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INTERVIEW: On the Rack
d=”standfirst”>The Thresher Group’s new CEO, Yvonne Rankin, aims to streamline the business, placing more emphasis on the Wine Rack brand. By Patrick Schmitt
| CV: Yvonne Rankin • September 2007, Yvonne Rankin became chief executive of The Thresher Group. • From July 2005 to July 2007 Rankin was CEO of the Central and Southern European Division at international retailer AS Watson, responsible for its European portfolio of 600 stores. • She previously led the strategic review and restructuring of the 440-store UK retailer, Savers. • Before joining AS Watson, Rankin was CEO of the Co-operative Group’s £1 billion Specialist Retail Businesses, responsible for over 1,500 stores. |
Has it really been three years since Thresher introduced 3 for 2 on all wines? Remember the speculation surrounding the decision, followed by outrage, and not long into it, an element of respect for a pricing solution that meant all things vinous would be tarred with the same promotional brush, therefore encouraging consumers to actually choose brands on merit, not merely depth of discount? Well, the seemingly savvy retail tactic has come to an end. Introduced in March 2005 by Alex Anson, then trading director for The Thresher Group, in March this year, Lloyd Stephens, Anson’s replacement, and Yvonne Rankin, CEO, announced the end to the selling technique. “We are exiting 3 for 2,” she said.
But why? It is part of a wider reappraisal of the Thresher brand and The Thresher Group.
Vision Capital, owners of the retail chain since June last year, hired Rankin, who joined the business in September, replacing Roger Whiteside, to, in her own words, “build sustainability into a business that had faced tortuous times in latter years”. This will involve, among other changes, introducing single-bottle price promotions to Thresher, rolling out a Wine Rack refit, going online with the retail brands and closing a number of stores.
In essence, after “a solid review”, Rankin says the group has hatched a three- to five-year plan which will focus on three core Thresher Group brands – The Local, Wine Rack and Thresher – and involve the conversion of Victoria Wine, Haddows, Drinks Cabin and Bottoms Up to one of the triumvirate of retail fascias. But, it should be noted that this scheme was clearly outlined by Whiteside to the drinks business back in September 2005 (“Seven into three does go”, page 14).
Under Rankin, however, each brand will apparently have a distinct, new personality. And just as Castel (see the drinks business, March 2008, page 12) has announced a reorganisation of the Oddbins estate based on store location and average customer, so has The Thresher Group.
“We focused very quickly on creating a solid brand strategy and creating three differentiated retail brands – each with a very clear brand proposition and retail footprint,” says Rankin.
“We did that,” she continues, “by being vigorous with consumer research through focus groups, exit polls and so on.”
Back the Rack
To begin, The Thresher Group is placing more emphasis on the Wine Rack retail brand. The look, feel and number of stores will change to attract a newly identified target consumer. As Rankin says, “Wine Rack is now aimed at the aspirational consumer – the young or middle aged professional, both male and female. We wish to create a modern, contemporary environment and we have a new format called ‘True Blue’ [as opposed to the green branding of old]. We are going to roll out this new store refit across 370 of our stores – 190 are Thresher, some are already Wine Racks, some Bottoms Up and some weird and wonderful names left over from the past.
“We have picked sites that align with right demographic and location. On top of that we aim to open 100 new Wine Racks over the next three years – we want to get to around 500.”
Visitors to the updated outlets can expect “a bright, open and modern interior, more like other retail environments in other sectors. We have found there is a whole generation of female consumers who feel intimidated by most wine retail environments but relate to the Wine Rack contemporary look and feel,” comments Rankin. The transformed stores will also have more chill space and a tasting area but a “tightened” wine range of 500 SKUs.
Secondly, the Thresher brand is focusing more heavily on convenience retailing – the single-bottle top-up shop – taking this arm of the group’s business head to head with Castel’s newly-identified “high street” Oddbins estate. Thresher will concentrate on single-bottle promotions, and will use simple merchandising and a reduced range to make the shopping experience quick and easy. Also a number of stores will close.
“The brand is being repositioned to focus on the mid-market urbanite and research has told us that the way this store is shopped is opportunistic,” says Rankin. In other words, the average Thresher customer is “on their way somewhere, perhaps to a party, and thinks I’ll pop in,” she adds.
“So, if it truly is a top-up shop – something that needs to be shopped in a hurry but with something specific in mind – then there’s a lot of work that can be done with store layout, and the kind of ranges we carry.” This will mean a contraction in wine SKUs to 300 but “some growth in impulse snacks and confectionery – it will be about serving the impromptu social life”.
Essentially, Thresher will look the same but its image will be slightly different. “Thresher will have a wine bias but not to the degree it once had when Wine Rack and Thresher were trying to serve the same customer,” she explains.
What about closures? “190 have gone over to Wine Rack, there will be some closures around Threshers, and we will end up with a solid urbanite estate aimed at middle Britain,” she says. That estate, currently comprising 581 stores and 83 franchisees, should settle at around 400 outlets.
Finally, The Local is also due a makeover to improve its drinks credentials as well as general appeal. “We have already done some work to develop this brand,” begins Rankin. “But further research told us this needs to be drinks-led convenience. A classic Local location would be the middle of a housing estate – corner shop territory. This is about serving local communities with a drinks-led offer with around 200 convenience SKUs including handy essentials, such as bread and newspapers. It is important to stress that it is drinks-led, it is not full convenience, and we aim to develop that right across the Local estate. We will be investing in this and also developing new sites – we aim to open 100 new local sites in the life of the plan.” Currently there are 574 stores and 33 franchisees – and the aim is for 680 stores.
Natural selection
Essentially, in total, The Thresher Group will contain “about 1,500 shops plus the 130 franchisees. At the moment we are just short of 1,600 shops.
“So, yes, we are doing some closures, but we are also opening some. It is classic retail behaviour to drill out the lossmakers, re-site stores and constantly evolve to bring in new to replace the old.
“The churning of your estate is very important in making sure the locations are combined with the right brand proposition.”
And on this subject, it is important to add that Vision Capital doesn’t own any store freeholds. “A major sale and leaseback programme took place over the last two years and we are just coming to the absolute close of that,” explains Rankin. “From my perspective it makes the whole flexibility of the estate much easier.“
So what about the promotional strategy? 3 for 2 has been pushed aside in favour of single-bottle promotions for Thresher stores, just as Oddbins is taking the emphasis away from multibuy offers in its high street outlets.
“3 for 2 for this business was a success in 2005 in terms of driving sales, but over time it has become static,” begins Rankin. “Our customers have repeatedly told us our single bottle price has become too expensive. And critically our lapsed customers have told us that as well. So we are working hard to establish the best way to retain the multibuy customers we have today and actually recruit new customers.”
In practice, expect a mix of single-bottle price cuts and multibuy offers such as 3 for £10. Furthermore, with bottle prices off-promotion, “it is our intention to be market competitive,” adds Rankin.
Of course The Thresher Goup will be using techniques other than price to attract shoppers. As trading director Lloyd Stephens points out, “We will market ourselves in two ways. Firstly we will be far more sophisticated in how we merchandise in store. For example in The Thresher estate we will look to use some of our bay space to make things easier for the customer, such as top 10 bays, or seasonal bays to make the customer journey a lot easier. Secondly, we will supplement that by talking to customers through marketing mediums. The business history is bereft of significant investment in talking to consumers and the plan is to have that as a key strategic strength.”
Part of this second approach will be the launch of a branded website for, firstly, Wine Rack, and then Thresher, allowing customers to order online. “We will have a fully transactional site by the summer – Wine Rack will be the first dedicated site, followed by Thresher,” says Rankin. Further, the group has changed its logistics partner to allow it to hold product at a central hub making home delivery possible.
And Rankin stresses that Vision Capital are spending a large amount on the business. “We’ve got 200 new stores, we are rolling out a new format across 370 stores and we’ve improved the IT infrastructure, including an upgraded Epos system, so there’s quite a lot of investment going into this strategy.”
Favourable return
At the end of this, it’s hoped The Thesher Group will make a highly attractive purchasing prospect. “For sure, Vision Capital will sell it on eventually, but it is committed to a three- to five-year development of the business, so when they do resell it is worth a whole lot more,” Rankin readily admits.
As for acquisitions, she says: “There will always be a dialogue with other retailers such as Castel, but I have nothing to say right now. We’ve got a growth strategy here and if an acquisition made sense, we would look at it.”
In the meantime, Rankin is clear about her role, which involves applying her specialist retailing experience from other sectors to the drinks industry. “All the retail behaviours and practices are eminently useable here and thereby hangs such a set of opportunities for this business because frankly I haven’t seen them as prevalent in this sector as they are in other areas. I think there is a great opportunity to reinvigorate the range and space optimisation and make sure the right tools are applied to right customer base.
“Combine strong brand propositions and clear retail practices with what a great product it is that we sell and you’ve got the winning formula.”
Or, as she adds, “there is an opportunity to lead the market in top up drinks retailing.”
| Scotland The Thresher Group’s three- to five-year strategy, while finalised for the rest of the UK, is still “work in progress” in Scotland, according to Rankin. This is because the Scottish part of the retail business was up for sale as a separate entity, but Vision Capital has now decided to keep and redevelop the sites north of the border. Furthermore, here the Haddows name still “has a reasonable amount of brand equity and we need to decide how best to position it,” says Rankin. “It is a question of how can we make the most of the opportunity there because we are the biggest drinks retailer in Scotland,” with a portfolio of 107 Haddows stores. Own-label Key points: 3-5 year plan |
© db April 2008