Snow joke - Woolworths back from the dead

The famous Woolworths brand is set for an online comeback after it was bought by the Barclay brothers...

Last Updated: 06 Nov 2012

Just weeks after the last of its stores collapsed into administration, Woolies is back – and this time, it’s going online. Shop Direct, the retail group owned by Sir David and Sir Frederick Barclay, has made the famous Woolies brand the latest addition to its stable of online retailers. Sadly it won’t make any difference to the fate of its 30,000 staff (hardly any are likely to get their jobs back), but at least the Woolworths name won’t be fading into obscurity. Well, not yet anyway...

Shop Direct (which you might know by its old name of Littlewoods Home Shopping) specialises in online retail, and already owns the Great Universal and Marshall Ward brands. Now, on the day that the UK has woken up to find itself knee-deep in snow, it’s picked up the Woolies brand to go with them - presumably for little more than a a bag of pic’n’mix, given that the chain recently collapsed under the weight of a £385m debt. It’s promised to re-launch Woolies – and its infant clothing label Ladybird – as fully-fledged online retailers, and is planning to announce the details of their product ranges in the coming months.

As far as Woolies is concerned, there’s a lot to be said for an online rebirth. Whereas high street shopping appears to be on the wane (a process that’s accelerated in recent months in the downturn), online retail continues to grow strongly. It’s also a fresh start on the financial front: in its latest incarnation, Woolies won’t be saddled with restrictive loan covenants, prohibitive property costs, or its dismally-appointed stores (one of the reasons why it started losing custom). Indeed, an online Woolies strips out much of the day-to-day cost of running the retail business, and so probably provides the best chance for the brand’s long-term survival.

On the other hand, the internet can’t magically solve all Woolies’ woes. One of the main reasons for its high street demise was that it didn’t sell enough stuff that people wanted to buy – it became increasingly unclear what the point of it was. What’s more, one of its few advantages was that as a general store, it sold all kinds of different things – so you might go in for a lightbulb and come out with a new garden chair, a photo frame, a DVD and a large bag of cola bottles. But online retail doesn’t work like this – because it’s so easy to buy from different sources, there’s no advantage to being a one-stop shop. It’s not even as if Shop Direct’s business is booming at the moment, judging by the fact that it just laid off 1,150 people.

There’s clearly a lot of goodwill towards the Woolies brand – but it takes a lot more than that to flourish online. Let’s hope the Barclay brothers have something up their sleeves...

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