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Retailing giant Woolworths this week called in the administrators as they could not see a way forward for the business.
The country is hitting hard times at present and retail is one of worst hit sectors with public spending well down on last year as the recession and credit crunch takes it toll. However the collapse of woolworths should not be confused with the recession, sure it didn’t help but this collapse is down to nothing more than poor product buying and bad management.
The truth is that Woolworths have been in trouble for over 10 years, customers have no real reason to go into their stores . I remember back in the day, Woolworths had its place on the highstreet, you went to the Butchers, Fruit and veg man etc and Woolworths for everything else, gardening tools, pick n mix, CDs, Pens etc etc etc but with companies like Tesco and Sainsbury you can get all of this stuff along with your weekly shopping and if searching for a sole item in town like a CD you would have been more likely to go to a specialist store such as HMV Woolworths has not grown with the times.
One of the big problems was due to management here's where it went wrong. Woolworth's in the 80s spend an absolute fortune researching and buying the best locations on the high street, these sites would be now worth a fair bit of cash or so you would think, But the management back in 2001 sold the sites with an agreement to lease them back but they signed an agreement that the rental rate would rise 2.5% a year regardless if times were good or bad if they made a loss they would still have to pay this increase thus signaling the death knell for wollies.
The administrators will now seek to sell of the valuable parts of the business
In other news this week, MFI have had to pull the plug and are currently selling off stock and knock down prices to clear the stores but like Woolworth's they claim to have a sale but when you go in its still £2000 for a plank of wood with a 10% discount *note to Woolworths and MFI* you are closing down you have to flog cheap this is why you are going bust because even in a closing down sale Tescos and Asda kicking your ass.
I would say by the end of 2010 we will be looking at a very different high street in many ways, big companies are not safe at present with huge outgoings and warehouses full of cash tied up in stock take your bets on which is to fall next.
It really is time for a small local business to thrive, they can make changes quickly to save the future of the business and apply changes that are suitable to their own town.