Woolworths UK to be Reborn Online
By Bernice Hurst, Managing
Partner, Fine Food Network
After years of famously
selling very little to a very small population, Woolworths in the UK closed
the doors of its British bricks and mortar outlets just after Christmas.
Many of their empty stores have now been bought as administrators couldn’t
find anyone willing to keep them open and trading.
Mere weeks later, however,
the name is about to be resurrected as an online brand. Woolworths’ new
owner, Shop Direct Group, has several online retailers, including Great
Universal and Marshall Ward.
Although the BBC points
to retail consultant Teresa Wickham’s view that
the online retail landscape is now a "very competitive marketplace," she
also believes the timing is ideal, "while the brand is still fresh
in people’s minds."
Mark Newton-Jones, chief
executive of Shop Direct, is confident about the future, according to the BBC.
"This is great news
and we are confident that Woolworths, as an online brand, will once again
prosper and quite rightly stay at the heart of British retailing…It
would have been a tragedy should the name have disappeared," he said.
"It is an iconic name."
It isn’t yet clear which
product lines will be available but children’s clothing brand, Ladybird,
is fairly certain. The new venture is scheduled for a summer launch but
a website has already opened for customers to register the sort of products
they would like to see.
Ms. Wickham observed that many who shopped at the High Street
stores were elderly and would not automatically visit the new website but
added, "People are generally getting more used to buying online, and
the online clothing sector is predicted to grow over the coming year."
The Times reported that Shop Direct
is closing a call center and cutting head office staff but wants to focus
on the internet over its more traditional catalog business.
Woolworths opened its
first store in Liverpool in 1909 as FW Woolworths, a subsidiary of its
U.S. parent. Known affectionately as
"Woolies" in Britain, the store was known for years as a major
value retailer. Woolworths in the UK had outlasted its U.S. parent, where
the final Woolworths stores were closed more than a decade ago.
One precedent for reincarnation
was set when Montgomery Ward in the US, forced into bankruptcy in 1997,
returned to life as a catalog and e-commerce business under the ownership
of Direct Marketing Services Inc. (DMSI) as discussed here back in 2007.
(Wards
Comes Back – As a Catalog – RetailWire)
Discussion question:
Do you see online retailing as a viable option to re-launch failed brick
and mortar retailers?
This gets a collective meh. If you fail at bricks and mortar, what makes you think you can win online? I don’t think this is the right time (especially in the UK) for this.
The Woolworths brand has become a synonymous with bankruptcies and closures. In my research on online shopping, customers purchase from brands they are confident in. Amazon has only come out with good news in the last 6 months, so people flock to it because they are confident with the Amazon brand. Woolworths doesn’t have the brand ammunition to make this work. Shop Direct should do themselves a favor and start from scratch with a new name like Shop Direct.
Teresa’s view that the Woolworths brand is fresh in the consumer’s mind is correct but not for the right reasons.
All that is left of Woolworths is the name. The customer experiences of shopping in the stores, the sights and sounds, the familiar fixtures and product merchandising will never again be experienced. All that is left then is the Brand.
The question is, will the Brand translate? If they wish only to appeal to the smaller core of loyal Woolworths shoppers, will it be enough to support a profitable online retailing operation?
If they plan to attract customers beyond the core Woolies shoppers, do they understand what the Brand conveys to them? Perhaps a “Woolies” customer has a negative connotation to those who never shopped it before. What will draw them to the site?
If the Shop Direct group wants to attract additional or new customers to this online site than they have the daunting task of re defining a Brand which comes with a much larger price tag in terms of marketing and time to success.
This is not the first time we have seen a retailer do this. Remember Sharper Image? Richard Thalheimer, CEO, closed down the retail stores and we have seen the brand Sharper Image reappear in various places (catalog and online) along with a new brand named Richard Solo. This is a case of catalog gone retail gone catalog and online.
I recently asked a retailer, what if all your sales shifted from your brick and mortar to online and you could maintain the same level of sales? The retailer answered correctly…”that would be great!”
I believe this will occur more over time. Online/catalog businesses are not without their own set of challenges, however, it gives a retailer the ability to dramatically expand their customer base and to provide consumers with purchasing opportunities that may not have been available through traditional brick and mortar solutions.
I don’t know enough about the Woolworth’s brand in the UK to comment specifically, but I think that, in general, this concept has merit if the online retailer can access the retailer’s customer list and if the products lend themselves to online marketing and shipping. One of the best examples I can imagine would be Marshall Field’s with gourmet foods, crystal, china, etc. That was a tragic loss of brand equity when they were lost into the Macy’s mergers.
Let’s not be so quick to write this off. Several brands are thinking “retro” right now in order to capitalize on the perceived comfort of post-war America (vs. 2009!). I think, in the case of Woolworths, that if they can launch a website modeled on the best of the brick and mortar version–that is, the one that Boomers shopped in during the 50s and 60s as children, that they might have something….
The key to success, as with all efforts, is to dig for the emotional connection that these target customers ever had with the brand and the shopping experience in its hey-day: from design to brand/product mix to service to merchandising and more. What made the experience feel unique and special back then?
What’s old is new again!
For many websites, the #2 cost (after merchandise) is the cost of attracting the audience. It’s not unusual for a website to pay $10 to $20 in search fees, affiliate fees, and other forms of advertising, just to get a new customer to shop the first time. So if it helps to have a famous name, the customer acquisition cost might be reduced. Why not reduce your second-highest cost?
There has to be positive value in the retailer’s name as it reinvents itself as an online retailer.
Hechinger.com, montgomeryward.com and wards.com have made the transition. While Hechinger.com has bitten the dust, this won’t prevent others from trying to make it in the internet world using a “famous” retailing name. Linens N’ Things, I understand, will follow in their footsteps.
I am sure, as the brick and mortar retail landscape weeds out the weakest in the months ahead, more will follow.