When Tony Leon got hold of Dan Murphy’s and expanded it, Dan’s went from a destination store which was unique due to the small number of stores (20 or something) to 100 or so. The geographical reach of Dan’s and their lowest price guarantee basically sucks customers from liquor stores around them into the Dan’s catchment. After Tony left, Martin basically turned it into a cultural giant and Coles were unsure how to respond.
Instead of building on the idea of Quaffers and growing the equity in the brand, they did they old ‘copycat’ and tried to turn Quaffers into a Dan’s figther. Except they couldn’t do it because the concept already existed, and Dan’s had the deep pockets to maintain their lowest price guarantee.
Thus, 1st Choice turned into a facade, and with the exception of Bazal’s store and a few others, was essentially an upmarket Liquorland.
Its the same thing as what Bunnings did with Masters, except this time WW’s won. I wouldn’t be surprised if 1st Choice doesn’t exist in th 5 years.
I'm surprised First Choice still does tbh. I don't even get the catalogues dropped in my mailbox anymore. All three stores remaining in Canberra are on struggle street... and elsewhere they turned some into LL Warehouse, which is an admission of defeat. Some have closed (mine, one or two in the Newcastle area. I think the Chatswood store failed within 18 months!).
They just never ever worked it out. Tony Leon even came on board and started a real charge, but they've consistently put the wrong people in other areas of the business and they just repealed all the good work he did. The model was there. Stores like ours, Naremburn, Sylvania and others showed the way to go...heavy focus on high end wines at good prices and a loyal customer base. We were doing $170k sales weeks with 65% wine sales at one stage, even with a Dans 500m away.
Realistically if they wanted to save First Choice the way forward was to turn stores that are glorified Liquorlands into Liquorland Warehouse stores relying on bulk beer, RTD and Lindemans sales, and have the stores like Naremburn et al move further in the direction of a one-stop boutique liquor market. Instead, they've basically turned First Choice into a bulk wine outlet selling bundle buys and trying to make money by putting wines that have an LUC of about $3 in 6 for $36 deals. Then they pat themselves on the back and say "look at us we make 100% profit on every deal we sell hurr hurr." But they fail to realise that the actual profit is f**k all.
There are 128 6 packs to a pallet. Assuming you sell that pallet (no guarantee, trust me...it's never a deal people fly in for) making $18 on each box, then your entire pallet nets you $2300 profit. I had a customer who used to spend up to $1000 a week on six or so wines, and I'll use him as an example because he consistently bought the same wines so it's easy. Let's say for the sake of argument, over the month, he bought 24 wines. Roughly speaking he might buy 6 Teusner Albert (LUC was around $32 at the time, shelf price $48) 6 Torbreck The Struie (LUC around $35, shelf $50), 3 Katnook Prodigy (LUC around $70, shelf $90), 3 Yalumba Octavius (LUC around $75, Shelf $95), 3 Stonewell Shiraz (LUC around $80, shelf $100) and 3 Mount Langi Ghiran (LUC around $80, shelf $100).
I'm being pretty rough with the figures off the top of my head obviously, but that nets you around $450 profit at the till...which is the same for four cartons of wine as you net from 25 cartons at 6 for $36. And that's before you take into account the sheer bulk we sold of wines at $20-30 with LUCs around $15-18. Some of those we were selling ten cartons a week and making as much on one bottle as you do on a 6 pack bundle. We also sold a tonne of good quality affordable imports that we made a bucket load on, but most of those were casualties of the new marketing team too.
Most, if not all, those products are gone from First Choice now. The people who buy like that sure as shit didn't stick around to get glorified cleanskins in bulk.
And they wonder why they're struggling....
we don't carry a single straight mataro or grenache oddly enough. Although some larger stores might.
