News

Oct 20, 2023

What has gone wrong at Wilko?

Selling pick 'n' mix, stationery and even garden tools: Wilko has styled itself as a budget UK homeware chain for more than 90 years. With 400 stores across the UK, the chain is well-known for its

Selling pick 'n' mix, stationery and even garden tools: Wilko has styled itself as a budget UK homeware chain for more than 90 years.

With 400 stores across the UK, the chain is well-known for its affordable everyday items.

But the High Street stalwart has warned that it is on the brink of collapse, putting some 12,000 jobs at risk.

We went to a Wilko in London and also asked customers on social media what they thought about the chain and what had gone wrong. The people we spoke to did not want to share their photo or surname.

Alex, a communications professional who lives in Wimbledon, says he'd be "gutted" if Wilko disappears altogether.

"It's where I get my pick 'n' mix before the cinema. I always find it great value, and really good on stuff like detergent," he said.

The business was founded in 1930 when JK Wilkinson opened his first store in Leicester. Then, it was called Wilkinson Cash Stores and by 1939 a total of nine stores had opened.

It expanded across the Midlands initially and by the 1990s became one of Britain's fastest-growing retailers.

James, a construction professional, remembers the first Wilko store in Leeds: "My dad loved it - a brilliant location at the Arndale Centre in Headingley. It sold such a wide range of things."

But Stephen from North Tyneside says it doesn't have everything he wants.

"We only go in for specific items. It's good for washing up powder. It's not what it was, I don't think," he said.

In 2012, Wilkinson began rebranding its stores as Wilko, after its own-brand products marketed under the Wilko name. By 2014, most stores had emblazoned the new name on storefronts.

Although the brand is beloved by Brits, Richard Lim, boss of the Retail Economics consultancy, said: "Sadly, sentiment doesn't ensure commercial success."

Wilko stepped into the High Street gap left by the collapse of Woolworths in late 2008, but has struggled over the past decade partly due to growing competition from the likes of Poundland and B&M.

Wilko's sales were larger than B&M's a decade ago, but now they are one-third of its competitor's. Its sales have also fallen below Poundland, Home Bargains, and The Range.

Some analysts have pointed out that rivals seem to offer similar goods at lower prices.

"The competition is a lot more fierce in non-food now, particularly in the discounted bit of the market, compared to five years ago," said Mr Lim.

"But also from our research demand for homeware is taking a backseat - it's almost like that surge during the pandemic for items like lamps, cushions etc has taken away from present day sales."

Retail analyst Catherine Shuttleworth said the typical Wilko customer tended to be very focused on price.

"I think what we're seeing is a lot of love for the brand - but unfortunately love doesn't pay the bills, and customers are being drawn to competitors."

Ms Shuttleworth added: "I don't think we'll see Wilko disappear from the High Street, but it could look very different in the future."

The discount chain has 408 stores across the UK, many of them in High Street locations in traditional town centres.

While these locations are convenient for shoppers without cars, since the pandemic there's been a shift to bigger retail parks and out-of-town options with more space.

Charles Allen, retail analyst at Bloomberg Intelligence, says that the locations of Wilko stores have been a bit of a turn-off for some customers.

"B&M has also moved many of its locations to retail parks which are more convenient for many consumers, especially when they are buying bulky goods."

Richard Lim says Wilko's focus on the High Street has not helped it keep up with rivals.

"B&M and Home Bargains have really invested in their stores - and since the lockdowns in the UK, customers are really after that shopping experience.

"Wilko has also struggled to join up their online and in-store operations - it's not as smooth as it could be," he added.

Attempts to modernise stores with self-service tills have struggled, said Catherine Shuttleworth, and made the shopping experience "quite frustrating, particularly for the older customer that will traditionally shop at Wilko".

But some customers feel Wilko is one of the last bastions holding on amidst a decline of the High Street.

One shopper told the BBC that she would be "very upset" if the town lost its Wilko store.

"It's a bit like the old Woolworths and it would be a huge loss - not everyone likes online shopping,"

Wilko has already borrowed £40m from the restructuring specialist Hilco, cut jobs, rejigged its leadership team and sold off a distribution centre as it faced a cash squeeze after falling to a loss.

Shoppers have noticed gaps on shelves after Wilko struggled to pay suppliers and at least one credit insurer withdrew trade cover, prompting some companies to pause deliveries.

Richard Lim added: "It meant that they didn't have the cash to stump up for products... and it turns the retail business on its head."

In this instance it looks like the chain might not have had deep enough pockets to get through another tough trading period - after a pandemic and a cost of living crunch.

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