It’s been one year since value retailer Wilko fell into administration, which saw the beloved high street chain close 400 stores and cost 12,000 people their jobs.
The Wilko brand was saved by The Range just a few weeks later, which wasted no time in getting it back on its feet again.
Wilko now has a relaunched website, a click-and-collect offer, a tools rental service and a partnership with Iceland Foods. It has also opened six stores, with a seventh due to open in the autumn.
Wilko ultimately wants to open 300 stores across the UK in the long term, starting with 40 openings per year.
The first six were met with extensive press coverage, ribbon cuttings and a queue of shoppers excited to get back to their new and improved Wilko store.
But will the novelty wear off? And what does Wilko need to do to win back those customers who flocked to rival retailers?
Seeking stores
Growing to 300 stores in five years is no mean feat, especially when competitors such as Poundland, B&M and Home Bargains already have hundreds of stores sprawled across the UK.
Slow and steady is the way to go, according to Investec analyst Kate Calvert, who says Wilko has the buying power of The Range to put it in a “much stronger position”.
“I wouldn’t expect a fast rollout or anything like that because that’s not the style of The Range, is it?” she says.
“I think when interesting property sites come up, which suit the Wilko brand, there will be more but I wouldn’t expect anything fast to happen in the shorter term.”
JDM Retail chief executive and founder Jonathan De Mello believes Wilko could look to reoccupy some of the locations it was in previously.
“Landlords haven’t let out some of those spaces yet,” he says. “In the majority of high streets these days, there’s a decent amount of vacancies so getting that space shouldn’t be a problem.”
He adds that acquiring 300 units overall “may be a stretch” but, if Wilko wants landlords to be interested in them again, an ambitious goal could be one way to do that.
Wilko also needs interest from customers. It would make sense to open in those areas of the UK where demand for brand and product offering is strongest.
Data from CACI reveals that Birmingham spends the most money online at Wilko in the UK, making this potentially the best location for a new store.
Rotherham, which already has one Wilko store, comes in second, followed by Leeds, Sheffield and Bradford.
“Wilko’s return to the high street can work if it approaches it differently,” CACI associate partner Matthew Pratt says.
“There is a clear place for value to thrive within the market, but it’s all about opening in the right places, with the right proposition and format.”
Value rivals
As part of its expansion plans, Wilko and The Range have appointed former Matalan property boss Antony Darbyshire as the new head of property.
“Matalan are principally out-of-town retail, so it’s clear that Wilko wants to target out-of-town more than in-town based on that appointment,” De Mello says.
High streets may not be the best option for Wilko this time around and it could benefit from operating at retail parks instead.
De Mello points out the large space and lower cost per square foot, adding that if Wilko wants to open 40 stores a year, it needs to look at retail parks “more than it did in the past”.
Another factor it needs to consider is competitors such as B&M, Poundland and Home Bargains.
While the value sector’s success peaked during the height of the cost-of-living crisis, that has not stopped these retailers from expanding their store portfolios and range of products.
GlobalData associate analyst Sophie Mitchell says some of these value players are now struggling with the product mix and that Wilko should continue its “test-and-learn approach” with its offering.
“I think Poundland’s struggling at the moment with its mix in store, having introduced clothing,” she says.
“Having taken over those previous Wilko stores, Poundland has got a lot of real estate to work out that mix quite quickly, whereas Wilko is taking a much slower approach.”
Mitchell believes Wilko should go back to its roots and supply hardware, DIY, health and beauty, and cleaning essentials as these ranges are where it is likely to succeed.
She adds that customers “won’t purchase homewares or bedding from discounters” once they are able to trade back up.
Journey to success
While the British public were mostly upset by Wilko’s closure, Calvert says love for the brand is not enough for renewed success.
“It’s not like losing Marks & Spencer. It’s not what I describe as a really powerful brand,” she says.
“There are plenty of examples historically where the brand hasn’t been enough and part of its decline is that they weren’t necessarily giving the consumer what it wanted.”
Mitchell echoes this, adding that Wilko wasn’t a great place to shop towards the end due to a critical shortage of stock.
To succeed this time around, she believes Wilko must focus on competitive pricing, strategic locations and online to put the famous brand back at the forefront of shoppers’ minds.
“There’s a focus on the online channel, which was never a big focus for Wilko before,” she says.
“There aren’t many discounters that have a particularly user-friendly channel and there’s often minimum spend, so I think that will help Wilko set itself apart.”
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