This article appears on page 8 of the May - June edition of DSB (Department Store Buyer). Online version here.

I think there IS a place in today’s economy and society for a variety store, but not a Woolworths clone. All too often success or failure is decided, not by what you do, but how you do it. I am reminded of how true this sentiment is by the various fashion retailers operating in the value sector. New Look and Primark have been performing well (excepting perhaps New Look’s on-off-at time of writing, back on again IPO) and both have released encouraging numbers. The opposite is true for MK One and Ethel Austin for whom the future looks very shaky indeed.

Woolworths did not collapse because they operated in the variety sector. There was a whole plethora of problems affecting the business. Covering every one of these issues would require far more column space than I have here today! Just a very few of these problems; availability and range issues in-store plus intense competition and cashflow nightmares with the Woolworths owned Entertainment UK. Add to that mix failed refinancing attempts plus the withdrawal of credit insurance and life at Woolies became truly desperate. The Telegraph described Woolworths as “an expensive and stagnating retail business tied bizarrely to a successful but cash-hungry DVD wholesaler.” Woolies will surely live on via case studies and lectures in universities and business schools around Britain but I think it is safe to say that it wasn’t operating in the variety sector that was really their problem…it was the way the business was run.

Having said all that Woolworths did have a lot of competitors in many of its product areas and since their collapse these competitors, including Asda, Tesco, Argos, Wilko’s and pound stores have all scrambled to snatch a share of Woolies ‘widows’. A few “son of Woolies including WeeW, Wellworths and Alworths have also sprung up. Legal battles aside (Shop Direct owns the Woolworths brand name), they seem to be trading well. Alworths is run by former Woolworths director Andy Latham and currently has four stores with plans for 22 in the next few months. Andy believes Alworths will breakeven in their first year so we will have to wait with baited breath to see if that eventuates.

Dave Dodd, co-founder of Poundland announced via Retail Week (March 12) that he would be launching Hub, a mid-market chain aiming to build into a 200-store chain. Apparently he plans to “shake up the variety sector” which has “lost its way”. The first Hub store should open in the next couple of months and will aim to “create a similar emotional experience to shopping in TK Maxx. Hub will sell confectionary, stationary, toys, hardware, electrical homewares and greeting cards. I don’t doubt that Dave has the commercial nouse required but 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 their place.

Now throwing caution to the wind – could there be a whole new take on variety around the corner? Stuart Rose, Executive chairman M&S recently said “We might have to look at Boots, M&S and B&Q teaming up to present an offer under the same roof” That would certainly be interesting. 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 Woolworths and offering quality small goods such as homewares (nothing that would need a car or delivery) in the convenience of a town centre location.

I guess we’ll just have to wait and see. What do you think?

Becki Rowe - The Retail Marketing Maven