Woolworths’ Titanic Fate

450 jobs are to go at Woolworths. For a company that employs 25,000 people, it may not seem very much. But it is an indication of the uncertain future that lies ahead for the firm.

The branches that are taking a hit because of the job cuts are the ones in Marylebone Road, London, and Castleton, Rochdale. Administrators who are now in-charge launched what they described to the BBC its "biggest ever sale".

One retail analyst told the website that it "looked like a closing down sale" but administrators said it was "ongoing".

'Unsold stock'

The store is offering huge discounts on many of its products during the fire sale. Toys and greeting cards are being sold for half the usual price. Other entertainment goods are also going cheap.

Deloitte, the administrators of the company who moved in on November 26, told the Financial Times that the chain had picked up in the region of £25m through the sale. This could possibly be a record for the company.

Administrators have confirmed to various media outlets that they expected the sale to continue after Christmas and stores too would remain open.

The bidders

This leaves room for the question about who will buy Woolworths and if it will be bought as a going concern.

The administrators have maintained all through that many parties have been interested. Woolworths runs 815 stores across the country.

Dragons Den pulled out of the race on Thursday. Theo Paphitis of Dragons Den admitted that he could not reach a deal with Deloitte. He told the Press Association that a break-up of the business would raise more cash for creditors.

David Buchler, for Kroll chairman and retail executive Eddie Woolf will reportedly be bidding to keep 350-400 of Woolies’ stores. This could help retain Woolworths name on the high street and save about 15,000 jobs, the Times Newspaper reported.

The ripple effect

The collapse of the high street giant is having a major impact on the troubled sector as well. The sale has pressurised other stores to reduce prices considerably. Prices of toys and gifts are particularly being slashed.

Also, EUK a part of Woolworths sent Zavvi into a tizzy as it buys its supplies of CDs and DVDs from the store.
Some high streets could well have a new Tesco, Sainsbury or Iceland coming up to replace the old Woolworths store. But then again, some stores may not be sold at all.

David Harper, of property firm Harper Dennis Hobbs, told the Guardian newspaper, “I have never seen so many shops come on the market before Christmas. Fundamentally retail has changed and there will be less players in the future.”