The Bookseller.com

7th January 2009

Alan Giles spent 20 years in bookselling with Waterstone’s and W H Smith. He retired as c.e.o. of HMV Group last year to take up non-executive and teaching roles.

Whither Woolies?

16.10.08

In November 1909 the first Woolworths store in Britain opened in Church Street, Liverpool, with the proud claim that nothing cost more than sixpence. With such strong value heritage, one might expect today's Woolworths to be hoovering up market share from more expensive generalists such as W H Smith, in the same way that cash-strapped shoppers are deserting mainstream supermarkets for the more limited, but cheaper, charms of Aldi. But as Woolies approaches its UK centenary, its prospects have never looked bleaker. In a chilling addendum to the recent interims, its auditors highlight "the existence of material uncertainties which may cast significant doubt on the company's ability to continue as a going concern". Credit insurers are running for the hills.

Woolworths has dabbled in and out of books. Having pioneered the retailing of paperbacks in the 1930s, the company has recently rebuilt a worthwhile book market share of around 1% under the stewardship of Gerry Berkley. If Woolworths collapsed, the loss of more than 700 retail outlets would be a severe blow. An even greater concern would be the impact on the EUK and Bertrams subsidiaries; but these fundamentally sound businesses would surely emerge unscathed if the parent went under.

It's easy to sit on the sidelines and throw out remedies for the Woolworths chain, when a succession of well-regarded managers have achieved only temporary respite. But on new CEO Steve Johnson's agenda might be:

Market positioning: it would be reckless to throw away any of the decent blocks of market share the chain has (confectionery, entertainment, etc) but a more compelling, over-arching mission is needed.

Back to basics: where is the plethora of hard-to-find household necessities for which Woolworths was once famous? Robert Dyas has illustrated the potency of returning to the legacy.

Restore value credentials: it's the brand's birthright—why stand by and watch chains such as Poundland report record profits?

Execution: availability and store standards can be woeful. Is morale, staffing levels or systems (or all three) to blame?

Real estate: in many smaller towns the company still has the biggest and best 
site. There is surely more value to be unlocked, considering last week's disposal of nine sites to Tesco for around £1m apiece.

The collapse of this erstwhile national treasure would be a disaster for publishers, landlords and decent, hard-working employees. Let's hope Steve Johnson is given enough time to find the right solution.

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