Majestic Wine scraps minimum purchase rule

<p>The chain of wine merchants is trying to bring back customers.</p>

Majestic Wine, Britain's biggest specialist wine retailer, has announced that from Tuesday (October 27th), it will be scrapping its minimum purchase rule.

The company's new chief executive Rowan Gormley, who took over in April, is trying to lure back customers to the chain of wine shops. Now, customers will be able to buy single bottles in store and online. The company has also promised more clarity in its pricing, after customers said its offers were too complicated.

According to Majestic, it has been experimenting with allowing single-bottle purchases in some stores over the past few months. The company says the changes have been popular among both new and existing customers.

'Out-of-date'

Majestic was launched in 1980 in a warehouse in Wood Green, north London. At the time, the company only sold wines by the case. In 2009, the minimum purchase was reduced by half to six bottles – at the time, this was a popular move. Now, Mr Gormley says that a minimum purchase is an out-of-date rule, especially considering the fierce competition from the big supermarkets, as well as discount retailers like Aldi and Lidl.

"Our customers were telling us that they wanted simpler, clearer pricing, and an end to the six-bottle minimum. There are now no barriers to shopping at Majestic, the pricing structure is very straightforward and I’m sure our customers will see this as a great move," he said.

Mr Gormley took over the firm after the company bought his Naked Wines online business. Naked Wines had experienced a chain of poor results, including over the Christmas period.

In June, he said that Majestic had suffered from a variety of problems, including cost-cutting and outdated computer systems. He also said the company had a forbidding image due to its minimum purchase rule, complicated offers and appearance of stores. At the time, he reckoned it would take three years to revive the business.

On Tuesday morning, shares in Majestic Wine were down slightly. At 09:45 (BST), they were valued at 349.50 compared to a previous close of 351.50.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.