Lessons from Woolworth’s for small firms

The credit crunch didn’t do it for Woolworth’s as some newspapers would have you believe, the former British icon has been limping along for years. Here’s why it went under – small businesses take note!

When the first Woolworth’s shop opened in New York, it marked the beginning of a revolution in retailing: a general store selling goods at cheap, fixed prices. It was so successful that when Frank Woolworth commissioned the city’s famous Woolworth Building in 1910, he paid cash.

His shops had two unique selling propositions. In a precursor to modern supermarkets (which didn’t gain a foot hold until the 1950s) they sold a host of everyday necessities at knock-down prices that undercut specialised retailers.

It also allowed people to handle goods before buying them, unlike existing shops which forced customers to select items from over the shop clerk’s shoulder. That improved shoppers’ experience by speeding it up; yet for the first time they could ‘browse’ too.

When the concept came to Britain it was an instant success. British stores also featured ‘lunch counters’, which became popular and again the idea was pinched by supermarkets that came much later.

In 1979, Woolworth’s was the biggest retail chain in the world. But that marked the start of a dramatic decline. One hundred years had passed since the first store and now the shop had nothing to differentiate it from countless other outlets.

In America the original concept failed and only newly acquired speciality stores were kept open, most notably Foot Locker, which has since thrived. In Britain the chain split from its US parents in 1982 and stuck rigidly to its stack ‘em high sell ‘em cheap principles, which was to be its downfall.

Massively dominant supermarkets bullied Woolworth’s in the price war, while other shops like W H Smith’s, HMV, Argos and a host of online retailers offered a more attractive proposition for bargain hunters. Customers switched loyalties in their droves.

In the end, Woolworth’s had no USPs and only ‘pick n mix’ sweeties associated with its brand. There was no product differentiation from other shops with more specific lines, and nothing in the service that was unique.

So it had to go.

Woolworth’s story is a classic warning to those who refute the adage ‘adapt or die’. And in this age of ever more volatile markets, the more quickly your small business can respond to (or force) change, the better.   

Why not sign up to our small business newsletter and learn more?

Rating

By Dan Matthews  on   Nov 28,2008

Add a comment  |  Add a rating  |  Email to a friend

Keywords

Woolworths    retail    New York    shopping    credit crunch    customers   

Comments

Pip Crowhurst
What nonsense! Woolworths unique selling point is that you can buy almost anything there. (the same as Tesco is trying to emulate) Also Woolworth is invariably on the High Street, a big boost. Report Abuse

nick
i think its discusting that they let the greedy banks stay afloat which they mismanaged and let a company like woolworths go under,im afraid the shops or stores that take its place will be the here today gone tomorow types.
Report Abuse