The blunder of Woolworths

One interesting news item that may have passed your attention last week was the fact that Claire Robertson, the ex-manager of the Woolworths store in Dorchester is to re-open the single store herself under the name Wellworths. This follows on the heels of the Barclay Brothers, who announced they have bought the Woolworths name and intend to operate it online, along with their other retail brands of Great Universal and Marshall Ward.

It wasn't so many weeks ago that I stood in my local Woolies as it entered its final death throes. The last handful of shoppers, wooed in by window posters proclaiming huge price cuts, had few bargains from which to choose: a handful of boiled sweets, some children’s socks and two packs of nails. Teary-eyed staff seemed dazed, unable to take in the fact that the doors they opened daily for many years would shortly be closing for good, just short of their centenery celebrations.

Was Woolworths yet another victim of the economic downturn? It would be easy to blame the recession for the company’s woes, but it wouldn’t be true. The problem was one hundred percent with the brand – or rather the lack of one.

When Frank Winfield Woolworth opened his first ‘five-and-ten-cent store’ in New York, the concept was right for its time: A clear value proposition, categorisation of goods and an enjoyable customer experience. Its first UK branch in Liverpool opened in 1909 with the claim, ‘Nothing over sixpence’ and succeeded in selling its entire confectionery stock in one day. But by the 1980s, the marketplace had seen significant changes. Other speciality stores had appeared on the High Street offering greater discounts than Woolworths and, in the absence of any new brand strategy, its popularity began to wane.

Seeing the writing on the wall, the American parent cut its ties with Woolworths in the UK and began its own attempts at diversification. Its US sports shoe arm, Foot Locker, appeared as its saviour and eventually all the Woolworth stores were closed in order to focus on promoting the Foot Locker brand – still a strong global retail player today. So why did Woolworths fail in the UK? Continual neglect of its brand left the business with no visible core values and little customer loyalty. Successful brands need to be exciting and innovative – but that was hardly apparent in a typical Woolworths outlet. Uncomfortable noise levels, untidy aisles littered with boxes of products and fragmented store layouts served only to frustrate and annoy customers. Staff often appeared ignorant of just what was in stock and could hardly be described as ‘customer-focused’ – despite the company’s boast of nearly two thousand ‘mystery shoppers’ checking on the customer experience in 2007.

As late as August 2008, the Woolworths board attempted a turnaround, and a new chief executive was appointed. Positive messages about the future were still being delivered in press releases early November. ‘Woolworths has a great retail brand,’ claimed new CEO Steve Johnson after just a few weeks in the job. Poor Steve. He hadn’t looked closely enough – or simply didn’t understand what branding was all about. Woolworths had become a weak player in a commodity market, a bargain basement, cut-price store that had lost its way – and its customer base – to other more innovative High Street brands.

There is a vital lesson to be learned here. In the year ahead, a strong brand will be the only lifeline for many retailers, because the fact is that no brand means no business. It’s a maxim that Woolworths management seemingly never appreciated. A huge blunder. And one that was paid for at the highest price.

I had a really nice email from Petter in Norway, who said, 'I've just finished your "Branding Your Business" book (that I happened to stumble upon at a local bookshop), and just wanted to say I'm glad I did...your book was a very insightful and inspirational read that definitely will help me both in my current position and future ventures.' Thanks, Petter.

HOT 102 FM in Jamaica interviewed me recently about branding their country – a place that gets bad press that's often unwarrented or inaccurate. Just goes to show how powerful perception can be. You can listen to the the interview by clicking here or right-click to download for later listening. It's quite a large filesize, so if you don't have a good broadband connection, you might find it a little too much!

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