Majestic Wine cup runneth over with 20 per cent profit increase

The simple change to Majestic's sales model is compelling - it makes a purchase seemingly more accessible and cheaper for customers. Yet it hasn't cost the company too much: the average transaction only dropped by 7.2% to £122, the BBC reports today. Better then, it seems, to go for a sell-more-cheap than sell-little-expensively model when consumers' purse strings are still drawn tight.

Interestingly, Majectic said it has simultaneously seen more demand for wine in the £20+ range. "People are prepared to spend quite a bit on a good, interesting, compelling bottle of wine," chief executive Steve Lewis told the BBC. "If you spend £20 in a restaurant, you'll get quite an ordinary bottle of wine, so we're seeing people buying good quality wine to drink at home."

Therein lies another interesting twist in the austerity pricing game. If you can offer a product that offers better value to stay-at-home, pound-conscious consumers, you can lure in customers looking for a little luxury to console themselves they're not out on the town, splashing the cash as fast as they can.

It's the lipstick effect - buying small economical treats to cheer yourself up because you can't afford to spend big. And the food, wine, cosmetics, homeware, DVD and similar markets can capitalise on it directly by offering good deals to customers who will be homebound most of the weekend.

Think of how well M&S has been using this one over the past couple of recession-bitten years, with its 'Dine in for a tenner' nice-food-plus-nice-wine-for-two deal (which worked so well it was subsequently ripped off by most other supermarkets) - or Sainsbury's 'Feed your family for a fiver' campaign.

It's all about keeping your business model flexible, and remoulding it to suit your customers' purchasing power at any given time. Understand your buyers' behaviour as part of wider economic trends. Know that they look for little luxuries and cheaper price points (six bottle minimum spend rather than 12, in Majestic's case) when the country is fiscally fraught.

Don't be afraid to try a new sales model. Then monitor it and scrutinise results forensically to find out what works best.

Bottoms up, Majestic - this business model is an absolute corker.

Find out more about salespricing strategies and check out this first-person case study on pricing to survive the recession.

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