‘Wilko may look like Woolies 2.0, but it could still have a future’

When Woolworths went down more than 10 years ago, Wilko looked likely to happily fill the gap left behind as the home of pick ‘n’ mix and general merchandise categories such as home and garden.

But Wilko now looks likely to follow Woolworths in a way it would rather not as it teeters on the precipice of likely administration.

The retailer revealed a notice of intention to appoint administrators yesterday, despite months of effort to secure its position, including consideration of a CVA and emergency financing injected by distress and restructuring specialist Hilco.

Administration would be a sad 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 with 400 branches, an online business and some 12,000 employees across the UK.

However, Wilko has not been fleet of foot enough in recent years, and the tragic irony is that its potential success is currently being enjoyed by a raft of competitors.

B&M, for instance, was only established in its current form in 2004 after the Arora brothers bought it as a 21-shop business, but it has become one of general merchandise’s star performers – helped by a footfall-driving food range – along with companies such as Home Bargains and Poundland, which have also grown apace.

“Wilko has made some costly mistakes. It has remained a fixture of the high street while competitors, notably B&M, have based themselves in retail parks”

Wilko has made some costly mistakes. It has remained a fixture of the high street while competitors, notably B&M, have increasingly based themselves in retail parks and out-of-town locations.

It was also hit hard in the pandemic and its aftermath, which further boosted the appeal of retail parks.

As online grew, Wilko got in on the party but it has fallen behind. It was only this year, for example, that 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.

Wilko’s shops look neglected and its value-for-money offer less compelling than the propositions being rolled out by B&M et al.

The latter’s buying prowess has enabled it to source products and deals that have evaded Wilko.

More recently, a lack of stock on Wilko’s shelves as the retailer hit trouble has only served to further drive custom away.

Slow to act

While Wilko’s family ownership is understandably a matter of pride, you have to ask whether that also in the end contributed to its slowness to act.

Lisa Wilkinson remained as chair until earlier this year, by which time the retailer’s problems were starkly evident. The family took a £3m dividend in the year to February 2022 – not a great look in the circumstances. 

The post of chief executive did not exist at Wilko between 2012 and 2020. It’s a reminder to all retailers that, while past success and the reasons for it should not be forgotten, companies must always ensure they remain in tune with the times and open to new ideas and ways of doing things.

The current chief executive Mark Jackson, who has made big changes to Wilko since being appointed last year, including strengthening management and reducing costs, brings experience in navigating retailers through tough territory.

He did it before at Bensons for Beds, where Wilko’s new chair Chris Howell held the same role.

“In the present environment, when customers are still staggering under the weight of the cost-of-living crisis, Wilko should be doing much better”

Wilko’s management is hopeful that, despite the notice of intention to appoint administrators, the business has a future. They are right to believe in its fundamentals.

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. Hilco, which previously owned HMV – and won praise for its stewardship despite the music specialist’s eventual demise under its ownership – and owns Homebase, must be a prime contender but not necessarily the only one.

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 in the event of admin – and sharpen its proposition and value, in 10 years’ time it may still be here, unlike Woolies.