Cut-price liquor concept faces axe

By Joe Helm

The Robbie Burns chain of 16 stores may be the first major liquor retailing casualty resulting from an expected law change allowing supermarkets and other retailers to sell beer and spirits as well as wine.

DB Group has been reviewing for several years the likely impact on the Robbie Burns and Liquorland chains and is now considering amalgamating them under the Liquorland name.

If it does, it will abandon the cut-price perception of the Robbie Burns chain, which is likely to come under intense pressure from supermarket discounting.

Combined, DB's two retail chains are the major players in the retail liquor market, giving the brewer an edge over its principal rival, Lion Nathan, which has the largest share of the beer market.

Research DB did late last year showed that traditional liquor stores cannot attack supermarkets head-on, said the chief executive of DB Group's liquor division, Tom Maguigan.

"For most people supermarket shopping is regarded as a chore which has to be done. That is the big advantage supermarkets have," he said.

"To survive, traditional liquor stores will have to differentiate themselves from supermarkets.

"We have to make you decide not to buy your liquor requirements at the supermarket. That is very hard for the smaller neighbourhood-type operators.

"Focus on the customer will be the key to that. We will have to be better at things like service, selection, ambience and friendliness."

DB will trial the merger in Rotorua. Mr Maguigan said the integration made sense in Rotorua but it might not do so everywhere else.

"The reality is that supermarkets will probably be able to sell beer and spirits seven days a week , probably from October 1, and companies involved in liquor retailing, like DB, have to plan for that."

Mr Maguigan expected some rationalisation in liquor retail outlets but not among the big chains.

He said the Liquorland brand was three times more powerful than any other in the retail liquor market and that was why DB would use it rather than the Robbie Burns brand.

There are 93 Liquorland outlets, of which 65 are owner-operated and 28 are owned by DB. It owns and operates all 16 Robbie Burns outlets.

Mr Maguigan said that over time DB would probably move more to franchising rather than direct ownership. "We are not getting out of retailing."

A final decision on the merger was about three months away.