High-street retailer Wilko has today (August 10th) collapsed into administration after failing to find rescuers or emergency investment, putting more than 12,000 jobs at risk.
The privately-owned company, which sells a wide range of branded goods at reduced prices, secured a £40 million lifeline at the beginning of the year from Hilco UK, but has spent recent weeks ‘hunting for a rescue deal’.
Following the announcement of its demise, Nick Drewe, retail expert and founder of online discount platform Wethrift, shares his reaction to the news: “Today’s news regarding the collapse of Wilko is, unfortunately, another example of the many retailers falling victim to the ongoing cost of living crisis and economic uncertainty.
“Consumers facing the repercussions of rising interest rates, energy prices and a lack of salary increases, means that the pressure to secure the very best prices and deals on everyday products is now greater than ever.
“Following the collapse of Woolworths in 2009, many turned to Wilkos as an alternative for sourcing a huge range of items or goods, at a reasonable price. From pick-and-mix sweets and pet food, to cleaning products and even homewares, Wilkos has arguably become a staple of the British high street over the past two decades.
“Unfortunately, despite the fact that Wilko’s has historically offered its customers competitive prices, chains such as B&M, Home Bargains and The Range seem to have overtaken in terms of popularity, availability of stock, and become the ‘go-to’ stores for bargain hunters.
“Many are also speculating that, due to its reliance on in-person purchases and high street footfall, Wilko failed to recover from the devastating impact that the COVID pandemic had on retailers. British consumers began pivoting the way they shopped for essential items, preferring instead to rely on online shopping rather than risking in-store visits.
“With the collapse of Joules, Made.com, Cath Kidston, Paperchase and many other well-known brands during the past year, it certainly seems as though Wilko won’t be the last victim of these trying times before the year is over.”
Rebecca Crook, chief growth officer EMEA at CI&T, said: “The reality is that Wilko has been in financial decline for the last four years, so this isn’t something which can be blamed on the cost-of-living crisis.
“Covid compounded its challenge with high street footfall, typically reducing this by around 40%. This meant that its expensive large stores in prominent high street locations were costly.
“Discount retailers such as Wilko have also grappled with how to leverage online shopping when product margins are so small and operating costs for logistics of e-commerce can be so high. Therefore, they have ended up with a weaker digital presence. Primark is a good example of connecting the journey across online search and then shopping in store with cool features, enabling customers to check which products are available in store.
“Online giants such as Amazon have been squeezing Wilko, and other budget retailers have been moving in on them. Wilko has also faced strong competition from supermarkets such as Asda and Tesco, who have really improved their household product ranges and DIY supplies.
“Sadly, product, presence, and pace have been Wilko’s downfall. Product, as it didn’t keep such a close eye on competitors and understand what its customers wanted. Presence, as too many stores were in wrong locations for their demographic audience. Pace, as it failed to recognise that shoppers want choice and an omni-channel shopping experience, which it missed the mark on by not investing in digital routes.”
“In its prime, Wilko seemed to fill the gap left by the likes of Woolworths. However, it has recently faced increasing competition from other value retailers, such as B&M, Poundland, Home Bargains and The Range, all which have all expanded rapidly in recent times and have stolen market share from the retailer and undercut Wilko on price.
These retailers are also commonly found in industrial parks which are all more easily accessible with parking and the like whereas Wilko is seen very much as a high street retailer and as we all know, high street retailers have suffered in recent years.
Due to Wilko’s cash position, it doesn’t have enough to pay its debts as they fall due. The return to any creditors will depend entirely upon what is left in the pot after paying costs of the administration, secured and preferential creditors and it is rarely the case that the return to creditors is 100p in the £.
This could have a significant impact on Wilko’s employees, who may find themselves in a position where they don’t receive the full amount they are owed because there’s simply not enough money to go round. The question of how much money they’ll lose out on depends entirely on what’s left in the pot.
In regards to recovery of wages owed, these employees still lag behind secured creditors, such as banks. However, if made redundant down the road, they will have the best chance of getting their money back.”
Kevin Mountford, savings expert and co-founder of Raisin UK, shared his advice for employees of Wilkos.
I AM A WILKO EMPLOYEE, HOW WILL I BE AFFECTED?
“The news that over 12 thousand roles at Wilko are uncertain will be concerning for employees, and redundancies may be announced if the retailer collapses. Here are my top tips for the coming months.
Read up on your rights, especially when it comes to redundancy pay and settlements.
Look at your existing debts. Do you have outstanding balances on credit cards that you can pay off now? It may be wise to settle these whilst you can be sure on your current income.
Look at your monthly outgoings, is there anything you could negotiate a payment holiday for? This may help whilst you plan your next move in the short-term.
Prepare your CV and think about your future career options. If it seems like your job role is definitely at risk, start to think about other options and reach out to people who may be able to assist in your job search.
To read about all of your rights visit the Gov.uk website.
I AM A WILKO CUSTOMER, HOW WILL I BE AFFECTED?
“At the moment, it’s business as usual. When businesses enter administration, it’s the time to use any gift cards as these can be no longer accepted at any time.”
Mountford added: “Wilkos has struggled to keep up with competitors, with the majority of stores being in the city centre and away from the convenience of out-of-town sites. With the success of B&M and Home Bargains, the budget retail sector is highly competitive and the location of these stores has been the biggest challenge, and may be a bigger challenge when administrators look at selling the business.”
