Majestic Wine’s results this week provided headline writers with plenty of scope to play on the business’s lost sparkle.

Pre-tax profits at the specialist fell 22.5% to £18.4m, as it felt the squeeze of competition from online and bricks-and-mortar rivals.

Since wine consumption took off in the UK in the 1990s, the market has been characterised by increasing levels of competition as the supermarkets grabbed share and pressured specialists.

Consumers have increasingly shopped on price and convenience and the grocers have used wine to drive footfall and, in doing so commoditised the market, which hit the sector’s margins. The advent of the digital age and rise of the discounters has only added to those pressures.

Polarised market

New Majestic boss Rowan Gormley said this week that the impact of Aldi and Lidl in the UK will mean that in 20 years’ time, the supermarket landscape will in many ways reflect that in France and Germany, where permanently lower margins, limited product ranges and a “zero service offer”are the norm.

As Gormley went on to highlight, under such circumstances the market has become polarised, opening up opportunities for a specialist offer.

What is most disappointing about Majestic’s recent performance is that the strengths that had until recently helped it stand out as a specialist – in particular its customer relationships, created by a passionate workforce – have at best been under-exploited and at worst taken for granted and allowed to decay.

Gormley has been refreshingly candid about the business’s failings, as his recent arrival allows him to be. He highlighted high levels of staff turnover and a lack of insight into Majestic’s customers despite its extensive database.

He jokingly referred to the key customer service question “would you like to be put on our mailing list” as like “being asked if you want an enema”.

Losing touch with customers

But the quip highlights the serious nature of how the retailer has lost touch with its customers.

The troubles do, however, make the acquisition of Naked Wines earlier this year and the installation of founder Gormley at the top of Majestic look increasingly pivotal to the future.

Naked Wines not only gives Majestic quick access to the key growth pillars of international and ecommerce but a fresh view of how it should connect with customers in the digital age.

Meanwhile, tests to see whether it should axe its six-bottle minimum purchase demonstrate Gormley’s willingness to overhaul the business as it seeks to rebuild relevance.

Gormley will not outline his full plan until later in the year, but he has already pledged £3m in investments into range, staffing, IT and infrastructure, while unlocking working capital efficiencies will also be an important focus.

The strategy will take three years to deliver, but Gormley has impressed so far by frankly articulating each of Majestic’s key strategic challenges and putting plans in place to address them, giving hope there may yet be news to toast sooner than envisaged.