Wilko may look like Woolies 2.0, but a new buyer should save it from collapse
Wilco’s collapse into administration put tens of thousands of jobs at risk, but the high street staple should have a future if a buyer sees beyond the hysteria, writes George MacDonald.
The news of Wilko collapsing into administration is sad news for our high streets – it represents potentially 12,000 job losses and the closure of 400 stores.
The good news is administrators PwC have confirmed that the retailer will continue to trade without any immediate redundancies as talks with interested parties continue. And there it is really – the vultures will now be circling as it is likely that they’ll snap up the business at a much more competitive price.
Administration is a woeful fate for what has been a great retail entrepreneurial success story, starting from a single store in 1930 and growing to become one of the biggest privately owned retailers, often dominating large retail estates on our already depleted high streets.
We had high hopes after Woolworths went down more than 10 years ago, that Wilko would plug the gaping hole left behind, but the reality is that decreasing footfall and an uptick in agile competitors has rendered it dwindling, despite the best efforts of its recently appointed chief executive Mark Jackson.
You only need to cast an eye at the likes of B&M, Home Bargains and Poundland, to see what they’ve been up against. The fact remains that whilst Wilko has been snoozing (and let’s be honest, it has) competitors, have increasingly based themselves in retail parks and out-of-town locations which pull in the crowds.
It’s efforts to grow online have been noticed, but it fell behind the pack. Only this year, for example, did the retailer made click-and-collect available across its estate, while general merchandise giants such as Argos had made it a core part of the proposition. Argos also saved money by relocating standalone shops into owner Sainsbury’s stores.
That is not to say that high streets cannot work for value groups, but they need to adapt their economics and appeal to succeed.
Slowness to reshape the estate or fully exploit multichannel opportunities were indicative, too, of a loss of operational and executional prowess.
The shops look neglected and its value-for-money offer is less compelling than the propositions being rolled out by B&M et al which harness a brilliant buying prowess, enabling them to source products and deals that have evaded Wilko.
More recently, a lack of stock on Wilko’s shelves as the retailer hit trouble only served to further drive custom away.
All of that said, I do believe that the business has a future. Potential buyers are onto something here.
In the present environment, when customers are still staggering under the weight of the cost-of-living crisis, Wilko should be doing much better – indeed it should be thriving, just like some of its competitors.
It remains unclear who might take over the business. Specialist investors such as Hilco – a lender to Wilko – Alteri and Gordon Brothers have all been speculatively linked to a potential deal. None made a move ahead of Wilko’s administration but now that has happened, there may be room for a rethink.
Wilko may look like Woolies 2.0, but it could still have a future. If Wilko can restructure – and, inevitably, there will be store closures even if it is bought – and sharpen its proposition and value, in 10 years’ time it may still be here, unlike Woolies.