing a corkscrew, will nearly double in size.

Innovator
Tim French is the wine buyer. He’s been there for three years, and was brought in, he reckons, as an innovator. “I was young when I joined,” he says. “It was a calculated risk by Fortnum’s.” Well, he’s not very old now, and while he’s been innovating away for the last three years this is his big chance to be noticed. Because one of his big challenges is to get more people to treat the shop as a normal wine merchant; somewhere they might buy by the case instead of by the bottle, and somewhere they might buy for themselves rather than for their corporate clients.

He reckons that currently “at least 80%” of sales are by the bottle, 20% by the case, and estimates that perhaps 60% ormore of sales are to people who walk in off the street. It’s difficult to know, he says, how many of those are tourists. Some 25% of sales by value are of Champagne, divided equally between own-label and brands, and, he adds, “We sell buckets of prestige cuvées.” About 40% to 50% of wine sales are through hampers – “hampers” being a fairly loose term which includes packs of wine on its own, as well as wine and food. “Fortnum’s hampers go to the most famous addresses in London, and the people who receive them should be coming here to top up with wine,” says French. Are they not doing that now? “They do come and buy wine, but we haven’t been as effective in marketing as we could have been.” Nor are the corporate gift-givers as quick to buy for themselves here as French would like. It’s a decidely quirky business, and if you were designing a wine department from scratch you probably wouldn’t design this.

French, however, has been clever in turning things to his advantage. Fortnum’s is very much about own-label, especially for corporate gift-giving, and those huge hamper sales have enabled him to have possibly the wackiest selection of own-label wines anywhere; own-label Eschendorfer Lump Sylvaner, for example. A lot of this goes through hampers, but he says they sell a lot on its own, as well, as an alternative to Grand Cru Chablis. Or own-label Gruner Veltliner Smaragd from Hirtzberger: “the Gruner Veltliner is £18 a bottle, and it would be difficult to buy a pallet without the safety-net of hampers”. Or own-label 5 Puttonyos Tokaji  from Szepsy, which French sells at £19.50, compared to £90 for the non-own-label 6 Puttonyos. Szepsy had never heard of Fortnum’s, but when he came to visit he liked what he saw.

Converting to cases
French emphasises, though, that hampers are not a dumping ground. Instead, own-label wines should be a vehicle for converting people to buying by the case; and “corporates are a hidden potential customer base”.
But how do you do it? A larger department, with better lay-out and better display – which French promises – and a wine bar attached, will presumably encourage personal buyers. But how do you get people to regard Fortnum’s as an alternative to, say, Yapp or Lea & Sandeman, which is what he wants? “There’s a massive local working community that is very affluent. Not many of them are coming in at the moment. The key is to be able to deliver wine to them. We have the logistical infrastructure in place already: at Christmas Fortnum’s sends out hundreds of thousands of parcels in three weeks. We could deal with a huge increase.” He’s wooing them with tastings and bespoke hospitality events, and with the strength of the Fortnum’s brand. “People come to buy a piece of Fortnum’s.”

He points out that while a lot of customers are tourists, “We have a stringent policy that our products are not for tourists. There are no teddy bears, for example.” Of the “Posh Four” shops, Harrods has gone down a more nakedly commercial route, though with a still-excellent food hall. “Harvey Nichols and Selfridges have brands within brands,” says French. “We are alone in terms of our offering, which is traditional and English.” On price French reckons to be less expensive than Harrods or Selfridges (and as an aside, quails’ eggs in Fortnum’s are cheaper than in Waitrose).

BOGOFs unlikely
Berry Bros (an obvious comparison since it is just around the corner from Fortnum’s, and successfully reinvented itself some years ago) is “more expensive by the bottle, but has sharper case prices”. French has introduced case discounts, but doesn’t think he’ll be doing BOGOFs.

The current annual turnover of the ground floor, which is how such things are worked out, is around £5m; the hoped-for increase is in the order of 30% to 40%. The wine department has to be financially self-sufficient, says French, but there’s a lot of interaction between departments and there will be more – food and wine displayed together, that sort of thing.
One wishes French well. We need more wine merchants sticking their necks out with unusual wines. The new wine department opens in October; and that Tokaji does look rather a bargain.  db June 2006