Recent articles in The Grocer on Bargain Booze’s plans to float on the Alternative Investment Market (20 July) and retailer bonuses (27 July) set me thinking about the numerous business structures in our trade, and their merits. Of course, there is no right or perfect model and it is for individual companies to make their choice. The decision of Diana Hunter at Bargain Booze is a case in point.
Bargain Booze has arguably never been a traditional business in its structures. Set up in the early 1980s by Alan Whittall and Rob Mayor, the concept was a triumph of thinking that challenged the norm, and of the force of personality of two entrepreneurs, coming as it did from the basis of a traditional C&C base.
With a dynamic market and real momentum, the franchise grew rapidly, despite the ultra-low margins and strict discipline, and the business was a great success. The loyalty of the franchisees to the founders, evident by turnout at their monthly meetings, was phenomenal. Since Alan and Rob moved on, the business has been openly marketed on several occasions, and has passed through the hands of Pernod Ricard, BWG, and several private equity investors.
”Waitrose’s average bonuses dwarf all others by a factor of five”
The latest announcement of an AIM listing was rather a surprise to me. I have always believed that wholesale businesses are not well suited to the stock market with its demands for constant high growth of both turnover and profit - in my view wholesaling is better served by a patient long-term strategy and this is often best from private (frequently family) ownership.
I fully accept this is countered by the current Booker model, and that second-guessing Charles Wilson is not generally considered wise. However I suspect both Booker and possibly Domino’s in franchising may be the exception proving the rule.
As most people know, the route we have taken for Parfetts’ ownership has been an employee ownership model, with a similar structure to John Lewis. The analysis of retailer bonuses illustrates just how successful this can be in the long term, with Waitrose’s average bonuses dwarfing all others featured (by a factor of five) despite the excellent PR achieved by Asda for its scheme.
It has taken JLP many years to achieve this level of success, and our partnership bonus is very modest in comparison, but I hope the example illustrates why I believe employee ownership is the closest model to benevolent family ownership.
Intriguingly Diana Hunter comes from a background in JLP but clearly disagrees with me. It will be fascinating to see how the next Bargain Booze chapter is written. I wish them well.
Steve Parfett is chairman of AG Parfett & Sons