Wilko is The Next Woolworths

Snapshot surveys, like small forum groups, can give skewed, biased, and unrepresentative results.  They can mislead.  But sometimes they can give a glimpse, perhaps even a panoramic view, of the overall situation. 

Twenty Wolverhampton residents’ were recently asked a series of questions about Wilko, the retail chain with over 400 stores across the UK, mainly in traditional town shopping centres. 

• 55% of the 20 residents reported they did not know if there was a Wilko in Wolverhampton; 20% knew its exact Wolverhampton.
• 60% were very unclear what Wilko sold. Some suggested mainly tinned food, others mentioned household cleaning products; 15% provided a good description of the main goods sold.
• 40% claimed it was like Woolworths; 25% like B&Q; 20% like Wickes (some believing Wickes and Wilko were the same); 10% like Poundland; 5% like Homebase.
• 80% did know if Wilko had online shopping; 60% of those asked did not know if it had out of city stores.
• 85% had not shopped at Wilko for more than a year; 60% of these for between 2-5 years; 40% of these for over 5 years. 

This snapshot survey, a cursory and superficial market analysis, highlights many of the problems Wilko is facing.  It has lost brand focus, lost many customers, and lost market share to competitors.  It has big city and town centre shops, which have very high cost bases, when its competitors selling large, non-food items such as Homebase and B&Q, have often located in cheaper out of town stores with easy parking.  These can undercut Wilko while providing a superior shopping experience.  Meanwhile, its competitors in the city and town centres such as Poundland and B&M, have a much more sharply defined brand and market focus than Wilko, have smaller stores, and offer customers greater value for money.

Whereas Wilko was the fastest growing High Street retailer in the 1990s, it is now struggling to survive.  This may not be a surprise: fifteen years ago it moved into many of big High Street shops previously occupied by Woolworths (a large, general goods chain which went into administration), when it was already evident that offering a very diverse , low margin product range in very expensive big, city shops was probably a key reason for Woolworths downfall.  Thirteen years ago Wilko shortened its name from Wilkinson’s, perhaps as part of its new branding strategy, but it changed little else.  It did not react fast enough to the new, more focussed, and more direct cut-price retailers.  It did not retaliate successfully when its market share first began to fall. 

Wilko is now like the retailer whose stores it rushed to occupy 15 years ago.  Wilko has become the new Woolworths.  Wilko is another big High street retailer that will fail. 

The Management Accounting Team

Department of Finance, Accounting and Economics