Sliding Doors
At the start of the credit cruch there were two independent European Woolworth chains. Both fell into Administration. Within three months one had moved on line, announcing it would never return to the High Street, The other abandonned the web, resdiscovered its value heritage, built a super-efficent supply chain, and has since doubled in size. Its latest plan dreams of 5,000 stores across the Continent, including at a later date, in the UK.
In Britain Woolworths faced severe challenges in the 2000s, after being loaded with heavy debts when it demerged from Kingfisher. Strong leadership and a radical plan would be needed.
A business which had been built on loyalty and home-grown talent, with people working their way up from the bottom, opted to look outside for a new top team.
By the mid 2000s not one Executive Director had ever worked in a Woolworths store, and only one had worked on the salesfloor of a shop at all.
After initial success the plan for the stores started to fail, while the wider group became increasingly dependent on Music, Video, Software and Book publishing and wholesaling, with its narrow margins and its customers expecting to get rather than give credit requiring increasing amounts of working capital. A business refinancing in 2007 proved disastrous when the credit-cruch began, quickly obliteraing the main chain and much of the wholesale division as vultures gathered the rest of the spoils.
Across the Channel. in Germany a leveraged management buy-out seemed to be doing well. In the ten years since the parent company had retired, the long-serving Board, most of whom had managed stores themselves, had taken the chain upmarket, dividing it into large department stores in major cities and towns selling a broad mix of branded amd own-label goods, including fashions, sweets, cosmetics and lot of toys alongside an increasingly upmarket selection of goods for the home, and a newer chain of convenience-led stores for smaller communities branded Woolworth-mini. Overseeing the chain was a huge administration centre in Frankfurt, an established supply chain and most of the organisation structure that it had inherited from the USA. In 2007 the Board accepted an offer from the London-based Argyll Capital Partners to sell the business to private equity. Despite what seemed a sensible development plan, the new owners found themselves caught in the cross-fire when credit insurers withdrew from the cover from the UK company, and after its demise turned their attention to Germany.
Unlike the UK, the German company was able to use the period of protection from creditors afforded by German law to find a white knight. Tengelmann Group, a family company, was able to bring its expertise to bear, rediscovering the chain's value heritage, simplifying its product range, buying and supply chain and setting it on the road to recovery. While around half of the stores were initially sacrificed, including all of the new Minis, the reborn chain has since gone from strength-to-stregth. In 2024 it is twice the size it was when the former parent retired, opening around 100 stores a year, and about to break the €1 billion mark, with exciting plans for further expansion now that it owns the rights to trade in every European country - maybe even one day in the UK.