Close Menu
News

Chris Orr comments on… Unwins demise

Heading towards Christmas it’s a pretty humbling thought that 2000 staff from Unwins may be having a less than ecstatic festive season this year.

Wednesday 21 December, 2006

Heading towards Christmas it’s a pretty humbling thought that 2000 staff from Unwins may be having a less than ecstatic festive season this year. As I write, depending on which reports you read, the administrators have been called in to Unwins and they are currently looking for interested parties.

I knew something was up last Wednesday, when I drove past the Unwins that is round the corner from me in Hove, and the shelves were completely empty and the fridges opened for an airing. This has, apparently, been happening across the South West and East, where the majority of the high street chains¹ shops are located, as stock and employees are moved from marginal outlets to the larger, more central sites, whilst the future of the company is considered.

In truth, though, the writing has been on the wall for the company for some time, despite their takeover from DM Private Equity in March. DM paid £32m plus debt to take the chain over. The funding for this was mainly sourced through an ingenious scheme where the freehold for the properties owned by Unwins, the majority of which were outlets, was sold, with the outlets leased back. In principal it sounded like a fascinating funding method that
might just work.

In practice, however, it was only ever likely to work, if someone took a proper hard look at the business on a site by site basis. From my own very limited, and very personal perspective, I am not sure that ever really took place.

Just over a year and a half ago, when I first moved down to Hove, I rented a house in Osborne Villas ­ just by the Hove seafront. There was an Unwins at the bottom of my road. There was an Unwins at the top of my road. There was an Unwins four roads further on, as well as two Threshers, an independent and numerous corner shops. Quite why they needed 3 Unwins shops in the space of less than a square mile (and actually I think it might even have been four) I couldn¹t really understand. Especially when each one of them, though populated by very friendly staff, hadn¹t seen a decent shop-fit for several
years or more and looked very much on the tatty side.

However, when I heard about the DM deal, I thought "that sounds sensible". Someone will have worked out which of these stores to rationlise and proceeded on that basis. But no, it appears not. Because driving through the area I previously rented in, shortly before the current crisis hit, all three branches of Unwins were still there. All were still muddling¹ along and all were there purely on the basis that someone might choose them rather
than any competitors, because they were perhaps slightly nearer to home. As far as I was concerned there was no discernible reason to go into them from a wine perspective, as opposed to any other wine store in the locale. In other words, no real point of difference.

When will the high-street retailers realise that size doesn¹t always matter. Look at Threshers, look at Oddbins, look at Unwins ­ all 300 stores plus in size, 2000 in the case of Threshers ­ and then look at the troubles each retailer has had over the past five years. Then look at the most profitable operation on the high-street today ­ Majestic Wine, which currently has just 120 stores. It doesn¹t take a genius to work out that Oconvenience¹ in this day and age, doesn¹t necessarily mean having a store on every high street
and every corner. Not when Sainsbury¹s and Tesco¹s are currently flooding such high streets with the likes of Local and Metro. People need a reason other than convenience to come to a wine store. It¹s not necessarily convenient to get in your car, drive to a Majestic and buy your wine there.

But plenty of profitable customers do. The sad fact of Unwins and they are not alone in this ­ is that there is no longer a reason to go into an Unwins store and buy wine there, as opposed to any other ‘convenient’ wine retail outlet in the vicinity. Anyone weighing up a possible purchase of the ailing chain should think long and hard about how ­ and indeed if ­ they can change that. If they can¹t, it will simply be more good money after bad.

It looks like you're in Asia, would you like to be redirected to the Drinks Business Asia edition?

Yes, take me to the Asia edition No