Dan Murphys brand. By the time Coles launched its big box liquor concept, 1st Choice, in 2005, Woolworths had rolled out another 40 Dan Murphy’s outlets in prime locations, including interstate sites. The acquisition was pivotal and had left Coles floundering in its liquor business ever since, with a procession of managing directors failing to lift the performance of the 1st Choice and Liquorland chains and suffering an effective decline in the brand value of its premium liquor offer, Vintage Cellars. Woolworths currently has around a 40 per cent market share in the retail liquor market, with annual sales of around $7.5 billion. The company’s market share has jumped in 10 years from 15 per cent, as Dan Murphy’s has expanded to almost 200 stores and BWS has ballooned to more than 1200. Coles’ market share is around 19 per cent with sales of around $3 billion from just under 100 1st Choice stores and close to 900 Liquorland and Vintage Cellars outlets. Coles announced its first major review of its liquor business 10 years ago, but the strategies adopted then, and through a succession of reviews and management changes, have made little impact in terms of gains for the division against Woolworths. Indeed, one of the MDs was Tony Leon, who sold his stake, along with the Murphy family, to Woolworths in 1998 and steered the expansion of the chain nationally until 2008. Leon was unable to revitalise the Coles liquor business, which was plagued by poor store location choices, particularly in the rollout of the 1st Choice chain. John Durkin, Coles food and liquor MD, conceded last year that the Coles liquor business was underperforming and represented unfinished business from the Ian McLeod turnaround of the supermarkets division. Durkin ordered yet another review, and has effected several management team changes in a bid to lift sales and earnings. The current MD, Greg Davis, took over in June 2014 after a stint as GM for fresh foods with Coles supermarkets business. He had previously worked with Franklins and Aldi. Davis has closed 32 underperforming stores in the past 12 months and has cut prices on more than 300 lines in Liquorland stores. He has also rationalised ranges, reducing the number of products by 20 per cent in a new Liquorland store format that is to be rolled out into more than 200 locations in the next phase of a turnaround plan. Davis is not looking to expand floorspace with new store growth, but to a plan that aims to improve productivity in existing stores and to re-engineer the network to relocate some stores from inferior sites to better locations. Coles has previously said changes in the liquor division would also focus on efficiency, with the aim to simplify the supply chain and operations and to lower the cost of doing business while also working to improve the customer offer and experience. Davis wants to invest in lowering prices and to introduce more private label and exclusive brands and is focusing on training staff in stores so they can better advise and interact with customers. Restrategise, restructure The new strategies adopted for the Coles liquor business have resulted in a restructure of management, with Cathi Scarce appointed as GM of operations last March and Anthony Davie as group GM of merchandising. Scarce is a 20-year Coles veteran and was state GM of Coles supermarkets in Western Australia before the liquor division appointment. Davie was previously MD for Asia with Treasury Wine Estates. Davis has also expanded the role of Andrew Griffiths, the GM of Spirit Hotels, to include management of the 1st Choice liquor chain. Coles is continuing to evaluate its business operations with trials of new merchandising concepts and layouts in stores, changes to advertising and promotion and changes to ranges that will see fewer suppliers in future and the development of house label products. In many ways, Coles’ dilemma in chasing Woolworths’ tail in the liquor business is the reverse of its Wesfarmers parent’s success in keeping Woolworths’ Masters Home Improvement at bay while Bunnings thrives. The issues at Coles liquor and Masters are similar, with poor locations, poor ranging, less effective advertising and marketing and adverse perceptions by customers on prices. Coles doesn’t break out the liquor sales from its supermarket figures, but the company has concedes the liquor businesses trading as 1st Choice, Vintage Cellars and Liquorland have been dragging down overall growth for the food and liquor division. Despite the evidence of previous reviews, Coles has failed to define the retail offer of its three brands in the way Woolworths has and has made little improvement in the decade since it launched 1st Choice after experimenting with another format called Quaffers. 1st Choice was launched in a string of poor locations, which would be bad enough in itself given Coles’ supposed capability in identifying and securing sites for its various retail brands. However, what’s worse is that poor property decisions are arguably still being made almost 10 years on. In annual briefings, Coles has promised range reviews, keener pricing on products and a fix for the poor store development strategy. But little improvement is evident and suppliers are scathing in their opinions of the retailer’s capability in liquor retailing. Even the recruitment of former Dan Murphys MD, Tony Leon, in 2008 failed to lift Coles’ liquor business, and arguably created more confusion for staff, suppliers and customers with a heavy reliance on discounting. Oddly, when Leon retired in 2013, Coles appointed a former Kevin Rudd advisor – with no real experience in the liquor industry – as MD. Andrew Charlton has now been moved to a business development role within Coles. Charlton made little headway in addressing what Durkin had defined as the problems in the liquor business. In a sharp appraisal of the business in 2014, Durkin said Coles’ liquor business had an inferior store network; a large and confusing range; non-compelling value; poor store layouts, signage and visibility; and a weak online proposition.