question time
“So-called ‘pound stores’ have seen sales rocketing and it is not just consumers from disadvantaged socio-economic groups that are flocking to them. A considerable proportion of their customers are affluent individuals who consider it more socially acceptable to be flaunting their frugality.”
expensive and stagnating retail business tied bizarrely to a suc- cessful but cash-hungry DVD wholesaler.” Woolies will surely live on via case studies and lec- tures in universities and business schools around Britain but I think it is safe to say that it wasn’t oper- ating in the variety sector that was really their problem…it was the way the business was run. Having said that, Woolworths did have a lot of competitors in many of its product areas and since their collapse these competi- tors, including Asda, Tesco, Argos, Wilkinson and pound stores, have all scrambled to snatch a piece of Woolworths’ market share. A few ‘son of Woolies’ brands, including WeeW, Wellworths and Alworths, have also sprung up. Legal battles over naming aside, they seem to be trading well. Alworths, run by former Woolworths director Andy Latham, currently has four stores with plans for 22 in the next few months. Andy believes Alworths will break even in its first year so we will have to wait with baited breath to see if that eventuates. Dave Dodd, co-founder of Poundland, announced in March plans to launch Hub, a mid-mar- ket chain aiming to build into a 200-store chain. He plans to “shake up the variety sector” which he feels has “lost its way.” The first Hub store should open in the next couple of months and
10 Department Store Buyer
will aim to “create a similar emo- tional experience to shopping in TK Maxx,” selling confectionary, stationary, toys, hardware, electri- cal homewares and greeting cards. I don’t doubt that Dave has the commercial nouse required, but the question remains, can he make the shift from Poundland to mid-market? Whatever the rest of us might think, there are certainly quite a few people out there who believe there is money to be made in the variety sector. My prediction is that they won’t all last the next two years and there will be a significant amount of refining and adjusting as each retailer finds its place. Now throwing caution to the wind, could there be a whole new take on variety around the corner? Stuart Rose, Executive chairman at Marks & Spencer recently said, “We might have to look at Boots, M&S and B&Q teaming up to pres- ent an offer under the same roof.” That would certainly be interest- ing. Or my secret wish: a town centre/market town format of John Lewis (where a full size store does not already exist) operating from a similar sized unit as Wool- worths and offering quality small goods such as easily carried home- wares in the convenience of a town centre location. I guess we’ll just have to wait and see.
MIKE PRETIOUS
LECTURER IN MARKETING AND
RETAILING AT QUEEN MARGARET UNIVERSITY, EDINBURGH
The closure of Woolworths in early 2009 seemed to signal the end of an era in British retailing. It was the last nationally known ‘variety chain’, offering an array of dis- parate merchandise categories, selling confectionery alongside children’s clothes and stationery products next to toys. Whilst the company had a number of serious problems, it was arguably this eclectic ranging that caused its downfall; customers didn’t know what the brand stood for and had no reason to visit the stores. What Woolworths did sell was available in a broader assortment at other shop-based retail outlets or online, often at better prices. Whilst older consumers reflect nostalgically on their experience of purchasing ‘Pick ‘N’ Mix’ sweets and other ‘pocket money’ lines, younger con- sumers saw Woolworth’s as having a dated image that was out of touch with their needs. Fast forward to the beginning of 2010, and the demise of the variety chain appears to have been exag- gerated. At least two businesses, Alworths and Wellworths, have been carved out of the Woolworths property portfolio by former em- ployees who have been able to capitalise on goodwill towards
stores in specific locations. The Wilkinson chain, which trades across an even wider selection of product categories than Wool- worths did, increased its sales and gross profitability in 2009, though operating profit was down on the previous year. Wilkinson is expand- ing its store footprint well beyond its Midlands heartland, aided by a new transactional website which is promoting its offer to potential new customers all over the UK. A clue to the company’s success lies in its slo- gan ‘The Home of Family Value’; the business is positioned far more adroitly than Woolworths was, and is exploiting a desire spawned by the recession for ‘value’, particularly in household goods. It is at the even more price-con- scious end of the market that the real activity is taking place in re- spect of the renaissance of the variety chain. So-called ‘pound stores’ have seen sales rocketing and leading players in this field, such as Poundland, are amongst the few retailers currently search- ing for new shop units. The premise of such stores is that all the items stocked sell at £1, and though this is not strictly the case, the price proposition is sufficiently catchy to generate substantial footfall volume. The merchandise mix is determined largely by what is available to their buyers oppor- tunistically, but typical categories cover not dissimilar territory to that which Woolworths used to operate in, including health and beauty, leisure, stationery and gift items. In other words, these stores are effectively discount ‘variety chains’. Intriguing, it is not just consumers
from disadvantaged socio-economic groups that are flocking to ‘pound stores’. A considerable proportion of their customers are affluent individu- als who consider it more socially acceptable to be flaunting their fru- gality, rather than spending freely, in the present economic climate. Those with an interest in retail history will know that Marks and Spencer origi- nated as a ‘penny bazaar’ market stall in the late nineteenth century and that Woolworths itself had a similar ‘penny and sixpence’ philoso- phy in its early days. Driving sales based on a ‘one price fits all’ philos- ophy is nothing new, and the consumer’s desire for a bargain frequently outweighs the most targeted retail strategy. ■
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28