Woolworths Group Plc
Introduction
Worthworth Group PLC began its operations in Liverpool, England in the year 1909 under the
leadership of F.W. Woolworth. The British branch was initially Pennsylvania-founded retail
stores known as Woolworth’s stores. The company mostly dealt in retail and distribution
operations and it had over 800 stores by the end of 2008. The company also owned the UK
entertainment distributor known as the Entertainment UK and also the Bertram Books
distributor. Woolworth successfully segmented the retail and distribution market in the UK that
made it possible for it to create its own brand of children clothes known as the LadyBird children
range of clothing together with Chad valley toys while also selling its own branded sweets
popularly referred to as the Candyking pic n’ Mix sweets.
The company went into receivership under the receiver managers from Deloitte in December
2008 where close to 27,000 jobs was lost. On the month of February 2009, Shop Direct Group
purchased Woolworths and Ladybird brand names to be utilized in internet based shopping
business. At its peak, Woolworth had a turnover close to £3 Billion pounds.
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Woolworth marketing strategy enabled it to achieve great successes in its early years of trading.
The intensity and the relative loyalty that the company’s products attracted enabled anything that
was associated with the company to sell. The company was associated with the pioneers of the
five-and-dime store and later the Woolworth’ Five Cent Store that was launched in Utica in New
York. These companies were associated with reduced prices while others had price limits that
were very affordable to the public (Beamon, 1999)
The Woolworth’s five-and-dime strategy enabled it to expand its influence across the US. It
targeted the middle and the lower class citizens who were the majority.
The second strategy was its segregation and differentiation of its products that were positioned as
affordable and of good quality.
The last and most effective strategy was the decision to buy the popular LadyBird brand label for
its cloth line for children below ten years.
Demand Chain Analysis
The Woolworth brothers developed merchandising, improved customer service practice, direct
purchasing and sales to expand and improve its sales records. The company developed the
system where the shoppers selected the goods required without the help of the sales clerk as in
the case of the current megastores like Wal-Mart. These concepts elevated the shopping
experience to new levels that it attracted a lot of customers.
Woolworth Plc continued to expand during and after the First World War. A total of 130 stores
or branches were established while a major expansion strategy was also introduced. The
company was floated at the London Stock Exchange in the year 1931 after opening its 400 th store
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at Southport in Lancashire. The parent company in the US reduced its shareholding by almost a
half of the total shareholding. By the end of the year 1934, the company had 600 stores, the latest
being opened at Wallington in Surrey. The total numbers of the branches rose to a peak of 1,141
just before 1970. The company tried unsuccessfully to launch hypermarkets during the late
sixties. From then on Woolworth expansion and performance took a turn for the worst. Most of
the branches were sold during this period as modern and well equipped supermarkets like Wal-
Mart began fighting for the same market that Woolworth had dominated for many years.
In the financial year ending 2014, the company the demand for the companies increased as
exhibited by the solid growth in various segments of the Woolworth’s business operations.
These results reflect the increasing demand that Woolworth has been able to attract in order to
boost its sales. To generate more demand for its products.
The entertainment department contributed a lot of profits to Woolworth especially the Our Price
Store which dealt with physical or copies of music records. The sales generated a lot of revenue
to the company.
The strategy of opening stores out of town locations failed totally with the last one in Merry Hill
Shopping Center closing down in 1989 due to poor sales records.
Value Proposition
Woolworth had a turnover of about £3 billion in 2008 with a net income of £7.5 million as at the
end of 2008.The company adopted measures that were directed towards creating an agile,
adaptive and accurate value chain that was used to coordinate information flow in all company
processes in order to reduce the time taken to make decisions and also to reconfigure the value
chain to take care of the new customer demands together with added leverage against
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competitive environment among the other value chain participants. The company had to re-
evaluate all the decisions regarding its major products life cycle, its market and development
plans. Value proposition for Woolworth resulted in the acquisition of the LadyBird brand of
clothing for children less than ten years (Business News Daily, n.d). This was a long-term
strategy to achieve increased growth in profits and also to address the needs of its customers
(Ballou, 1992). Value proposition is part of a company’s strategic positioning that traces its roots
to the core competence of the company. The impact of value proposition on growth and
profitability of a company cannot be taken for granted as it defines a customer’s reasons to visit
or make purchases from the company.
Supply Chain Analysis
Woolworth had advanced material requirement planning systems that were incorporated in the
company’s initial years. The distribution requirements planning, the Just-in-time planning
methods together with its program evaluation, review and implementation techniques contributed
to the company’s most successes in the early years (Cook and Rogowski, 1996). The company
had a comparative advantage against most its competitors then as it could purchase and supply
most orders in bulk. Being a retail and distribution enterprise, Woolworth had an organized
system of merchandising and stock evaluations methods. However, the manufacturing
department that dealt in cloths design for children and the other departments that dealt in
confectionery outsourced most of their supply requirements to external suppliers (Gereffi, 1994)
Enterprise Value
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Woolworth’s enterprise value in the value chain management refers to the processes that the
company undertook to ensure that all the concepts of supply chain management and competency
building and application are adhered to in all business operations. Supply chain optimization,
transfer pricing and all outsourcing activities are part of strategic long-term growth control
measures to achieve maximum revenue collections and growth opportunities (Hahn, Pinto and
Bragg, 1983)
Most of the Woolworths branches were operating on franchise and the owners had to meet the
operational requirements of Woolworth’s initial branches. The frontages or entrance areas had
distinct Faience tiled art deco’s that created an environment of friendliness as most of the stores
had similar construction styles. These factors contributed to customer’s loyalty and improved
sales (Lee & Billington, 1992)
After the year 1990, Woolworth rationalized its merchandised products and defined them into
four categories; Home, Kids including clothing and toys, entertainment and confectionery.
The company also begun to down size its operations by introducing the Big W brands that were
characterized by their large formats and were similar to Wal-Mart that are largely in the US
(Gurría, 2012).
Woolworth based its strategy on its pricing formula that created its initial successes. The other
strategies of buying renowned brands like LadyBird also worked and contributed to its success.
The differentiation and positioning of various merchandise under different department also
attracted more customers. However, the out town strategy of locating the stores failed due to lack
of adequate sales.
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References
Ballou, R., 1992, Business Logistics Management, 3 rd Ed, Prentice-Hall, Englewood Cliff, NJ.
Beamon, B., 1999, “Measuring supply chain performance”, International journal of operations
and
Production management, Vol. 19, No.3 pp 275-292.
Cook, R. and Rogowski, R., 1996, “Applying JIT principles to continuous process manufacturing
supply
chains”, Production and Inventory Management Journal, First Quarter, pp. 12-17.
Gurría, A., 2012, The Emergence of Global Value Chains: What Do They Mean for Business .
G20 Trade and Investment Promotion Summit. Mexico City: OECD. Retrieved 2 April 2015.
Gereffi G., 1994, Capitalism, development and global commodity chains. In Capitalism and
Development, Sklair L (ed.).Routledge: London; 211–231.
Hahn, C., Pinto, P., and Bragg, D., 1983,”Just-in-time’ Production and purchasing, Journal of
purchasing and materials Management, Vol. 19, No. 3 pp. 2-10.
Lee, H.L. & Billington, C., 1992, Managing supply chain inventory: pitfalls and opportunities.
MIT Sloan Management Review, 33(3): 65.
