No One To Save Woolworths Crisis...even at £1

23 November 2008 has been locked in crisis talks this weekend with company restructuring specialist Hilco, negotiating a 'rescue takeover deal' to save its 840 high street stores.  The starting bid price? £1.  The reason?  Debts of £385m.

However, Burdale Financial, a subsidiary of the Bank of Ireland, and GMAC Commercial, both lenders to Woolworths, have so far rejected the Hilco offer to offload their debt, striking fear that 30,000 jobs could be at risk with the troubled retailer, currently reporting "operational issues and strategic challenges".  The half year reported losses amounted to almost £100M in September.

Unless the M&Ms and Gok Wan DVDs start flying off the shelves, 25,000 staff at Woolies, and another 5,000 for other businesses within the group could be lost.  The subsidiaries of Woolies include media distributor EUK who are closely involved with stocking DVDs and CDs at supermarket chains like ASDA, BBC media partner 2entertain, and women's clothing store MK One.  It's also the 2nd time this year that MK One has had trouble.

But is throwing money at one of the UK's most well known high street chains going to solve the problem?  In my opinion, Woolies needs a serious image rebranding whatever happens.

[Times Online]


  • chrisg
    They need to improve y, and fast. Here's some ideas: 1. 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. 2. 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. 3. 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. 4. Maximise the benefit of their web presence. There's a big market for ordering online, picking up in store which is being ignored by this retail sector. 5. Update the image - recent store upgrades have been surreal at best, schizophrenic at worst. Celebrate the wide stock range, and use that as a differentiator from the rest of the high street. 6. Leverage the in-store café facilities at some stores more. Cheap food and drink brings in the punters, especially tea and coffee so sell it at cost and increase foot fall. 7. Stop reducing the perceived value of DIY/household goods by constantly having half-price offers on lots of items. Nobody is fooled by it, just sell things for a fair price, and have sales only at appropriate points in the sale cycle.
  • simonb
    i have a shop a few doors from 1 and don't know if it will help or hinder my business if it goes down. It is the only major shop on the high street and if it goes will people come to the high street any more or will they now come to me as Woolworth is gone. Fell sorry for the people who work there. Maybe the government should bail them out like it is the banks and possibly car industry. I only go in there to buy the £1 sweet offers (dime bars, crunchy etc) and black bin bags and last time i went in there they weren't there anyway. Seems to me it's between a rock and a hard stone. There to late to join the internet business and presence on the high street cost lots which your not going to clam back selling bin bags and sweets. I guess if your looking to what they could do then current market winners seem to be tescos, primart and lidls. quality products at good prices. perhaps changing stock once a week (like lidls) would keep people coming back more often (and buying more sweets).
  • chrisg
    And it has begun. Woolworths now offering 3 for 2 on all confectionary. Just like I said in point 1 - take one part of the market, and fight tooth and nail for it and bring people in that way.
  • veedubjai
    Another National institution going down the pan just like C&A, BHS & Littlewoods. This is very sad situation with many job losses & because nothing was executed at the right time at the right moment with the right management. You have to feel sorry of those who are going to lose their jobs & have to cope with financial issues under the credit crunch. Just like Rover sold for £10.00 & it's a National joke. Where do they employ these management staff from? What did the shareholders do to stem from this? Have they not learned from their last mistakes. Have they look at other continental business models that could be used in the UK to be at the forefront of retail business. All big retailers have to stop giving out big bonuses for failed performance for all staff including the management staff. Woolworths are simply too late for a MAJOR restructuring plan especially with debts up to it's neck especially with the credit crunch going on unless they can get the best retail management staff to turn around the business immediately who understands the very fast changing market. The image of the company is appalling with current market trends. What bank would be stupid enough to loan out more money now to any losing business portfolio when the credit crunch could potentially last until end of next year or two? Even the Big Four banks are trying to build up cash reserves to keep the business running. 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. Woolworths can forget the Government assistance as this is UK retailer & not a major National company such as car manufacturing, heavy industry & finance market that have big influences on a international market.
  • Woolworths B.
    [...] 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 [...]
  • jim
    it was offensive and a load of rubbish

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