30. June 2011
Submitted by: Jan Szollos, B4992532
Tutor: Mrs Suzan Fritsch
a. The description of a retail business
b. The macro-environment factors
d. Managing the workforce
The retail business I am going to analyse is called The Wine Rack. It is a wine specialist retailer owned by Venus wine and spirit merchants’ plc. The brand was founded at the end of 19th century. Later it belonged to the Threshers Group and in 2009, when the group became insolvent due to the recession and the decrease in customer spending; it was taken over by the Venus group. In 2011 the Wine Rack comprises 20 remaining small businesses, all with a turnover of less than £40 000 in a month and employing 5 people, on average, per branch.
The business specialises in selling alcohol and the main focus is on wine from all over the world. The selection of wine could be divided in to three major categories, such as the premium wines which include upmarket products and rare wines, then the medium prized products for everyday consumption and the ‘good value products, which are being marketed through various promotions like 3 for £10 or buy one get one free.
A good and wide range of spirits is also on offer. Since the takeover by Venus group, the selection of spirits has increased rapidly. There is a sector in each shop dedicated to beers and ciders from all around the world and it is very popular with the foreign customers and tourist living in the area. Cigarettes and cigars, soft drinks, snacks and sweets are also being sold and are chosen with precision to be convenient partners when enjoying wine; however there is no cheese being sold in Wine rack shops.
Political and legal forces have a major impact on the alcohol industry. Recently a number of wide-spread campaigns have emerged in the UK. Most of them are aimed to curb underage drinking and therefore Wine rack, along with other retailers selling alcohol, has adapted a challenge 25 approach towards customers. Another campaign was aimed to set a minimum price per alcohol unit. Although this has not been yet implemented by the government, in the last 16 years the stamp duty on alcohol has been increasing each year and this year it is was increased by 2% above the Retail Price Index. (direct.gov.uk) This decision has increased the price of a bottle of wine by only 15 pence but the retailers could not pass the expense on to the customer in order to maintain competitive prices. The supermarkets are much more immune to these changes thanks to their ability to absorb these increases and consequently to apply them later after they have achieved bigger market share.
In recent years economic forces have been a major factor when in determining demand and supply. When in 2008 the British economy entered the recession, customers spending have decreased immediately. The Wine rack has responded do that by reducing the prices of the majority of lines and started best value promotions on overstocked product lines. A massive leaflet campaign has kicked off, radio adverts were running on every major radio station and the in store wine tastings were organized more often. All these measures managed to attract more customers in the shop but the average spending per customer has decreased significantly. The demand has proved to be elastic and the business maintained its position due to the lower margins. (Ellis-Chadwick, 2011) In addition the fuel prices started to rise as well and that has increased the overall inflation and put ever more pressure on alcohol retailers to absorb the rising costs.
The Wine rack has always been committed to reducing the environmental impact of the trade. Only the...