If Woolworths didn’t exist, would you invent it? If it wasn’t on the high street, would you miss it? Those questions have become clichés. Equally clichéd is the answer so commonly given – no.

The idea that Woolies is a retailer whose time has gone has become pervasive, but it’s a counsel of despair. That surely must be the opinion of new chief executive Steve Johnson.

Plenty of rival retailers clearly believe that the variety store group’s business model, modernised and adapted, has legs. Privately owned Wilkinson, as we reported a couple of weeks back, is piling on sales and profits by effectively occupying strategic ground traditionally held by Woolies.

Similarly, the fixed-price variety store model it pioneered has been replicated by more youthful market entrants. Poundland and 99p Stores are both doing well and Poundland was exciting enough to win private equity backing.

Only three years ago Woolies itself was the focus of private equity interest as Apax mulled a bid at more than 58p a share. The financial whizz-kids clearly saw profits to be made from Woolworths.

The harsh trading climate of the moment should spell opportunity for Woolies, not the dismal trading last reported. From Aldi to Primark, the trend is for cash-conscious consumers to seek value as never before. Is there really no opportunity any more for the revival of one of the value pioneers?

Woolworths’ difficulties are partly attributable to the incursion of the big grocers into its categories – evidence of the attractiveness of its market – and there is no doubt that the task facing Johnson is daunting. The business that emerges is likely to be quite different to that of today – focused, for instance, on shops in smaller towns rather than big city centres. But it’s not impossible to envisage a profitable future.

Some point out that the sale of Focus for£1 is hardly evidence in support of Johnson’s track record on turnarounds, but many of Focus’s problems were attributable to its debt burden rather than any retailing failures.

The other cliché about Woolies is that it is well managed but a bad business. Up to a point, Lord Copper. If management really is good, can a business perennially be bad?

It wasn’t so long ago that WHSmith was supposed to be the retailer nobody would miss, but Kate Swann’s success there has transformed opinion. Johnson and Woolies will stand or fall on whether a similar story unfolds.

George MacDonald is deputy editor of Retail Week

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