What Happened to Woolworths?

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#16: WOOLWORTHS

Woolworths was for many years one of Britain’s most popular stores, welcoming millions of customers year-on-year. Woolworths was renowned for its pick’n’mix, toys, their value range and children’s clothing. After almost 100 years of success, Woolworths ultimately closed, preceding the eventual collapse of the business. The collapse had a profound effect in the United Kingdom, with 807 store closures resulting in 27,000 job losses. In this article, we look at the history of Woolworths, and what went wrong.

 

Retail2
Woolworths enjoyed considerable market share for many years

Woolworths first store was opened in 1909 in Liverpool, England. Frank Woolworth, an American entrepreneur, founded the company. Woolworths used concepts from the US in their early years, despite concerns over its effectiveness. But the local press responded with delight to the opening, with shelves left almost empty after just a day of trading. Woolworths initially surpassed all expectations, and expansion was inevitable. By the 1920s, there were over 40 stores.

 

Founder Frank Woolworth passed away in 1919, with the business at the time worth the equivalent of $800million in 2010 money. The company survived this potential disappointment, and a new strategy around mass expansion began in the 1920s. By 1930, the number of stores had swelled to 400. Soon enough, Woolworths was floating on the London Stock Exchange. Following World War Two, their expansion continued, and, in 1957, their 1000th branch opened.

 

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In 1982, following decades of success, the British stores of Woolworths were acquired by the company which would eventually be known as Kingfisher. Throughout the next few years, the business would continue to enjoy excellent profits. Ill-fated attempts to open hypermarkets and larger stores with other Kingfisher brands integrated were eventually abandoned, but this didn’t affect overall profitability.

 

But by the 21st century, Woolworths started to struggle for numerous reasons:

  • Music Sales: Music had long been a key revenue stream for Woolworths, with CD’s and albums proving popular. Yet purchasing albums online became easier, while streaming songs as opposed to buying them outright became more popular.
  • Wilkinson: For a long time, Woolworths didn’t have a direct challenger. Yet Wilkinson (later Wilko) started gaining market share from Woolworths. While they were never threatening to overwhelm Woolworths, they took away some revenue. Wilkinson also had out of town stores, whereas Woolworths didn’t.
  • Online Competition: As the 2000s went by, the likes of eBay and Amazon became more popular – as the convenience of ordering online affected retail outlets. This trend has continued since.
  • Global Financial Crisis: Yet their biggest struggle came due to the financial crisis that engulfed the world around the 2008 mark. In what was already a tough time, this crisis compounded Woolworths’ misery. Consumers attempted to save wherever possible – affecting Woolworths.

 

These different struggles caught up with Woolworths, who started accruing debt. Takeover talks with frozen-food store Iceland broke down in early 2008. Debt was mounting for Woolworths, and this led to banks annulling loans. This forced Woolworths into administration, and trading on shares was suspended. Woolworths had entered administration with £385million worth of debt. The British government considered stepping in, but Woolworths was regarded as a ‘financially unviable’ business.

 

Amazon
In the contemporary age, Amazon dominate internet sales.

 

Finding a buyer was difficult, and store closures were announced. By mid-December 2008, stores started to close. Stores discounted products heavily in the final weeks in an effort to sell as much stock as possible, and some even sold fixtures and fittings too. The final store closed on January 6th, causing 27,000 job losses. The business itself was subsequently shut down too.

 

Woolworths has never returned since. However, there have been a few attempts to resuscitate the business:

  • Woolworths.co.uk: The brand ‘Woolworths’ and its online domain name were bought by Shop Direct Group in 2009. An effort was made to relaunch the brand as an online retail store. Yet the idea never really took off. The website was eventually defunct, and the URL currently redirects to very.co.uk – another online retailer owned by Shop Direct.
  • Wellworths: In a move that secured national headlines, employees at a closed down Woolworths store in Dorchester, Dorset, relaunched a store named ‘Wellworths’. They tried to sell similar items to before, and enjoyed a strong first year of trading. Yet the business struggled to sustain success, and legal battles led to a name change to ‘Wellchester’. They ceased trading in 2012.
  • Alworths: A similar concept to the above, Alworths was a chain of stores adopting the same products and format used by Woolworths. The business was launched in 2010, yet by 2011 the business had entered administration.

 


FROM BRILLIANCE TO BANKRUPTCY:
TOP 20 BUSINESSES THAT WENT FROM HUGE SUCCESS TO COLLAPSE


 

So many different areas contributed to the collapse of Woolworths – which was seen as a dark day for the high street. The high street has since continued to struggle, with further closures seen since – with the rise of online retailers causing this demise. Several other factors contributed to Woolworths collapse, with the global financial crisis proving key. Woolworths may be gone, thought it’ll never be forgotten by the millions of customers it served for many, many years.

 

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