For Britons of a certain age, the name Woolworths evokes
memories of childhood treats.u
...Which is rather the problem: few of us visited any of the
chain’s general stores as adults.
The Woolworths strategy was always to compete purely on the
basis of price. Woolworths were cheap. There was no brand status. There was no
spending on frills. Everyone knew exactly what they were getting when they
This can be a very effective strategy. For many years, it
made Woolworths a fortune.
Alas, he who lives by the price cut dies by the price cut.
For a long time, Woolworths has been undermined by a
combination of supermarkets, mail order companies, and even cheaper discount
stores offering products at similar or lower prices. The market has become more
competitive, especially since the internet and globalisation have made
international sourcing a reality.
Having relied exclusively on pricing, Woolworths had nothing
on which to fall back. They had no niche markets. Their stores were dowdy and
unappealing, because they had not spent money on them. Indeed, they had no
incentive to do so because, again with an eye to economy, their sites were
leased rather than owned directly.
That lack of a property portfolio was the final nail in their
coffin. There was nothing to attract a potential rescuer when the creditors
This is not to say that Woolworths were necessarily wrong.
Indeed, there is irony in the fact that the British group has gone into
administration just as the recession offers new prospects for discount stores.
Those opportunities now belong to others. It is in the
nature of discount operations to burn brightly for a while, but tight margins
mean there is little to invest.
Woolies had their time. They cannot complain. It was longer
Sad – but it happens that way.