CityBeat: Wondering about Woolies
Glynn Davis looks at Woolworths’ drive to boost the fundamentals of the business
February 20 2003
There can’t be many retail brand names that have greater recognition than Woolworths, so how come it can’t capitalise on this and take advantage of its prime town centre locations?
It seems to be forever enveloped in stocking problems, which is a tad unfortunate since that it what the whole business is about. Not having the right product on the shelf when the customer wants it is a pretty dire situation for a retailer.
When Philip Green cast his eye over the Woolworths chain last year he described his local store in pretty strong terms. One suspects he wouldn’t be revisiting the outlet. It certainly wasn’t applying the rigorous disciplines that Green is renowned for bringing to his various high street operations.
Since it was demerged from Kingfisher, the performance of Woolworths’ shares have been pretty lacklustre – apart a brief period when it looked like the value of the brand was finally about to be untapped. This took them to a 12-month high of 55p but this was a false dawn and the perennial stock problems resurfaced. At the close of play on Wednesday they stood at a more modest 30.75p – up from a year’s low of 22.75p.
However, there is evidence that things are being addressed and the company is working hard on its stock issues. One such project involves ‘reverse logistics’. This is a relatively new area in the UK – but widespread in the US – and basically involves handling that mass of goods that remain unsold, have been damaged, don’t work or have been returned by customers.
Although much value can be gleaned from this process most retailers still take the ostrich approach to the problem. But if this move is indicative of what Woolworths is generally doing behind the scenes then maybe even Mr Green might find himself in his local Woolies some time soon.
Glynn Davis was previously a fund manager in the City, and has since become a business journalist specialising in the retail sector. He regularly contributes to national newspapers and specialist trade publications. email Glynn@busicomm.fsnet.co.uk
