Majestic Wine is set to scrap TV advertising and plough investment into new store growth instead after lacklustre campaigns last year.
Majestic said it is “unlikely” its Christmas campaign, which offered shoppers 10% off, will run in its current form again. It is thought the ad did not deliver the level of sales the company had expected.
Analysis of its impact will be completed next week.
The campaign followed the retailer’s “satisfactory but not compelling” summer national TV ads, which were timed to coincide with the Queen’s Diamond Jubilee weekend. Majestic Wine said their impact was dampened by the poor weather.
Majestic Wine ploughed £887,000 in total into advertising in its first half.
A Majestic spokeswoman said: “Majestic have not had the final analysis of the winter campaign however the results from summer were satisfactory but not compelling.
“If the evaluation of winter is consistent with these results then it is unlikely to be continued in its current form for next year.
“The objective of driving new customers is being achieved successfully by the new store opening programme with 14 stores already opened and a further two to open before the end of the financial year.”
Espirito Santo analyst Sanjay Vidyarthi, who met with the company last week, said: “It looks likely that Majestic will cut back on its advertising spend for television, with the required sales uplift not having materialised. Management’s view is that the new store roll-out is driving strong enough growth in new customers.”
Vidyarthi said Majestic needs to get its current customer base to increase its spend to three visits a year.
He added: “When asked what it would take to increase the frequency of customer shops, management suggested that there was no quick or easy solution, rather it was about doing a lot of things better to engage the customer. Our view is that datamining of customers probably needs to improve.”
Majestic Wine chief executive Steve Lewis told Retail Week in November that the Christmas campaign was make or break.
Lewis said: “I am disappointed; we can’t continue to make them without some return. If it does not work this time we will stop and look at something different.”
The retailer ultimately aims to open 330 stores.