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New values and a new direction for the third millennium

 

Woolworths Group Chairman Gerald Corbett (who served from 2001 to 2007) and Finance Director Christopher Rogers (2001-2004)
As Gerald Corbett interviewed candidates for the vacant CEO role, the Group FD's expertise helped to secure improved financing for the new Group. A clearance programme was initiated to turn old stock into cash.

Weeks after the demerger the men had to present figures for the half-year as part of the Kingfisher Group. These revealed the destabilising impact of the lengthy demerger process, and highlighted the challenges ahead.

 

Retail Week reported that the new Woolworths would see a dip in profits in their issue of 3 August 2001

The executives informed the audience of Investors and City Analysts that they had found weak stock management disciplines and severe overstocks. They were addressing these as a priority. They warned that there would be a number of exceptional charges at the year end, relating to the lengthy demerger process.

The initiatives that Woolworths had managed on behalf of Kingfisher would have to be revisited. The priority was to agree supply terms with B&Q for Big W and with Superdrug for both Big W and Woolworths General Store. It was not possible to decide a strategy for either until the supply lines were secure. In the meantime openings would continue on interim terms.

In response to questions from the floor, they confirmed that the selection process for a CEO was progressing to plan. They planned to interview three internal candidates, who were the Managing Directors of the three Woolworths divisions, but would also seach outside the Group. Ominously they also warned that it was unlikely that the role would be filled until after the year end. In the meantime Corbett would work full-time and direct operations personally.

They confirmed new Board appointments. Trading Controller Octavia Morley had stepped up to become Marketing Director, releasing Ken Lewis to head the Commercial portfolio. The new appointees would join the MDs and the incumbent Retail Director, Steve Lewis.

 

One of Gerald Corbett's first actions as Executive Chairman was to shut down the Woolworths Direct catalogue operation, dramatically scaling back the on-line web presence to just music and video. 100 people were laid off.Corbett told investors that he had already faced up to his first executive decision. He did not consider the Group's investment in new channels to be viable and had decided to scale right back. The Direct catalogue would be dropped, along with the service agreement with Freemans. He also planned to close the fulfilment warehouse. Regretably 100 jobs would go in Braunstone and at Head Office.

Rather than close the new website, he had asked the Group subsidiary Streets Online to reposition it with an Entertainment-only offer, which would be shared between Woolworths and sister company MVC. Entertainment UK would fulfil customers' orders.

The Group would record the costs of the changes, around £10m, as an exceptional item. However the Board had decided to proceed with the Kingstore project, which would replace all of the tills at Woolworths over time, and with the implementation of the SAP Retail enterprise system.

 

The MD3 - Woolworths Managing Directors Keith Fleming (Local and Heartland Stores), Bob Hetherington (City Destination and Big W out-of-town), and Steven Round (General Store, Health and Beauty)

Later Corbett rejected each of the internal candidates for the vacant CEO role. Neither the popular Keith Fleming, who had excelled in the High Street, driving up standards and improving morale, nor Bob Hetherington, the evangelist behind Big W, who had previously headed the Asia Pacific Region for Walmart and had extensive Woolworth and Woolco experience in the USA, nor even the dynamic Stephen Round was considered suitable for the job.

In their place Corbett chose Trevor Bish-Jones, the up-and-coming MD of Curry's, who had launched 'The Link' for Dixons Stores Group after working his way up at Boots. Corbett had worked with Bish-Jones at Dixons and was confident that the had the strategic skills to take the Group forward.

The appointment was trailedl in advance. City rules required a spell of 'Gardening Leave' before the new CEO could take up his post in 2002.

 

Trevor Bish-Jones, who was CEO of Woolworths Group from 2002 until the Spring of 2008Despite their sadness for Keith Fleming and the other MDs, colleagues instantly warmed to 'TBJ'. The affable and indefatiguable CEO captured hearts and minds by engaging colleagues at all levels and by explaining issues in simple terms. A good motivator and an optimist, for Bish-Jones no problem was insoluable. City Editors came to describe the new man as the 'nicest CEO in British Retail'.

The new appointment followed a long period of uncertainty. The MDs left the Group one-by-one, followed over an eighteen month period by forty of the chain's fifty top managers. Many were headhunted by the major supermarkets who were keen to break into General Merchandise and respected those who had prospered under Kingfisher.

As a result, for the first time, not a single member of either the Group Board or the Board of Woolworths, had ever worked in one of the High Street shops, or even in Area or Regional Management. Most had joined at the top, directly from outside. Ironically three of the Directors, Corbett, Bish-Jones and Lewis, shared a common career path, each working for the one-time arch-rival of Kingfisher, Dixons Stores Group. A fourth, the FD Christopher Rogers had also cut his teeth in the electrical sector.

 

William Lawrence Stephenson - the first British MD and Chairman of Woolworths (on the Board from 1910 to 1947)Successful Woolworths Chief Executive Roger Holmes (at the helm 1998-2000)


The immediate challenge for Bish-Jones was to formulate a new strategy for Woolworths. Many years earlier, William Lawrence Stephenson (a Director from 1909-1947) spent twenty-two years preparing for the role.

Even in the 1990s, the McInsey-trained ex-Consultant Roger Holmes had a year's handover before taking over from the most successful MD, Roger Jones.

TBJ gave himself just three months.

 

 

The company's five values were agreed and publicised as part of the 'TBJ Strategy' for Woolworths. Colleagues also received a history video and memento to take homeTo help shape the new strategy, Bish-Jones worked with the Board to agree a set of core values. He explained that these should be the pervading ethos of a firm over many years, remaining constant whatever the strategy.

The writer was invited to suggest values from the history and to share a potted version of the heritage with the new Board. The Directors chose five values from a list of proposals. These were 'we are product obsessed'. 'we simplify', 'we are innovative', 'we are classless' and 'we have pride'.

The Board chose not to adopt three other longstanding values. Low prices would no longer be a core brand ethos, stores would not necessarily be in the highest traffic spots and, unsurprisingly in the circumstances, there would no longer be a career path from the stockroom to the boardroom.

Bish Jones gathered the entire office management to hear the new values and his strategy to revive the business on 14 June 2002. The session was followed by roadshows which conveyed the strategy and values right across the workforce.

 

'Don't forget Debbie' - a poster used to explain the new target customer for Woolworths Buyers. Debbie was considered the core shopper from 2002 until the demise of the store-based business in 2008The CEO proposed radical changes to the Woolworths formula. He believed that the offer was unfocused. After 93 years as 'the everyday store for everyone', the shops should target its buying to a 'core customer'. Research had pinpointed a key group which accounted for the lion's share of turnover.

All of the merchandise, and the store look, should be geared to 'Debbie'. She was typical of many 28-35 year old mothers of two, with one child at school and one at nursery. She worked part-time to help build a household income of £40,000. She was house proud and made sure that her children wanted for nothing. She relied on Woolworths for toys, clothes, anything educational and finishing touches to make the family home special.

An actress brought the character to life (right).

The layout of the stores and the merchandise mix would be updated. More space would be used for 'Kids and Celebrations', with bigger displays of Toys, Clothing, Cards, Stationery and Entertainment. Displays of sweets would be condensed, while Home, Kitchen and Garden would be scaled back. Buyers must confirm that every item was suitable for Debbie.

Bish-Jones planned to tackle the largest stores first, believing that these set the tone, and were important to analysts and investors. Later he would turn his attention to the out-of-town Big W outlets, leaving the 550 smaller local High Street stores until last. The best products and new ideas would, of course, go to everyone ahead of a full revamp.

 

The Woolies Store in Tunbridge Wells, Kent, pictured in 2002The updated values were well received. Long-servers agreed with the principles that they heard, without stopping to consider the parts of the formula that had been dropped. The Board had commissioned 30,000 copies of a company history film by the Virtual Museum author, Paul Seaton, which put the updated values into context. These were given to every colleague as a memento.

Old-hands were less sure about Debbie - regretting the passing of the 'everyday for everyone' approach, and harbouring doubts about Kids and Celebrations, which had marked similarities to a short-lived 'limited story' experiment in the Nineties. There were also some concerns that the new offer would be less appealing to men in general and older customers too.

The consensus was that the superstar CEO must be given his head.

 

The main service counter in the shortlived convenience drugstore Woolworths General Store formatIn answer to a question from the floor, the CEO revealed that he could not see a viable future for the General Stores drugstore format. The new owners of Superdrug had other priorities and could not support the venture. Over time he planned to reintegrate the stores into the main chain.

He also confirmed that multi-channel retailing would not be a priority for the High Street. Fortunately the Group also included Streets Online, MVC and EUK. The woolworths.co.uk website would provide information for High Street shoppers and suppliers, and a store locator. It would also sell EUK CDs and Videos from a badged version of the MVC site.

Asked whether he was moving up-market, the CEO confirmed that Debbie's household income was higher than Woolworths' traditional average, and she was prepared to spend more on her children.

 

Bish-Jones aimed to get his first new look store open in time for Christmas. He hoped that colleagues would find time to visit the Hemel Hempstead store and share their feedback. In the meantime everyone should think through what the new strategy and values meant for them, and start buying and working with Debbie in mind. He hoped that, with the strategy in place, he could soon drive the share price from the 29p when the chain demerged towards his goal of £1 a share, which would make Woolworths Group an FTSE100 company again.

The great majority of colleagues were happy to buy into the plan and awaited the store pilot with interest. Time would tell.