In November 1909 the first Woolworths store in Britain opened in Church Street, Liverpool, with the proud claim that nothing cost more than sixpence. With such strong value heritage, one might expect today’s Woolworths to be hoovering up market share from more expensive generalists such as WHSmith, in the same way that cash-strapped shoppers are deserting mainstream supermarkets for the more limited, but substantially cheaper, charms of Aldi. But as Woolies approaches its centenary in the UK, its prospects have never looked bleaker. In a chilling addendum to the recent interim accounts, their auditors highlight “the existence of material uncertainties which may cast significant doubt about the company’s ability to continue as a going concern”. Credit insurers are running for the hills.
In sharp contrast to its eponymous retail chain, Woolworths owns some highly successful distribution businesses; EUK and Bertrams service both the Woolworths chain and a variety of third party customers including mainstream supermarkets and entertainment retailer Zavvi. These fundamentally sound businesses would surely emerge unscathed if the parent company went under.
It’s easy to sit on the sidelines and throw out suggested remedies for the Woolworths chain, when a succession of well-regarded managers have achieved little more than temporary respite from the downward spiral. But on new CEO Steve Johnson’s agenda might be:
• Market positioning: was “kids and celebrations” ever meaningful? It would be reckless to throw away any of the decent blocks of market share the chain has (confectionery, entertainment, etc) but a more compelling over-arching mission is needed.
• Back to basics: where is the plethora of needed but hard-to-find household items for which Woolworths was once famous? Robert Dyas has illustrated the potency of returning to the legacy heartland.
• Restore value credentials: it’s the brand’s birthright – why stand by and watch chains like Poundland report record profits?
• Execution: availability and store standards are often woeful – is morale, staffing levels or systems (perhaps all three) to blame?
• Real estate: in many smaller towns the company still has the biggest and best site. There is surely more value to be unlocked here, along the lines of the recent disposal of nine sites to Tesco for around £1m apiece.
The collapse of this erstwhile national treasure would be a disaster for publishers, landlords and decent, hard-working employees. Let’s hope that Steve Johnson is given enough time to find the right solution.
This blog entry is a version of an article which was first published in “The Bookseller” magazineBack to top of article