Naked, Majestic, and Angels: a cautionary tale of belonging?

“NO-ooh!” 

A cry from my husband over Saturday morning coffee.

Political comment on the election? News of the death of a much-loved actor? Another tech innovation hit the dust?

No. Much more personal…

An email from Naked Wines saying it has been bought by Majestic Wine Warehouse for £70m.

It was a cry of betrayal of belonging. Naked Wines was the antithesis of wine warehouses.

As part of the deal Naked’s founder, Rowan Gormley, is taking over as CEO of the group.
It felt like David had put down his slingshot and gone to man Goliath’s big guns.

Belonging is right at the heart of Naked, as an enterprise and as a brand. Customers, growers, and the team behind it, all feel a close sense of belonging.

My husband has been an Angel with Naked Wines since soon after it started eight years ago as a new concept. For a modest investment ‘Angels’ support independent wine-growers and in return buy interesting decent wines direct from the source at a good price. A small community with individuality, interest and mutual benefit.

It all felt like belonging to a maverick, independent club of like-minded people. Wine-lovers without the pretension. Insiders but outside the establishment.

The note to Angels emphasises that the deal solves Naked’s biggest bugbear – distribution. Plenty of reassuring words of ‘exciting news… good for you’ or ‘we’re not selling out’. But could ‘Majestic wine warehouse’ and ‘click and collect’ undermine this?

The personal dismay of one Angel reveals a hidden commercial risk. What happens if a deal dislocates the sense of belonging for customers and partners?

As well as employees, mergers create wide ripples of impact on markets and communities that can quickly destroy belonging – and value.

BBC Business correspondent Linda Yueh has called 2015 the year of the mega deal. This one’s a bit modest at mere £70m, compared with last week’s £47bn Shell-BG Group acquisition. Still it exposes some of the belonging challenges in these big deals.

All the fine talk of compatible businesses, synergies in strategy, creating more value… can ignore the complexities of culture clash:

What if the people whose loyalty has created all that value just don’t want to belong any more?

Belonging to Naked was liberating. A bit anarchistic even. It defines us because of what we don’t what to be.

Naked’s style has been joyously informal, sociable and direct. We’ve enjoyed exploring, discovering new possibilities. At the wine tastings we chat with the growers while sampling – a real sense of intimacy. No spitting-pretence to be proper tasters: just enjoy flavours. Then rollock our way home, slightly squiffy, on the tube.

Naked’s unique relationship with customers is acknowledged by Phil Wrigley, Majestic’s chairman, in the FT’s Lex column

 “Our online [business] is only 10 per cent and we are behind in building bridges with our customers online.

“Naked specialise in customer loyalty. We could have built it, but it would have taken time so this deal is an accelerator.”

It’s a virtuoso performance in social enterprise networks, far better than most retailers.

But, though Naked already has 300,000 customers compared with long-established Majestic’s 640,000, maybe the commercial reality didn’t add-up without bigger backing.

The Telegraph comments:

“Although Naked Wines grew its sales 40pc in 2014 to £74m, it made a loss before interest, tax, depreciation and amortisation of £3.3m.
The City gave the deal a lukewarm response, with shares in Majestic rising ½ to 318¼p”

Will Naked throw the baby out with the bath water (wine?) ?

I can only tell you that there’s a slightly glum Angel in North West London, feeling a little less Naked.

At Belonging Space we help organisations create a sense of belonging, keeping ethos at the heart of their business.

isabel@belongingspace.com
http://www.belongingspace.com