Retail giant shrinks on the high street

LORNA MARSH It is a tale of two superstores that have grown up over the decades then grown apart. While Midas-like Tesco cranks up its bid for dominance former wonder of the high street Woolworths announced slumping sales.


It is a tale of two superstores that have grown up over the decades then grown apart. While Midas-like Tesco cranks up its bid for dominance former wonder of the high street Woolworths announced slumping sales. LORNA MARSH reports on a rise and fall in retail.


There was a time when shoppers looking for anything from buttons to bins would head down to their local Woolworths. A staple of the high street it was a force to be reckoned with in the general house wares market. Most Norfolk towns had one, in fact the joke was that the definition of town was somewhere that boasted a Woolies, and in Norwich it took up a huge dominant space on Rampant Horse Street where Marks and Spencer is now. But that was in the days before supermarkets got in on the saucepans and sundries act - and, just as pertinently, before the advent of the internet.

The wonder of Woolies was that it sold all those things under one roof that you would otherwise have to scour several other shops to find and that it was local.

Now Woolworths unique selling point is not so unique and certainly not selling as the chain struggles with widening losses following tumbling sales in the face of continued pressure from supermarkets, specialist shops and the internet.

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The one-time giant of the high street posted pre-tax losses of £66.8m in the first half of the year compared with losses of £36.2m in the same period of 2005.

Like-for-like sales fell 8.3pc although Woolies traditionally does worse in the first six months of the year because of its heavy reliance on Christmas trading.

The news comes as Tesco prepares to launch its furniture catalogue giving the chain an inlet into almost every sector of retail. It is already a few weeks into its Direct project that will see homewares delivered to the door along with groceries but has so far only been able to offer a limited range of goods due to technical glitches.

Tesco already has a 31.6pc share of the UK grocery market and the service will rival catalogue firms such as Argos.

And it already takes one out of every £9 in the high street - a shocking figure no matter how many times it is bandied about.

The two stores, which were both founded just after the first world war and grew to high street dominance together, have in recent years followed opposing trajectories in their fortunes, as Tesco rose so Woolies fell.

During the growth of our much-debated time poor/money rich society Tesco's timing has been immaculate. What shopper can resist a one-stop 24-hour store after a busy day at work for everything from children's school uniforms to CDs, not to mention the weekly grocery stock pile? And one that undercuts almost every competitor in every range? Online sales are rocketing for those that care to take advantage of the phenomenon.

It is not just the apparently infallible Tesco that has benefited from the internet revolution, John Lewis's record breaking figures, published last week, were underpinned by a massive 70pc rise in cyber sales.

Yet Woolworths has so far inexplicably failed to take up the challenge, even in the face of online retailers like Amazon threatening sales of books, CDs and DVDs.

The company said yesterday that sales in the 26 weeks to July 29 were further hit by the World Cup and the heatwave in July, which dragged shoppers away from the high street.

The hot weather improved sales of outdoor ranges but hit its key toys and chocolate market. Woolies also said there were weak sales of music and DVDs.

Chief executive Trevor Bish-Jones said he expected a better performance in the second half of the year and Woolworths is undertaking a major store refitting programme.

Mr Bish-Jones said one of its chief failings, that of customers never really being sure exactly what it sells, will be addressed by marketing it as a place for “kids and celebrations” concentrating on birthday cards, Halloween outfits and Easter eggs.

But most notably Mr Bish-Jones said a key driver of growth would be its new home catalogue which will be available in stores by the end of next month with more than 5,500 products available to order by phone, online or in a shop, which will become “mini-Argos” stores.

Only time will tell whether it is too late for the strategy to work - but Woolworth's ailing fortunes can at least be a stark warning to others to ignore the changing tides in retail at their peril.