Is Wilko’s collapse another sign of the demise of the high street?

The high street took another battering with the collapse of retailer Wilko perhaps even more poignant since the brand has had a presence on the nation’s high streets for more than 90 years.

Nottinghamshire-based Wilko operated 400 shops and employed 12,500 people when it went into administration on 10 August after it was unable to secure a rescue deal. The chain has continued to trade as administrators PwC sought to find a buyer although a deal with B&M will see it purchase 51 of Wilko’s stores and it is thought Poundland will acquire around 100 stores. However, this week (11 September), PwC announced all 400 stores would close by October.

Despite regeneration schemes by local authorities up and down the country and legislative changes which have eased planning permissions making it easier to change the use of a commercial premises and even transform units into homes, evidence that town centres are largely in decline is all too apparent.

The GMB union blamed ‘mismanagement’ and has now reported that 24 stores will close on Tuesday 12 September with a further 28 to be closed two days later, resulting in a total of 1,016 redundancies. The union also warned the purchase of the stores by B&M did not necessarily mean jobs were safe since confidentiality agreements seemed to indicate the sale was for the premises only.

James Kemsey Wilkinson opened his first store in Leicester in 1930 and by the 1990s the Wilkinson chain had become one of the country’s fastest growing retailers, well known for its value items. In 2012, it rebranded as Wilko and had largely filled the gap left open after the demise of Woolworths in 2008.

With competition at the lower end of the market fierce, some analysts think lower prices at competitors was a contributory factor as well as a decline in consumer tastes for homeware which had flourished during the pandemic. Meanwhile, consumer preference for retail parks with convenient parking, where Wilko was underrepresented and where growth had been experienced, have also taken its toll.

Whilst Wilko attempted to modernise by introducing self-service tills and ‘click and collect’ at its stores in February this year, its online offering was unlikely to achieve the cut-through the ailing retailer needed since margins for discount stores are often too low to justify the investment. Interestingly, B&M sidelined its own online strategy earlier this year after a seven-month pilot.

Empty shelves as a result of an inability to pay suppliers and a refusal to pay potential new suppliers in advance told its own story. Other commentators highlighted stores which were too big with excess space and the stocking of too wide a variety of products covering too many markets as well as higher rents and rates, as significant factors in its demise.

Wilko’s hopes it could negotiate rent cuts failed to materialise, according to a report in The Grocer. Wilko’s last full-year accounts for 2021-2022, recorded a £35.9m operating loss after a fourth consecutive year of falling sales after its turnover peak of more than £1.6 billion in 2018. Its troubles were also compounded by changes in its leadership team just a few years after previous incumbents had been appointed.

According to The Grocer’s report, Wilko also struggled to modernise its supply chain principles sticking to traditional methods of dividing the stock up between its stores rather than adopting a data-led shopper-centric approach.

With discount shoppers almost spoilt for choice when it comes to non-food discount stores and the fact that the cost-of-living crisis is squeezing budgets harder than ever, together with its management, supply and location issues, these spelt a disaster from which it was difficult, if not impossible, for Wilko to recover.

Whether its demise is more widely indicative of town centres unable to rejuvenate is another question but there is no doubt, Wilko’s loss will have reverberations far beyond the loss of yet another High Street brand itself.