Woolworths has been a staple on the British high street for almost 100 years even though it started life as an American import. The first UK branch was opened in Liverpool in 1909. The main problem with Woolworths in recent years is that it lacked a specific brand identity: as a cut-price retailer it was undercut by the supermarkets and £1 shops and as a seller of CDs, DVDs, home wares and toys it was out performed by specialist retailers like HMV, Waterstones or Toy R Us. It became a jack of all trades and a master of none. The only reason people went to Woolworths was to nick pick n’ mix and buy really small cans of coke.
Typically Woolworths made 80% of its yearly profits in the run up to Christmas, now with the British economy in the doldrums, the high street is suffering. With Woolworths’ business model in such a precarious state, all it has taken is one bad year for it to go to the wall.
Woolworths might still prevail now it is in the hands of administrators. The BBC is interested in acquiring Its DVD and CD distribution business while Hilco a specialist restricting firm are looking at options for taking over the day to day management of the branches.
The failure of Woolworths may precipitate a price war as the administrators, desperate to claw back some money, sell off Woolworths’ stock in massively discounted sales. This would force other retailers to reduce their prices which may affect their own profitability during the festive period. Instead of being an isolated event, the failure of Woolworths might have a domino effect on the British economy affecting jobs and businesses alike.
