What does the collapse of Wilko mean for the UK high street?

The demise of Wilko has sparked concern for the thousands of people who will be made redundant, as well as the high street as a whole as hundreds of sites will be left vacant – adding to the long list of current empty stores.

Numerous bids and offers have been weighed up by administrator PwC, but only one has materialised and that was the purchase of 51 stores by B&M, to be relaunched under its own fascia.

The fate of the other 350 single-unit stores is currently unknown, but there have been links to other value retailers such as Poundland and The Range snapping up the sites.

Another scenario is that the stores will be left empty, an option that GlobalData senior analyst Matt Walton is concerned about.

“My fear is that it’s going to be a similar sort of situation to Woolworths in that the sites stay vacant for quite a while,” he says.

And while the fate of the former Wilko stores is up in the air, the future of its staff looks bleaker.

While The Works, Home Bargains, Aldi and The Original Factory Shop are promising to offer former Wilko staff interviews, it is unlikely that all 12,500 staff will be re-employed immediately. 

So does the collapse of Wilko mean we will see a larger presence of value retailers on the high street or will we be greeted with more empty shops? 

Value on the high street

With B&M confirming last week that it paid £13m for 51 former Wilko stores, the retailer is now planning to relaunch the sites under its brand within weeks.

Despite B&M having a presence mostly in out-of-town areas, founder and chief executive of JDM Retail Jonathan De Mello believes there could be a place for the brand on the high street.

“B&M could be in conurbations, perhaps London-based locations,” he says. “B&M has always had London locations, but these are in retail parks in residential areas. I would imagine that London and the South East would be where it looks critically to pick up Wilko stores, especially where it has limited out-of-town presence.”

Meanwhile, Poundland has been linked with purchasing about 100 stores from Wilko, expanding its high street presence.

Walton believes it could be useful in the short term, but in the long term it won’t be enough to bring people back to the high street.

“There is an overlap with the two businesses, and I think Poundland will be going to the spaces where it hasn’t got that much presence,” he says. “But there needs to be a more fundamental change to the high street and what can be done to encourage people to come into town centres. I’m not sure having Poundland replacing Wilko is going to make that much of a difference.”

De Mello counteracts this — he thinks Poundland could end up closing certain stores to move to the better or larger sites it acquires from the vacant Wilko stores.

“I don’t think there are many locations where there’s a Wilko but not a Poundland,” he says. “So in that instance, it would be required to increase Poundland’s representation in that area. But I think a lot of the time it’ll be because it wants to upsize and therefore this is the quickest and easiest way of doing so.”

But he emphasises that this move would mean Poundland would want to keep its existing staff who are familiar with its offering, meaning Wilko staff wouldn’t benefit from job offers.

Unaccounted stores

While Poundland is reportedly in the running for taking over 100 stores and The Range in talks to acquire Wilko’s online assets, other value players could be in the mix to snatch up some vacant sites.

Retail Week data and insights director Lisa Byfield-Green says Savers, Card Factory and The Works could want to expand their store portfolios.

“It is likely to take some time for stores to become occupied — as we have seen since the demise of Debenhams, there are still many stores standing empty on the high street,” she says.

Byfield-Green says there could also be an opportunity for other out-of-town retailers such as Dunelm and B&Q to venture on to the high street, whereas Walton thinks the empty stores could be converted into non-retail units such as community spaces, hospitality or leisure facilities.

“Outside of already named players, who would be interested in it from a retail perspective? I think it will shift towards non-retail,” Walton says. “Those who are left with the vacant units are going to need to be quite creative in terms of how they can fill the space.”

De Mello thinks Aldi could look to purchase some leftover stores, as it aims to open a further 500 stores in the next few years. 

“I think the only other possibility is Aldi coming in and acquiring some of the stores where it doesn’t have current representation,” he says. “Aldi also needs to recruit 6,000 staff, so they could definitely pick up a number of Wilko staff.”

Aldi has called on Wilko staff to “get in touch” as it goes on a recruitment drive. But even with this offer, there will inevitably be many vacant units on the high street and thousands of people will lose their jobs before Christmas approaches — all in the midst of a cost-of-living crisis.