Saturday, November 29, 2008

What is the point of Woolworths? (BBC)

So woolies with a failing business model for the last few years has finally become the latest victim in the credit crunch/ recession / down turn or whatever it is being called today. As an aside it is comforting to know that the end of the world will be accompanied by a media friendly name which is supposed to make everything more acceptable.

Anyway woolies has lost its way and the decline has been ongoing for the last few years. You might say it started with the fall of the CD single although that was not the only reason for the fall from grace.

Fundamentally Woolies have tried to compete with everyone and in doing so has made the usual mistake of having too many general products and not enough niche products. What it does well is that it is the retail version of the post office on the high street. In my town apart from Tesco it is the only place on the high street you can buy things like light bulbs. One of the last things I bought from woolies was a kitchen bin which was a third of the price of the equivalent one from their only competitor on the high street.

Even I have started being put off by woolies, the stores seem cluttered and un modernised, the parquet flooring they all used to have is now replaced by cheap flooring. Woolworths is an institution like M & S and like M & S it needs to go back to its roots and discover the reason it was there in the first place.

Any radical revamp would involve cutting its lines by at least half, it needs to concentrate on key areas such as home wares, stationary and children's clothes. It needs to cut the rubbish like books, electrical goods and most of the entertainment isle etc. If the product category doesn't fill a good 5m row of shelving it should go. By all means have two different store inventories based on store size but products need to be comprehensive and fill customers needs. Dare I say it most of the cheap products also need to go. Price the own brand range based on the competitors, don't be the cheapest in the market place, be one of the cheapest with a reputation for quality and good value.

Stack it high and sell it low was never a good strategy for woolies, it never had that kind of brand. Woolies made the mistake of trying to compete against companies on the business parks which had lower overheads. Woolies key strength is that it is on the high street at the centre of the community, it has a range of products which can only be found in woolies on the high street, you didn't need a car to go get what you wanted. This is its strength and this is its core business and this is the home it needs to return to.

Woolies is not dead merely lost in the wood. It has a lot of potential and only needs the right person with the vision to push through the changes.

No comments: