Ailing drinks wholesaler Conviviality should have heeded high street closures as a warning against “overambitious expansion”, industry experts have told RN.
Senior analyst at retail analyst GlobalData, Molly Johnson-Jones, said the Bargain Booze owner’s problems are a warning to other businesses choosing not to prioritise product range in their growth strategy.
“Conviviality’s ambitions of opening a Bargain Booze a week, alongside the £25m acquisition of more than 100 Central Convenience stores last year, were clear signs of an overambitious expansion plan.
“The company was pursuing a really aggressive growth policy by trying to expand into areas it had never been in before,” Miss Johnson-Jones said. “The closures of many high-street retailers should have been enough of a warning to chase growth with core products rather than in new areas, but Conviviality took its eyes off the ball.”
Steve Parfett, AG Parfett & Sons chairman, agreed with Miss Johnson-Jones and said: “Recent events have proven thoughts about Conviviality being overambitious to be correct.”
The company announced on 28 March it would appoint administrators within 10 days after failing to raise the £125m necessary to recover from an outstanding £30m tax bill and overdue payments to creditors. There are currently 350 Bargain Booze franchisees who manage more than 700 stores at risk of being affected, alongside several company-owned stores.
Commenting on a potential buyer for the chain, Miss Johnson-Jones said the business model would most likely be changed. “Bargain Booze has lost its relevance as customers want stores which offer more than just an off licence.”
However, Shore Capital head of research Clive Black disagreed. He said: “Bargain Booze’s heritage is in alcohol and, if it tries to replicate what One Stop, McColl’s or Co-op is doing, there’s a danger it can lose its point of difference.”
Read more: Bargain Booze stores ordered to shut down as availability drops to 70%.