The most dramatic exit from this year’s Top 50 list is, of course, off-licence chain Unwins, which collapsed into administration just days before Christmas 2005. When we put together last year’s listing, it was clear all was not well at Unwins - sales were down 7% and it was one of only four Top 50 chains to record a year-on-year decline. Even so, nobody could have predicted that the business was heading for total collapse. So what went wrong?
The answer is not clear-cut. For most of its 163-year history, Unwins was owned by the Wetz family. But towards the end of their tenure, it was clear they lacked a strong retail strategy - and the business flip-flopped about between off-licences, c-stores and premium wine shops. Worse, the chain was gripped by uncertainty as management changes were made and the business was put through a convoluted process whereby it was first up for sale, then not, then sold.
All of that was clearly damaging for a company operating in a highly competitive part of the food and drink retail scene.
“You have to be very good to succeed,” says one analyst. “The high street off-licences are all struggling to keep up with the supermarkets and only the out-of-town wine merchants with more floor space, notably Majestic, seem to be able to survive. Unwins was definitely up against it.”
The real turning point in the company’s story came when it stopped being family-run just a few months after The Grocer’s last Top 50 was published.
It had started courting potential buyers back in the summer of 2004, attracting the likes of Thresher, Bargain Booze, Oddbins, as well as the Co-operative Group and former Sainsbury director Patrick McHugh. By last February, the retailer had pulled out of talks, claiming it had decided to pursue a sale and leaseback scheme instead. Then came the bombshell: in March Unwins was sold to DM Private Equity for £32m.
The pricetag alone raised more than a few eyebrows among rivals who
felt that DM had over-paid for a struggling business. And some of the blame for the Unwins collapse must lie with the new owners, even though they were in charge for just seven months.
As one analyst says: “There definitely seemed to have been a few administration errors by the guys that bought it.”
There’s no doubt that DM didn’t seem to know what it had on its hands. And as the year progressed, things went from bad to worse as initial reports of low stocks in many stores became obvious with shelves looking sparse. Unwins was locked into a vicious downwards spiral: as low stocks got even lower, the chain’s ability to generate cash was undermined, which made it harder to pay bills, which put the business under even further pressure and ensured the stock situation deteriorated. And so it went on.
Right up to the end, DM was in public denial about the poor state of the business. Chairman Phillip Cook even went so far as to boast to us in early December about his ambitions for Unwins, with plans to launch a franchise scheme and expand the Phillips Newman concept
On December 20, his words had a very hollow ring to them as Unwins collapsed into administration. Within days, Thresher had bought 200 stores and the wreckage is still being picked over by a host of buyers eager to acquire the remaining 150 stores - with Cook, unbelievably, among them.
Can anything be learnt from the collapse of Unwins? Probably this: there’s no room in today’s market for a chain cursed with bad strategy, bad management and bad luck.