Woolworths still limps on but its days are numbered. The Woolworths in Camden Town is still open but the shelves have been stripped bare. It looks like a Russian supermarket in the late 80’s. You can still grab some sweets from the Pick n’ Mix section which is fitting as for many the only point of Woolworths was its sweet isle. When the last Pick n’ Mix is sold then, Woolworths will truly be no more.
This is what happens when companies go into administration during a recession. There was neither the inclination or the money to save a shop as symbolic as Woolworths so it is bad news for Adams, Whittards and Zavvi which have all gone into administration in the last two weeks.
It is easy to understand why a company like Whittards and Adams are having problems. Whittards is a luxury tea retailer while Adams purely sells children’s clothes. Their core business is provided by other retailers. It is possible to buy luxury teas and coffees from super markets and department stores. There is little reason to make a separate visit to a specialist tea retailer when you can buy similar products when you do your weekly shop. The same applies for children’s clothes which can be bought in super markets or in cheap clothes retailers like TK Max or Primark. Most importantly during a recession people spend less on luxuries like luxury teas and children’s clothes.
Whereas Adams and Whittards are too specialised, Woolworths did have enough of a defined identity to keep people coming back. Woolworths sold products that any other high street shop did, but without the range of specialised retailers. Woolworths also could match its competitors on prices. A company like Argos is able to sell every product under the sun while at the same time offering its customers a huge number of items within each range. It is also really cheap. How could Woolworths possibly compete?
Zavvi is an interesting case. Theoretically a shop selling CDs, DVDs, game consoles, games and other home entertainment items should be doing really well. These are reasonably expensive must have items. Everyone, from every age and walk of life likes music, films and games. Even during a recession, people still buy these items because they are more likely to stay at home to save money and so invest in their home entertainment. However the music and movie market has taken a hit in recent years because more and more people are getting such items online from companies such as Amazon and Play.com. These sites do not have the overheads of a high street retailer and so are able to pass on the costs to their customers. Plus they can sell items high street shops with limited space cannot afford to stock. Buying online is becoming more and more popular as the populace become more web-savvy. Many online retailers offer free delivery and are often able to deliver an item within 24 hours of its being ordered. Illegal downloads mean that many people have stopped buying music and films altogether. Both scenarios are serious threats to off-line home entertainment retailers like Zavvi.
The coming year will be a difficult time for many retailers. It seems as only those with the most robust business models will be able to weather the economic down turn. Companies in precarious situations like Adams, Whittards, Zavvi may follow the same undignified fate of Woolworths.
