The Trouble With Woolworth's

So after 99 years of trading Woolworth's is going out of business. Some 30,000 staff are to lose their jobs with little hope of finding alternative employment. Yet while these people worry about their futures some are greedily eying up the cut-price pic'n'mix.

Not the hordes of eager shoppers who, worried about their own finances, are looking to get their hands on some cheap chocolates for christmas, but the vultures of big capital who are keen to secure the portfolio of prime retail properties at bargain basement prices. The key players in the scramble for these sites are Asda and Tesco.

While many of the reports regarding the demise of Woolworth's have described it as a 'retail giant' this is misleading. The combined workforce of Asda and Tesco numbers 410,000 with Tesco having the greater share. With a UK workforce of 29million these two companies alone control over1.4% of the total. In comparison those losing out in the Woolworth's closure make up only 0.1%, not insignificant but it is clear who are the real giants here.

So why are these supermarket giants so eager to get into the high street after years of drawing shoppers away from town centres to their warehouse style superstores? Does the collapse of Woolworth's not herald the final triumph of their out-of-town business model and consign the idea of town centre retailing to the history books?

The answer is both yes and no. While the demise of Woolworth's is without doubt a direct result of the growth of the large supermarkets and the diversification of their product ranges which placed them in direct competition, it is the growth facilitated by the out-of-town model that is key, not the location of the stores themselves. The huge expansion evidenced by the swathes of new supermarkets built throughout the country gave Asda, Tesco, Sainsbury's, et al unprecedented buying power which they exploited to pressure their suppliers and drive down prices in a competition for customers. This left Woolworth's, a traditional 'pile-it-high, sell-it-cheap' retailer hopelessly outclassed.

If the staff of Woolworth's are looking for a culprit the prime candidates must surely be the supermarket shareholders and the government who were complicit in allowing them to run roughshod over the UK retail landscape.


Tomorrow: Why the giants want to return to the high street.