Woolworths: Cheap but not so cheerful?

By Candice Krieger
November 20, 2008

Not even Sir Alan Sugar's midas touch could prevent Woolworth's from the credit crunch, it seems.

The Apprentice star bought a near-four per cent stake in the business last month, but the sweets-to-CDs retailer has suffered as the economic slowdown has hit consumer spending. The company is reportedly in talks to sell its retail division for just £1.

Where did it all go wrong?

The chain has been struggling for some time as competition from more specialist outlets, large supermarkets and of course, the Web, has forced down sales. Its problems have been exacerbated in recent months by a rapid downturn in consumer spending, which has forced a string of retailers into administration.

In September, it announced a first-half pre-tax loss of £90.8 million. There is no question that Woolies - jack of all trades, master of none - is an institution, known for its cheap and cheerful diverse stock. From pix and mix to mixing bowl, Woolies had it.

But today, they are not the only one. The store has been eclipsed by larger ranges in other stores and supermarkets. Tesco and Asda are home to a competitive range of clothes, music, toys and school uniforms, while Primark is becoming increasingly popular for home-wares. And so, Woolies - with its famous red logo - is left in a precarious position.

If the retailer were to go, I would be sad. Not because I may one day find myself in desperate need of a cheese grater or World Cup football stickers, but because it further underlines the vulnerability of the British high street. Sales on the UK's high streets fell by a lower-than-expected 0.1 per cent in October, according to the Office for National Statistics and leading retailers, such as Marks & Spencer, Dorothy Perkins, Selfridges and John Lewis, are cutting prices for short periods of up to several days.

Besides, the high street would certainly be a duller place without it.



Fri, 11/21/2008 - 11:42

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I don't agree that the high street would be a duller place without Woolworth. It is perhaps the dullest outlet on the high street and has been for some time. Woolworth has been beset by bad management and a lack of strategic focus for years.

A look through the window of any of their stores tells the story: tatty displays, untidy stock, messy floors, miserable looking staff and overpriced low quality products. There's nothing wrong with positioning oneself at the low end of the market - that's why Sir Alan is interested, it's his speciality - but low quality has to have low prices to match.

Woolworth fail in so many ways and that's why they're in trouble.


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