Woolworths on the brink of administration - your reaction
I've a confession to make. Woolworths are on teetering of the edge of going bust, and it's all my fault. See, sometime in the early 1990's I stole a Dime bar from their Darlington store. Accidentally, I might add. I didn't mean to - I'd put it in my coat pocket while I was looking at the Transformers - but I can't help but feel in some way responsible. I'm sorry.
As a direct result I'm sure, Woolworths seems royally screwed. Shares in the company have been suspended today while a buyer is sought for the company, as we reported at the weekend. And it's emerged that in order for Woolies to avoid administration, the following needs to occur:
- a buyer is needed to take on the company's £385 million of debt
- Woolworths has to sell its 40% in a publishing firm, most likely to BBC Worldwide who own the other 60%
- the banks have to approve both deals, which isn't guaranteed
- dinosaurs must be discovered at the centre of the Earth
We added that last one, but we might as well throw it in because the chances of the first three all happening are slim-to-anorexic. Regardless of the outcome, it's already reported that Woolworths will have to make two thirds of its workforce redundant - yes, that's the best case scenario.
Plenty of you have had an opinion on the fate of another heritage high street brand. Bitterwallet reader and shopkeeper SimonB has concerns about the impact of Woolworths closing down for other businesses, his own included:
I have a shop a few doors from [a branch] and don’t know if it will help or hinder my business if it goes down. It's the only major shop on the high street and if it goes, will people come to the high street anymore, or will they now come to me as Woolworth is gone? Feel sorry for the people who work there.
There still may be hope, according to veedubjai, but it would mean making some hard-nosed business decisions:
It will have to be emergency drastic measures such as selling parts of the business right now & just concentrate on the core business that it has been known for in the past & have special exclusive offers with the manufacturers on weekly / fortnightly / monthly basis. The market has changed so much within the last few years now & Woolworth is not keeping up the pace. Woolworths have now to be ruthless & just sell off unprofitable parts of the business.
Finally, ChrisG has some thoughts on how Woolworths could have claw its way out the hole it now finds itself in:
- Pick a market, and aim to be #1 place to go in the high street in it. Margin is irrelevant, just attack attack attack. For example - be the cheapest place to get new games on the high street without any exclusions. Owning the disty will help here. Loss leaders or zero margin offers like this will generate impulse and add-on revenue generation in the longer term.
- Find new niches. For example, confectionery is seen as a core competency, yet a quick visit to a Woolworths store will show a dwindling number of lines carried. Add some new lines, to bring in new customers - witness the clamour for Wispas recently; sign a deal with one of the big manufacturers to bring back an old classic as a Woolworths exclusive. They have previous form here, when they brought back some random sweet from the 1980s whose name escapes me.
- Go for the grey pound. Getting pensioners in there buying their supplies for kitchen and home is an absolute must. There’s opportunity to take back market share from argos, simply by offering off-the-shelf supplies of goods at a similar price point to Argos.