Blog: Will Woolworths work?
Leonie Barrie | 26 June 2009
Saddled with an estimated GBP385m (US$594m) worth of debt, jaded stores, rising rents and a business model that sold everything from sweets to electrical goods, garden furniture to clothes but struggled to compete with specialist retailers on either price or range, the demise of Woolworths earlier this year was long overdue.
But whether this outdated concept can be revived by a new way of selling – via the Internet – remains to be seen.
There’s no doubt the combination of the well-known Woolworths name – in particular its popular Ladybird children’s label – and the growth in online sales should make for a compelling story. And without the physical restrictions imposed by its stores, the brand now has the scope to sell a far wider range of items than it could before, including plans to introduce clothing, footwear and sportswear for older kids.
But there are also concerns that Woolworths' traditional customers may not be regular online shoppers, and that in the six months since the retailer’s demise they will have switched their shopping for kids’ wear to the likes of supermarkets Tesco and Asda, H&M, Primark and even Next and M&S.
But if there’s anyone who can make Woolworths and Ladybird work then it must surely be Shop Direct. The retailer is aggressively shifting its business away from its more traditional mail order catalogues and onto the Internet.
The group’s online sales now account for 56% of its total revenues, up from 18% three years ago – and it expects 70% of its GBP1.7bn (US$2.8bn) annual sales will be online by 2010/11.
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