Out of town Big W superstores
Realisation of a dream ... or start of a nightmare?
During the 1980s and 1990s the Kingfisher share price substantially outperformed the market. Dividends rocketed as the chain expanded. But, from time-to-time, City Editors raised challenges about the Group's retail brands. Was there a theme and a carefully crafted strategy, they asked, or was Kingfisher just a hotch-potch of shop chains that had needed new management.
The stock response from the CEO, Sir Geoffrey Mulcahy, was that each 'OpCo' was a leader in its markets, or had that potential. Then, in June 1999, he revealed that throughout the decade he had been exploring the idea of a store chain that would bring all of his major UK fascias under a single roof.
The British Kingfisher brands covered nearly all of the leading markets, missing only Food and Adult Clothing. Customers could buy appliances, televisions, audio equipment and computers from Comet, all manner of Do-It-Yourself, Home Repair and Gardening Products from B&Q, Health and Beauty from a revitalised Superdrug and, to complete the picture a wide selection of general merchandise including Home, Toys, Kidswear, Confectionery, Entertainment and Seasonal Products from Woolworths.
Behind the scenes, secret work was exploring a merger with Asda which it was hoped would add the missing pieces, with a full range of food and clothing.
With Woolworths sales and profits on the road to recovery, and the Asda talks going well, the CEO decided to lay some foundations, supported by his protégé and new Woolworths MD, Roger Holmes.
Mulcahy sked Woolworths (as the Company who would provide the largest part of the range) to take the lead in developing the out-of-town concept. An Executive Search was launched to track down a Managing Director to bring the idea to life. In parallel, the Kingfisher property subsidiary Chartwell Land was asked to find possible sites within their existing portfolio or for ground-up builds.
Pending the outcome of the secret merger talks with Asda, short-tern arrangements to buy groceries from the Big Food Group, which was then the parent of Booker Distribution and Iceland Frozen Food. A similar arrangement was agreed with Peacocks for a clothing range.
The headhunters recommended Canadian-born Bob Hetherington to lead the new business. He had spent his early career working for F. W. Woolworth Co in the USA, rising to manage their Woolco out-of-town operation. When this had been sold to Walmart he had been retained to head their operations in the Asia Pacific Region. He had a strong reputation as an inspirational leader and an excellent motivator. It was soon clear that he had infectious energy and enthusiasm, as he developed a vision of a larger than life 'fun place to shop' with 'retail-tainment at the weekend'.
A location on the outskirts of Edinburgh, Scotland, was chosen as ground zero. The team had nine months to shape the idea, select a range and layout the store. Between September 1998 and May 1999 they had to engage with other Kingfisher operating companies as well as Big Food Group and Peacocks, agree the processes and supporting systems and select and set up 55,000 products. By opening day the Big W tills were programmed to recognise a remarkable 200,000 different bar codes.
Less than eight months after accepting the role, Hetherington was ready to open up shop. Breakfast television superstar Lorraine Kelly gave a speech to a large crowd to declare the store open, accompanied by the Lord Provost of Edinburgh, Eric Milligan. Kelly told shoppers that she had already chosen several items including toys, and strongly commended the firm's range of knickers, which she declared to be beautiful 'and such good value for money too'. CEO Geoff Mulcahy told reporters that Big W was a bold step forward for the Kingfisher Group and praised Hetherington's leadership and the support that he had received from the Woolworths MD Roger Holmes and his Retail Director Leo McKee.
A brass band struck up the theme to Hawaii Five-O as shoppers made their way in, greeted by rapturous applause from the store staff who had lined up inside the entrance. The range, atmosphere and energy were all larger than life. The 100,000 square foot (9,290 m2) store offered a very broad selection at consistently low prices. Most of the customers interviewed by film crews outside said that they loved the new store, were proud that the firm had chosen Edinburgh for the first outlet and would be back regularly for bargains.
The enthusiasm was enough to quell disquiet about the collapse of the talks with Asda for a while. The store had a distinct magic and personality all of its own, and its prospects looked encouraging.
Encouraging early sales in Scotland prompted Kingfisher to accelerate their roll-out plans, and called on B&Q, Comet and Superdrug to make the project a priority, even if this meant delaying their other plans. By Christmas Big W had opened a second store in Glasgow's Forge Retail Park and the Group had taken a lease on a site in Bristol in South West England where they announced that they would trade head-to-head with Asda. Plans were also laid to open in Bradford, Rotherham, Tamworth, Coventry and Redruth (pictured above) during the millennium year. You can see what a Big W store was like in our digital gallery.
But all was not well at Kingfisher. The Big W news did not placate frustrated investors for long. There was disquiet at the collapse of the Asda Merger and a suspicion that poor trading performance from the Kingfisher subsidiaries in mainland Europe showed that the CEO had taken his eye off the ball. Pressure mounted for Mulcahy to halt the falling share price. In the end he announced that Kingfisher would be split up. His statement explained that the general merchandise businesses would sold off or floated independently on the Stock Market. This would free 'GM plc' to pursue its exciting strategies while also allowing 'New Kingfisher' to concentrate on its out-of-town interests.
Without the guiding hand of Kingfisher, Mulcahy's 'dream come true' soon became a nightmare. It was not long before Executives at B&Q and Comet returned to their other priorities. Instead of demerging with Woolworths, Superdrug was sold privately to Kruidvat, putting further pressure on Big W's supply lines. Without the long-term support of the sister companies, the out-of-town premises looked over-sized. The upwards-only, full repairing, 30 year leases were to become a major millstone for the demerged firm in the twenty-first century.
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