Woolworths on the brink of administration - your reaction

26 November 2008

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.

TOPICS:   High Street News

8 comments

  • Billy
    Why are people always so quick to jump on a band-wagon - in this case knocking woolies even when its on the brink. Have peoples lives really been that messed up by Woolworths being on the high street. Get a grip.
  • chrisg
    They have a superb high street footprint, but simply aren't making the most of it. That can only be down to poor management. I echo the comments of those suggesting they take a "weekly" product line approach. It works well for Tchibo/Aldi/Lidl, so why not woolies? They've gone down too many unprofitable rat holes (BigW, anyone?) and noone is likely to step in to buy the brand (and debt for that matter) in this climate. It will go to the wall, and the carcass will be fed upon by the swirling vultures of Best Buy or Wilkos.
  • Alexandra O.
    Yeah, bring back Spangles. Again.
  • chrisg
    Spangles, that's the one. Was searching through my brain like a ID fraud thief ransacking the bins to remember that.
  • Deathwatch B.
    [...] hours after we reported that shares in Woolworths had been suspended, breaking news from the BBC: High Street legend Woolworths with its 815 stores across the UK has [...]
  • veedubjai
    Woolworths has been a presence on UK High Streets for nearly a century & one of the best-recognised retails brands in the UK but if they were to stay in business in the short term, they really have to get a move on as the banks will not be waiting & want the money back for security in times of the credit crunch. No question of it. With over 800 stores around the UK, they could easily closed down half of the outlets that have not been performing very well or simply underperfornming & keep outlets that have potential long retail lifespan. Sell the DVD retail business to 2 Entertain publishing joint venture with BBC Worldwide. I never thought Woolworths was the best place to buy DVD's & music CD's so why carry on a revenue-losing business. They are plenty of online retailers that sells DVD's & CD online with free delivery on some occassions with less retail store expenditures. (Remember MVC which was also part of the Woolworth PLC group?) The problem with Woolworths is they have been trying to the the "jack-of-all-trades" but seem to have loss the master of what they do best at. Selling products at cheap prices can have a impact on the image of the business. Customers are not dumb or fooled easy enough to understand Quality at a fair price. They could try to bring in some exclusive deals with some toy ranges & I mean high-tech toys, not just cheap gimmicks & also bring in some classic confectionary sweets that sold in bags of "Quarter of a Pound" just like in the old days when they were plenty of sweetshops just selling sweets only. How about a giftbox of classic 80's Quarter of a Pound box of sweets. I think it will be a good ideal to bring this in a revival of a modern day sweetshop selling retro classics like Shrimps, Floral Gums, Space Dust, Anglo Bubbly, Sherbet Pips, etc. Just do it as a trial & if they sell off so fast then Woolworth will be on a winner. May be consider introducing tea shops selling cup cakes & teacakes as well for that authentic British pastime. Like most businesses, Woolworths must listen to customers needs.
  • Dixons B.
    [...] we watch the demise of both Woolies and MFi, doubts about the future of two further high street chains have been brought up [...]
  • jaden w.
    saying that people from my family is just cruel, knowing that there are a lot of woolworths. it makes me upset to see my name with worthless on the end. I am deeply offended.

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