Marketing Challenges: Woolworths

Woolworth is one of the successful U.S companies, the history of the Woolworth Retail Company is more than one century. According to the Telegraph.co.uk (2009) the history of the organization can be traced back to a chain of five and dime stores founded by Frank Woolworth in 1879 in Watertown, New York. It was only a short period of time before the company opened its first UK facility in Liverpool in 1909. It was not long until the retailer had become a major fixture on most high streets across the nation and the retail model that most people recognize had emerged.

They sold children’s clothing, toys and stationary at beginning, this was the born of British shopping institution. By 2008 there were 807 stores and around 25,000 employs working in the store chain of Woolworth. It was the first chain to make brand items with its own name. In 1960’s when chain was at its peak with more than 1,000 shops across the UK Woolworth declared ‘I believe that a good penny and sixpence store, run by a lively Yankee, would go down a storm in England’. (Tom Geoghegan, 2008)

Woolworths Group plc is one of the UK’s best knows oldest group, they are general merchandise retailer, entertainment wholesaler and publisher. They had two broad lines of business Retail and Entertainment wholesale. Woolworths, Streets Online Limited, Flogistics Limited and WMS Card Services Limited are within Retail, with Entertainment UK Limited, 2entertain Limited and Disc Distribution Limited being part of Entertainment wholesale and Publisher. They brought everything under one roof the home, family and entertainment. Woolworth’s key products include toys, confectionary, electronic media, children’s clothes and small household and entertainment items. Their outlets allocated in small towns and city suburbs targeting the basic shopping requirements, and big stores located in larger cities on shopping streets and centers.

(Graham Charlton, 2008)

The name of Woolworths evokes memories of some Britons childhood but the future of Woolworths in United Kingdom doesn’t look promising at present and it’s really hard for them to get their original niche back in market. Woolworth is the most high profile UK High Street causality of the economic down turn and ran into trouble this year after struggling under the weight of its debt. The recession has taken out Woolworth a tragically mistimed management. (Tom Geoghegan, 2008)

Woolworths have gone into administration in 2009 with debts of £385m and had to close down all Woolies store. Woolworths relaunched by Shop Direct Group on 25th June 2009 as an online retail company Woolworths.co.uk and offering half of the million products and they also launched an Easter Egg website called Woolies Wonderland for Easter of 2009.

Methodology:

We have taken valuable inputs from our module instructor during our semester various stages which helps us to form a frame work of our assignments. We have met regularly during the course to complete the task and conclude that ‘Is there a future of Woolworths’ particularly in the region of UK as Woolworths has closed operation and stores in the UK, the reasons of their failure we had to investigate and it was quite hard objective to achieve. To find out about the company who is no more operating was not that easy task but we have found so many reasons and conclude with some recommendations in this report.

Data Collection:

For the research we have used Inductive method and approach, and collected data from different resources available online about Woolworths which includes case studies and the information provided in different discussion forums, through news articles, journals, research papers and secondary data was collected. Information relating to history and growth were resource mainly from BBC.news official website.

The directions of the company in the recent times

1) Market Penetration:

(Wall Worth) established its website which focuses to serve all the categories of the family. Wall Worth in its marketing strategy considered that it would make it easier for consumers to see the specifications and offers of goods quickly and at low cost, then it chose to make a lot of shown goods digital , and this is what the company focuses on (books, songs, electronic games, I Pod, movies). In terms of advertising , it worked to market their products through the brothers (Brooklyn) to develop the brand and logo and this was not traditional advertising, but by the Ads-mail mail for the storage of its goods and put as nearly half a million products on its website. the company also made a combination of competitive pricing strategies and the promotion for its sales and ad through Web sites as it is found in the Home page (example: if a customer bought more than 30 pounds ,you would receive goods free of charge). After this big transformation in the entering of Woolworths as a retail store by Internet ,it was ranked among the 50 brands that are searched by customers through the Internet in the United Kingdom on the (Wutscher)site.

More than one million visitors accessed the company site when it opened on the Internet in the first week in February 2009. The company achieved this success through a combination of products with a great value and great offers and discounts. On the other hand, demand increased for discount Tesco coupons by 5% from the last year and 49% of people say that they use the Internet to buy their products by the Tesco website for retail sells.

Woolworths also had a new marketing strategy to sell all its products under one roof by its website .So it has three shops for selling on its website including main store to sell electronics, store for entertainment, store for clothes and fashion.

When developing a marketing plan, Woolworths found that the strongest area of its business is concentrated in computer games (such as Nintendo), and there was an increase in demand in 2007_2008 and this is what led it to sell them on its website at the beginning of 2009 to the e-games and DVDs . it did this to reach operational low costs and the minimum number of employees after seeing that consumers prefer to buy this type of merchandise through the Internet . First of all , by designing products in line with the wishes and needs of t consumer with different aspirations , and on the other hand. to retain the current consumers and attract potential consumers

2 – Developing the market:

Woolworths had got new and different sales channels from traditional stores such as portals as a new market places for industry / consumers , e-mail, and also Facebook, from these channels (I U k) company .In early 2008 , Wall worth started a new experience in selling digital products for this reason the total sales rose to 23.5% and this equals 240 million pounds through this joint project.

3 – Developing the Product:

Woolworths considered after the entry of foreign competitors to the UK market specifically in the area of food , and found that it needed to new strategies for keeping of their competition trend : innovation, uniqueness and quality and it continues in this until now by innovating and developing new products and developing modified products to increase sales.

So it kept developing its products by products concern Christmas trees and decorations. In 2008, the company produced a total of 2200 products . the company aims in this marketing strategy to increase sales. In this time, Tesco entered on the line of Christmas products which is focused by Woolworths , so Tesco contracted with Cadbury Chocolate company to buy millions of units at a cheaper price than Woolworths and this was a great challenge to it in their direction to increase sales, while Tesco tries to reduce the unit value and enhanced service to its customers. The company also had got exclusive partnerships for some global products in a move to introduce new products and monopoly them as well.

4 – Diversification of new products in new markets:

Woolworths has new buying lines and adds new products such as televisions, mobile phones and (I Pod) devices directed at consumers, particularly young people. Multi-services to all members of the family , the tendency is to make the price competitive, but not the cheapest in the market. Wall Worth entered the field of clothing for children by using shopping and direct distribution on the internet. It aims to provide better customer service than its competitors. Tesco company did this too , but with less costs in the market.

In conclusion, Woolworths put all the strategies that make it succeed in the coming years according to their capabilities .It is an important step to know what its customers need and what they are looking for, so Its current focus is on the non-food products, and this will be achieved entirely by its website.

Relate the issues to appropriate concepts introduced in the Module

There are few strategies and concepts within marketing that can be relate to the Woolworths strategies and method they used. Woolworths mission and strategy was ‘to deliver to customers the right shopping experience each and every time’, vision to provide quality products and services to customers through price strategies, human resource strategies and fresh food strategies. To achieve this they integrated and execute several strategies which include low prices strategy, project refresh strategy. The Woolworths strategy was purely and completely on the basis of price and they implement every-day low prices strategy to offer customers lower prices through reductions on all products but there was no brand status. This was a very good strategy for many years and it made Woolworths fortune and achieved the goals. Woolworths experienced great success through innovative, tactful and profitable strategies their organizational structure, staff leadership and stakeholders all played an important role in executing these strategies.

It is really important for any company to understand the marketing environment and customer needs/wants to target the correct costumer for the product sales. Woolworths was successful all over the world and in UK also they enjoyed a time as a leading and dominant company capturing the most market shares and there was no threat for Woolworths till 1960’s. Woolworths business also had an important part to market their products in the people with understanding of products and result in increased in sales and customer interest. They succeeded to change their new customers into retain and loyal customer and Woolworth understand and targeted the customer values, reliability, credibility, accessibility and provide them with satisfaction of shopping at their stores and build their trusts. Macro environment was in the favor of Woolworths from the start as there was no political and technological awareness in early 1900, factors and forces that affects the Woolworths capability to operate effectively was not there.

Woolworths destabilized by the combination of supermarkets, cheap discount stores and online buying stores offering products at lower prices. Thus the market becomes more competitive since the internet and globalization have made international foundation as reality. There was no spending on frills having relied exclusive on prices with no position in market. Their stores were old fashioned and unappetizing because they don’t use to spent money on stores to catch the attention. There lack of property portfolio also discourages government to rescue them and creditors start claiming and suppliers asking for cash for the goods.

BCG Growth/Share Matrix:

We can analyze Woolworths through BCG growth/share boxes as David Jobber (2007). Hence, Woolworths was at their peak in 1960’s and they were the leading company having big chains of stores in retail industry. Woolworths completed century and prove to be the star of the industry. Market and business growth rate graph was on its peak in 1990’s, market share was even very high and the stars of the past was proving to be the cash cows and company having the high turnover and revenue. Their market position was indefinite with no competitors in the industry. But, today Woolworths is being a problem child with negative growth and their shops are closed leaving 25,000 people unemployed and in 2009 they completely closed down retail operations in UK.

Woolworths is creating new solutions and have come into business with new strategy to open few new shops with different ideas and they have gone into administration with re-launching of the company as an online retailer with new product lines which better meets customer needs and they can easily access the market. David Jobber (2007)

Discuss the Customer’s Perspective

The purpose of this essay is to discuss the topic issue of whether or not there is a future for Woolworths from the perspective of the customer. It will provide a prediction for the outlook of the organization from the perspective of customers. Whilst the organization was known as the Woolworths Group Plc the company according to BBC News (2009) the company closed all 807 if its retail stores and the company was ultimately liquidated in February 2009 and for purposes of this paper the focus will be on the online retail operations of the company. This has made a huge impact on the way the company deals with customer and what customers can expect from Woolworth.

According to the Laurence writing for the Dailymail (2008) the company had experienced years of poor performance. In the wake of increased competition and a global economic downturn it was the case that the holding company for the organization decided to liquidate all physical assets and focus on online retail operations. According to an interview with Gordon Brown in the Telegraph, the Prime Minister stated that the government had considered bailing out the organization but had decided that the business model was financially unviable (Prince, 2009).

Upon examination of the company website (2009), when speaking in relative terms, the company has product offerings that closely mirror that of what was on offer in the former retail outlets. Furthermore, there has been a modernization of the entertainment offerings over the previously employed retail model (Company entertainment website, 2009). That said, from a customer’s perspective Woolworth now offers very little that cannot be purchased at other online retail outlets such as Amazon or EBay. Furthermore, these companies are much more experienced and economically healthy than Woolworth, and therefore have a much larger market share. This is unlikely to change. From the perspective of the average consumer it is unlikely in the near future there will be a return to Woolworth’s traditional business model. It is simply the case that the environment is far more saturated with traditional and specialty retailers. According to TNS World Pannel (2008) it is the case that a number of already established grocery retailers are offering clothing, house wares, gifts, and electronics which is a market traditionally dominated by Woolworths.

Whilst it remains to be seen whether or not the continued success of the organization using the current online retail business model will continue indefinitely, the initial success is certainly promising. According to an article by Marketing Week (2009) it is the case that 68.7% consumers are planning on doing more of their Christmas shopping online this year which represents a huge growth opportunity for the Woolworths if they can capitalize on this growing market. This is supported by an article by Huber (2009) the parent company to Woolworths launched a massive advertising campaign to help promote the services offered in an effort to boost consumer confidence to one of the busiest retail spending times of the year.

An additional problem to consider, however, is that Woolworth’s target demographic has traditionally been older shoppers. Because such shoppers are less Internet savvy than younger shoppers, Woolworth will have to work hard to reach out to its traditional base. Traditional customers might be tempted to simply continue shopping at places where they can pick up and look at the goods they are interested in. Some do not even have credit cards. Woolworth must work hard to differentiate itself in an online marketplace dominated by big, experienced retailers. If it does not do so, it will go the way of the dodo bird.

In conclusion, any return to the previously employed retail business model as employed by Woolworths is unlikely. That is not to say that people will not continue to enjoy the level of service and product offerings that the company had offered but this must be done so by new means.

Assess the Perspective of Competitors

There was the time when there was a demand for Woolworth’s in the Market, but after a certain period of time we witnessed that the Woolworths was off the market in a few years. The sudden debacle of Woolworths from the market can be because of various aspects. With the increase in the numbers of its competitors and the woolsworth unable to compete with them accordingly and improper strategies and not updating with the technology as well as with the change in the needs and the demands of the consumers.

Woolworths Competitors

The loss of Woolworth in Shirley was echoed in about 800 High Streets across UK, breaking the record of 99 years in the history of the British towns and cities. The main cause can be named as recession as with the impact of recession many of the stores were closed and increment in the number of charity shops. The streets were having now the three times more the charity and the discount shops. These great losses in the business were due to the recession, the rise of the supermarkets and the increasing popularity of the weekly shops. The debacle of Woolworths had a few other aspects and they were its competitors. The major competitors of Woolworths were the Tesco and the Wall-mats. The main reasons which led to the downfall of the Woolworths are

Fewer women’s clothes shop

One in every five women’s as well as children’s clothes shops were closed in UK. This was one of the most important and discretionary area were there were a lot of money was spend so when there were locks on such doors people then decided or rather started going to the discount outlets and were fully satisfied and were satisfied in a cheap price. Next is a diagram representing the actual diagram representing a proper data showing the approximate loss of the market in according to the closure of the shops of Woolworths. This data is been taken from a local data company which is depicting the % of loss of a business dealing in a particular product. And as we go throw the data we can see that there has been a major loss to the woolsworth in the near future and compare with its near competitors.

Shops mostly empty

The shops became empty because of increment of the competitors and effect of the recession that led to the downfall of major businesses.

Woolworths have so many competitors. The competition was basically amongst the super markets specially Tesco, as they started selling more and more household products as well as toys and electronic goods and many such other products that can be considered as gift items. Woolworths on the other hand was not looking over the aspects that other large markets were giving them a stiff challenge.

The first ever store of Woolworths was opened in Liverpool in 1909. And it was selling almost all the products right from the tools to clothes, it was selling cheaps of things and none other stores were such big.

The greatest of Woolworths was from its main rivals probably individuals stores themselves, the consumers were going regularly to the Woolworths because the specialist stores were not having appropriate stuff that the consumer were demanding but with the increase in the number of super markets there were more stuff along with the relevant information so consumer started going towards those who were new but were very promising namely

Tesco the competitor of Woolworths

Tesco was founded in 1929 by J. Cohen. The company was not on the London stock exchange till 1947, unlike the Woolworth and the Wall-Mart as their primary focus was on the groceries right from the beginning was struggling at the time in 1970, it only expanded when it introduced the club cards and entered the European and the Asian markets expanded into non food banking and telecom products. Tesco that reportedly having half of its sales in the UK at present. According to Tesco inflation had dropped substantially since three month till September. They keep on launching cut-price ranges and by these aspects they were attracting almost 300,000 more customers every week and they witnessed strong improvement in their sales volume. Tesco is due to complete the purchase the remaining of the 50% stake of Tesco Personal Finance from the Royal Bank of Scotland in a very near future. The group has also said that they will put brakes over their expansion in the US and will only focus on the hitting the key areas. Tesco being the greatest threat to the Woolworths is implementing the strategies to take over it in every aspect.

Tesco has also confirmed that they are surely interested in buying the Woolsworth as the chain has almost collapsed just after they were not able to stabilise their company with major threats from the markets. Woolworths kept its regional focus on the other hand was concentrated on the supermarkets in the future might focus on the food products as recently bought the 10% shares of New Zealand based The Warehouse Group. They copied high success retailing fuel strategies from the Tesco which has been largest retailer of petrol since 1991. Tesco on the other hand developed 4 main formats to suit different locations. Also used the supermarket in selling the liquor which became major threat to the Woolworths.

Bill Carlson

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