Sussex branches of Woolworths and MFI face insecure future

3:18pm Friday 28th November 2008

Woolworths, one of the best-known names on the British high street, has been put into administration with £385 million of debt. As company bosses and administrators Deloitte wrestle with the task of rescuing the business, RICHARD GURNER takes a look back at the company’s history in Sussex and asks business leaders what needs to be done to revive its fortunes.

Hundreds of people employed in the 25 Woolworths stores across Sussex are no doubt worried about their future.

The company’s retail division and its distribution arm, Entertainment UK, have gone into administration after talks to save the firm, through a buy-out by troubleshooters Hilco, fell through.

It is understood Woolworths, which has been in business in Britain for almost a century, hopes to trade as normally as possible in the coming months under the control of incoming administrator Deloitte.

Experts say job losses are still likely however as any potential buyer would want to make the operation leaner.

Furniture company MFI has also gone into administration, painting a gloomy picture for retail workers this Christmas.

Tony Mernagh, chief executive of the Brighton and Hove Economic Partnership, said: “For the 30,000 people employed by Woolworths there is help out there for them. The regional development agencies have a service which specialises in going into companies where there’s going to be mass redundancies and helping employees before it happens.

“In the South East it has prevented 80% of people who have lost their jobs from going on the unemployment register.

“It’s obviously bad news but they must take advantage of the help that is out there.”

Woolworths’ decline has been a long one but the recent downturn has, in the words of Mr Mernagh, pushed it over the edge.

Increasingly shoppers have turned to supermarkets or the internet, leaving the chain facing a dramatic decline in sales. The stores made a loss of £72.5 million in the six months to August 2.

Nick Bubb, retail analyst at Pali International, said: “Every year supermarkets take more and more business away in confectionery, kids’ clothing, music. The convenience of one-stop shopping at the supermarket is very powerful.”

This year has arguably been the toughest yet for Woolworths. It is saddled with debts of £385 million and has recently faced a credit squeeze with suppliers wanting to be paid in cash for stock.

Alastair Smith, chief executive of the West Sussex Economic Partnership, said: “The business model Woolworths had has been a bit fragile in recent times because they seem to want to sell a bit of everything and compete with everyone.

It’s not viable and if it’s going to survive it needs to create a new business model.”

With its sometimes surreal mix of stock, questions are being asked whether or not there is such a place for Woolworths in the current retail sector.

Mr Mernagh said: “The market has spoken. This is not a business plan that can survive in the modern high street.”

Would you miss Woolies if it was gone? Tell us below

Woolies in the news

Woolies, as it is affectionately known to the nation, has a rich history in Britain lasting almost a century.

Started by Frank Woolworth in 1879 with a store in Lancaster, Pennsylvania, the runaway success of the store’s fixed prices, much like pound shops today, meant the American retailer was soon looking across the Atlantic to Britain.

The first British store opened in Church Street, Liverpool, on November 5, 1909. And 49 years later the company was opening its 1,000th store – in Portslade.

The Argus carried a special eightpage supplement marking the May 22, 1958 opening in Boundary Road.

Inside, the company’s then managing director, W J Turner, said: “We are proud to have reached the figure of 1,000 stores now operating up and down the country, and I am particularly pleased that Portslade should carry the 1,000th symbol, as I have been connected with this part of the country for some time.”

The shop, which is still in the same spot today, proved to be a hit with shoppers.

If proof was ever needed of the place Woolies held in the hearts of Sussex people then it was made clear in August 1978.

A massive fire destroyed the store in London Road, Bognor, causing £1 million worth of damage. It took 175 firefighters to bring it under control.

In the days after the fire, thousands of shoppers filed past the burnt out shell of the store. A stunned shopper told The Argus at the time: “It’s almost as though they are mourning the loss of Woolies and are paying their last respects.”

A trip through The Argus’ vast archive suggests the company’s employees loved the shop as much as its customers.

In 1999 hardworking Connie Willie celebrated 50 years working at Brighton’s Western Road store.

Connie, then 69, started work at the store in 1949 when her father asked about a job while doing building work.

For many others, though, Woolworths was a place for rich pickings.

In the early 1990s there was a spate of break-ins at stores across the county. In a 1991 raid at the Crowborough store in High Street £1,700 worth of CDs, tapes and videos were taken including a box of Cliff Richard albums.

Other raids included £15,000 worth of stock stolen from the Lewes branch, also in 1991, while in 1993 a knifeman tied up two shopworkers while he carried out a terrifying robbery at the Western Road branch in Brighton.

It wasn’t the first time thieves had targeted the chain of stores.

In 1957 an increase in shoplifting at Woolworths’ store in Crawley alarmed magistrates.

On October 4 of that year The Argus reported: “Their criticism came following a spate of charges against new town housewives for petty stealing from the ‘Help Yourself’ counter of Woolworths’ store in Queensway.”

Woolworths has been a symbol of the British high street. Has it finally burnt itself out?