#325 The battle for Oddbins

When you are fighting a battle, you want to do it in your own territory because you know the lay of the land and have an advantage.  If you are invading, you need much more manpower and strength.   The reason Oddbins died last week was because, under Castel ownership, Oddbins took its eye off the ball in its own territory, and tried to take on other company on their patch.  Then, when they realised they weren't winning these battles, they regrouped and found a stronger enemy now dominating their former kingdom, but they didn't have the forces to retake their homeland.

There are four main outlets for wine sales in the UK – Supermarkets, online, out of town and high street.  You would argue that Oddbins could have fallen into three of these, but the reality was far from the case.

Supermarkets sole goal is to make profit.  Their wines are bulk produced, bulk shipped and distributed throughout the nation.  They make a hefty margin, and give ‘hefty’ discounts.  The net result is they are still making more profit than most specialist wine shops do.  Supermarkets are the place you shop when you don’t care what you are drinking or can’t be bothered/have the time to go specialist retailer.  If an off licence chain tries to compete they will simply fail, as was proven with Threshers.  Thankfully, Oddbins didn’t really try to take on these guys as they would have gone belly up long before now.

Online retailers give convenience and, usually, keen pricing.  They also give a range of products but they are not conducive to company loyalty.  Sure there are companies like the Wine Society that have customers coming back, but that is generally because they just want a case of wine delivered to them on a regular basis, and, like the supermarket shopper, either don’t care what they drink too much or don’t want the hassle of shopping.  For most other online retailers, the customer goes where the product they want is, not because they like the online retailer.  Oddbins did launch a website, but they couldn’t transfer their high street loyalty to their webshop, and their range was not inspiring enough to warrant high web traffic.  At best, Oddbins.com was a token gesture, one that never really stood a chance of winning.

Out of town merchants, and by this I mean Majestic, offer bulk discounts due to their cheaper rates and warehouse format.  The range is good, but they aren’t much good for you if you want a bottle of wine for the evening.  Majestic sacrifice passing trade for bulk sales and a destination venue, and that business model has proven effective. Oddbins’ venture into retail parks was simply to take the high street concept and make it bigger.  They didn’t offer the USP or deals of Majestic, and were facing huge bills for a huge shop with fewer customers than a tightly run high street shop.

Finally, the high street.  This is where Oddbins ruled for a long period of time but their rule was cut short by the incompetence of Castel.  After the French takeover, the range of wines was lost and the staff, who had previously stayed loyal despite terrible pay, left as they no longer enjoyed their job.  These staff went to the independent sector and started competing against their former employer – and started winning.  When Simon Baille & Henry Young took over the company, they wanted to ‘bring the Odd back into Oddbins’, but the ‘Odd’ was established elsewhere in a huge selection of indie merchants throughout the UK.  Look around the many small wine shops in the UK, and you will see the famous 'Oddbins handwritten font' on signs and window drawings and you will find the Oddbins layout with strange and interesting wines scattered around the shop, such is the huge number of former Oddbins employers now in the indie sector.

Try hard as he might, Baille couldn’t offer to the wide range and local diversity that an independent could.  Maybe he should have offered out a form of franchise to the shop managers to operate under the Oddbins banner and focus his attention on the internet.  Maybe he should have hacked the company back to 50 shops in small hubs throughout the main cities of the UK.  Maybe he should have let Oddbins die in the arms of their temporary French master.  Hindsight is always perfect, but praise should be given to him for at least trying to keep the company going.

Oddbins wasn’t the problem and isn't the reason they went bust last week, Castel were.  They thought they knew best and instead of making the successful brand profitable by closing the unprofitable stores and listening to their managers, they went on their own misguided path and destroyed, perhaps, the greatest wine brand the UK has ever seen.  They allowed Oddbins to lose their high street kingdom by expanding into retail parks and online, but in the most half-arsed way imaginable.  Now a load of staff are unemployed, suppliers have lost money and Simon Baille has failed where his father succeeded, through little fault of his own.  He was trying to invade his former territory against a massively strong opposition force - his own company's former army.