Weep for Woolies
The manner of Woolworth's demise as a going concern was almost as shocking as the fact of its collapse into administration.
Although Woolworth had been one of the UK's weaker retailers for years - propped up by a decade of benign, debt-fuelled trading conditions which we now know to have been unsustainable - it was done in by a sudden deterioration both in the real economy and in financial markets that took hold four weeks ago.
And it's the suddenness of how everything turned bad that shocks - and means Woolies will not be the last casualty.
Up till then, Woolies sales had been broadly flat. Then, on an underlying or like-for-like basis, sales dropped off a cliff, falling by double-digit amounts in percentage terms.
Around the same time, many of its suppliers found they could no longer insure against the risk that Woolies would no be able to pay its bills. So Woolies was forced to pay suppliers in cash for all that important Christmas stock.
In the process Woolies maxed out its borrowing facility: its debt rose to the £385m limit imposed by its lenders, led by GMAC and Burdale (part of Bank of Ireland).
Perhaps unsurprisingly, GMAC and Burdale - each of which is owed around £70m - yesterday decided enough was enough, and pulled the plug. Other financial creditors include Bank of America, Barclays, GE, Wachovia and KBC, with GE owed the most of this bunch, or £50m.
Now what's significant is that Woolies is far from being the only retailer pummelled by the sharp contraction in Britain's economy and also by a sharp and painful rationing of credit insurance.
Many thousands of British businesses have had their insurance cover withdrawn for supplies to companies perceived by insurers as poor risks - and that's causing havoc on the high street.
Unless something can be done to persuade the big providers of credit insurance to reinstate cover - and that would probably require taxpayers to provide some kind of guarantee - Woolies will not be the last substantial victim.
Also, just because Woolies has been something of a lame duck for years, that does not mean its demise is somehow a self-contained episode, with little consequence for the broader economy.
The inevitable loss of jobs, perhaps 20,000 of them, will cause misery and hardship in itself.
There's a hole in the pension fund of £100m, so the Pension Protection Fund will have to pick up the bill for some of the group's pension liabilities - which drains the resources provided to the official protection scheme by other pension funds.
And then there's the knock-on to companies that supply Woolies stores with more than £1.5bn of goods every year. At a time when the UK economy is shrinking fast, the loss of these orders will be painful for hundreds of businesses.
Also Woolies owns a substantial wholesaler of books, music, games and DVDs, Entertainment UK, whose turnover is well over £1bn. Entertainment UK has also gone into administration, which has raised the alarming prospect for some big supermarkets and high street stores that they won't be able to get hold of vital stock during the all-important Christmas selling period.
The corollary is that publishers and music businesses are anxious they won't be able to get their stock on the supermarkets' shelves.
What's more, as Richard Fletcher points out this morning in the Telegraph (and on Tuesday night he made the correct call that neither Woolies or MFI could avoid administration), Woolies' collapse will probably spark a price war - since the administrators will probably keep the stores open for the next few weeks, and slash prices to shift all the stock.
That would be good news for shoppers, very bad news for weak competitors.
So perhaps we should all weep for poor, lost Woolies. As it happens, I love its eclectic mix of light bulbs, pic'n'mix and gadgets you never knew you wanted. And for many kids, it's a treasure chest.
But even if you wrote it off years ago as an anachronism, you can't be wholly insulated from the indirect damage inflicted by the manner of its end.
I'm 
© MMIX~RS~q~RS~~RS~z~RS~57~RS~)
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Forclosure on retailers.
Currently we are only taking 2009/2010
production orders with hefty deposits.
There is no viable CREDIT INSURANCE
I wonder in any event if the Insurers can
pay out.
So sadly Woolworths is just the begining.
So the noose tightens on all sectors.
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I followed all your logic until you got to the statement that suppliers would lose orders. Surely we, as customers, will still be buying our essentials, we'll simply be buying them from another store. I think that's a bit of a specious argument.
Well, except I suppose, that Woollies never really sold essentials, and that's probably why it was one of the first to do...
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No political points to make, just sad to see Woolies go. Coldly part of the restructuring of the UK economy, yet part of the fabric of the country like the mining villages, fishing harbours and big ports like Liverpool & Port of London. We will adjust eventually, but the painful adjustment will blight many lives. Where is the leadership that will explain the implications of the change to the country and describe what the future may hold (however painful)?
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So NEW LABOUR??
WILL YOU NATIONALISE EVERYTHING??
WILL YOU HOLD ALL OUR FEET TO THE FIRE ??
So we all borrow borrow lend lend spend
spend.
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Shops come and shops go. If a particular trading model no longer works, it will fail. It's called evolution.
A question for everyone out there.
If Crash Gordon were to step down or get forced out before the next election, will he be the first PM never to have even contested a general election?
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PC World and BandQ appear to have been jacking up prices recently and a non-scientific perception is that there are few customers in the stores. Think they both have to reduce prices and cut stores and fast. BandQ has huge stock carrying so expect even more bad news as buyers dry up almost completely and they get caned on stockholding costs ... do they rent or own the stores?
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Yes a sad, even poignant event and very symbolic: the government will have cause to lament this as keenly as individuals do.
But only the first of several in the retail sector: and who knows how many other iconic names elsewhere in the months to come.
Wll people really think that reducing VAT by 2.5% is a masterstroke ?
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Robert - sometimes you write some sense, but other times you mix emotion with commercial reality. You don’t weep for the banks but you do for a shop that could never compete in the free market given no discernible retail identity or hook – what did Woolies do?
I’m sad to see them go, but I’m also to blame – I haven’t been there for years instead I preferred to buy light bulbs and cd’s in Tescos while doing my weekly shop. Come clean and tell me when you last went shopping there.
Now I go to Morrisons shopping as Tescos appears to me to be the giant and is taking advantage. I’m more careful about what I shop for and I also want to give more retailers a chance. It was too late for Woolies and perhaps I should have spread my pound around more on the high street – perhaps we all should. But don’t pretend to feel sorry.
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A lot of High St retailers are going to struggle in the next 6 months, mainly due to what they are likely to sell this Xmas.
Most of these stores bank on huge sales duing the seasonal period to subsidise their quieter periods. Unfortunatley Santa isnt coming to a lot of households this year.
This is what the VAT cut was all about, to try and stimulate our thirst to have a typical Christmas, but it came to late for Woolworths. The main problem is consumer confidence is shattered and many people are questioning the modern ideals of Christmas. You all must know people who say they are cutting back this year.
Not exactly in the festive spirit, but this is the hatsh reality of our current situation.
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Woolies hasn't known what business it was in for years. This is more a marketing disaster than anything directly to do with the current economic climate.
I'm deeply sad for the staff losing their jobs as its happened twice to me, and may yet happen again. (I'm in engineering).
Chin up and best wishes folks!
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The economy is going to unwind quickly because teh systems in place are computerised and efficient. Many PLC companies has borrowed up to the hilt, sailing as close to the wind as possible, to maximise short term profits. Their shareholders are mainly the pension funds run by the same banks that lend them the money and extract huge fees. The tail is now wagging the dog and there is nothing anyone can do about it except "Brace! Brace! Brace!" Thanks Gordon...
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It is very sad that Woollies is in this position, but having visited some of their smaller stores, that look like dirty car boot sales, then it is really no suprise.
Having worked for the company, it is also no suprise that this day has come - they have not moved with the times and are stuck in the late 80's with thier ideas and structure. There are so many managers, that some of them don't even have any staff to manage, there are little empires all over which do not work for the good of the company. They accept failure as part of daily life and everything they do is a tactical, short-term fix, there seems to be no clear strategy and long term plan as too many managers have their own little agendas.
I for one will be very sad to see this much loved retailer disappear from the high street.
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Can someone point out to Alexander Curzon that caps are rude and his comments incoherent?
Ditto bliarwatch, NuLab (old hat, rude as doubtless intended) etc etc.
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The miracle is that Woolworths (and WH Smiths) have lasted so long... they try to sell a bit of everything and therefore do nothing well. Their main trade are in items such as CD's and books which can be found far cheaper online. The range they sell is 'top 20' only and so are also underpriced by Tescos on one while Waterstones etc beat them on choice. The rest of their range (clothing, homewares etc) is virtually poundshop quality yet they try and maintain hundreds of large high street stores.
Woolworths were a dinosaur and have gone the way of the dinosaur. Hopefully the stores themselves can be bought up and a better CEO can employ their staff to sell things that people want and can't get better & cheaper elsewhere.
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Its good that the administrators are trying to work to sell the retail trade and shops of Woolworths, Good luck to them. I don't think the board should see a penny of any monies raised if all the debt gets cleared. There is no justification to pay a financial director £27,00 a month in salary under a situation like this and frankly the board needs a vote of no confidence and firing for what they have one to the company.
Meanwhile Happy Christmas to the Woolies army of workers Good luck to them all.
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Robert,
It is a bit rich for an employee of the BBC who is maintained entirely at public expense to pass jugement with phrases like:
'weaker retailer', 'lame duck'
It was a businsess that for many years created wealth to provide livlihoods for many people, it made profits and paid taxes.
Contrasted with the BBC and the rest of the public sector - who consume wealth generated by (and forcibly extracted from) the private sector - just how weak/lame do you consider yourself and the BBC?
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Woolies has been damaging well run businesses, discounting heavily in its death throws. The sooner Woolies and other poorly run chains go out of business, the better it will be for the high street - currently companies like Woolies just dilutes a very difficult market making it more difficult for everyone.
I am amazed anyone is surprised that Woolies has failed so fast, it hasn't! The righting has been on the wall for months, credit insurance was withdrawn because insurers knew it was no longer viable
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Alex Curzon, yesterday you were writing like a shouty kid, today you are attempting the form of poetry. (try reading the posts as if they were poems, works quite well)
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Robert, I understand from your blog that the Woolworths on our high street has a parent company.
How is it possible for them, presumably, to benefit if they had sold the chain of stores and, yet, the parent company doesn't pick up the tab if it goes under?
Is this something for both media and government to look at?
Great blog btw
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Re Post 5 by eddixon
"A question for everyone out there.
If Crash Gordon were to step down or get forced out before the next election, will he be the first PM never to have even contested a general election?"
I believe that Sir Anthony Eden succeded Churchill and then resigned after Suez without contesting a general election as PM.
You're all doing very well !!!
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RP,
You acknowledge like-for-like sales plumetted as economic uncertainty took hold. Why could that be, I wonder? Could it be that shoppers became more price-sensitive and realised just what poor value Wollies had become?
And why do you think that "around the same time" suppliers found they couldn't insure against Woolies' bad debts? Could it just be that the suppliers of this insurance check out the sales stats on a rather more timely basis than you do? Maybe someone had the novel idea that it isn't smart to provide insurance against bad debts for a firm whose cash flow is plumetting and which is close to its debt ceiling.
As for some of your other points, all I can say is you seem to have reverted to "The Sun Says" mode. If Woolies' sales have plumetted, then two things have happened. Either retail sales generally have fallen sharply, in which case the effect on suppliers is the same whether Woolies survives or not, ie there are no sales therefore no purchases from suppliers. Or, sales have been at least partly diverted from Woolies to other retailers, and suppliers will be getting larger orders from them to compensate for the loss of Woolies business.
Finally, oh no, other suppliers won't be able to get supplies of books, CDs etc from Entertainment UK. If this business is so critical at this time of year, it suggests it will be cash positive, which means the Administrator will keep it going. The banks behind the Administration will support it, ie provide credit and ensure if necessary supplies can be paid for upfriont, simply because positive cash flow is to their benefit. If it's that good a business, it will be attractive to someone to buy it.
Alternatively, it's just another basket case company that failed to adapt to the internet age. Personally, I can't imagine going into a shop for a book, DVD, CD etc anymore. Have you heard of a company called Amazon? And does anyone buy CDs anymore? Doesn't everyone just download direct onto their iPod? It's years since I bought a physical CD.
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yes, thats right. its the credit crunch that has done for Woolies...conveniently ignoring the fact that they were an ailing company with an outdated business model, and the worst advertising campaign in years - really? a toy dog and sheep are going to to turn your business around?
They sell tat...sorry, sold. Where will we get our low quality greetings cards, discount quality dvd's and one penny sweets now?
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The big surprise regarding Woolies is that it has taken so long for them to come to this position. A firm that had lost it's total direction and could find no viable reason for existence is sure to fail. Sad that an 'old friend' has gone but not it's not the end of the world.
Neither will it be the last of the big names in the High Street that will bite the dust after the Christmas season.
As for suppliers and their insurance guarantees, their position is surely their own fault. They contracted with Woolies knowing that they had been in a perilous state. If they did not take this business risk into account whilst contracting then they only have themselves to blame.
The question now is will the fire sales start before or after Christmas?
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It is sad to see Woolies go but it will not be missed as the current format was a dead duck. If only the Directors had the vision they could have made it a profitable business as it still has alot going for it.
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It's almost comical some people take their personal digs at Labour party and Gordon Brown and company when businesses fail. If the businesses are unsustainable they will fail no matter who the PM or chancellor is and there's little they can do about it. They are not individually responsible for running these businesses so blaming them everytime some business entity goes under is silly to say the least. The other parties have hardly come up with any resolution of their own and they don't seem to have answers to the economic problem either so please take out your personal grudges at the time of voting and spare everyone the same old whining.
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GMAC part of US firm General Motors, Burdale part of Bank of Ireland, GE part of US firm General Electric, Wachovia the failed US bank which was taken over by Wells Fargo, and Bank of America decided that they had no reason to listen to Gordon Brown's cry for banks to lend. Just about every single one of the lenders mentioned is a US firm and has got into trouble with bad lending practices. By bad lending I mean they undercut lending costs of more prudent banks and completely mispriced the risks of the loans going into default.
We could blame the banks for making risky loans to Woolies without forcing them to make sure they were better structured but the real demise started started some time ago when the buffer against hard times was removed. When woolies actually owned their shops then during a downturn they had the option to sell a few shops to raise some money. Modern retailing business practice though is for commercial real estate to be seperated from the retail business as it limits expansion with money being tied up. Many modern retailing businesses now operate within such fine parameters that a 5 percent downturn for any protracted period puts them out of business. Once we get past christmas we should expect more news of retailers getting into problems as they spent the last few years rushing to get more highly leveraged just like the banks, government, councils and other big firms. Small and local will survive just as it always has.
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I will buck the trend here, I think that in January the bulk of chain stores will report record numbers through their doors.
Why, because as mentioned, stockholding has to be reduced, suppliers paid, debt burdens slashed. In-store prices will continue to drop and people want a good xmas, maybe the last for a while.
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The collapse of one badly-run retailer does not mean that all the consumer spending that would have taken place there has gone away. Most will be diverted into better run businesses, and make them healthier,
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Why should the government step in at all? Why mention it? The more they step in the worse it will be.
We need to clear all these crappy shops out of the way - I'm sad to see Woolies go, a friend will lose their job. But we have an economy with 70 odd % consumption. That will have to drop below 50%, surely. So we'll no doubt see the back of many, many more, especially those that thought it was a good idea to mortgage themselves to the hilt.
It's a good job many private companies don't run the same way as they might be the only ones left standing when this finishes.
Very hairy.
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Excellent analysis Robert. Much food for thought.
This is the most frightening bit: "...administrators will probably keep the stores open for the next few weeks, and slash prices to shift all the stock.
That would be good news for shoppers, very bad news for weak competitors."
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Robert
Great piece. I too will be sad to see woolies go. I hope something can be done to save it. Many a great day out with my late grandmother to the pic n mix section.
Thanks for the memories woolies!!!
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The taxpayers can not pay anything to any company, enough is enough.
I for one shall not weep for insurance companies, they are the bane of all our lives and should not get any tax funds.
We should have let the banks fail, we have to let our insurance companies and their greedy shareholders fail.
It is a great shame that Woolies will go, many fond memories include that place.
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Forgive me if I sound naive, but if this is a "Global credit crunch" and the government are trying to encourage further debt, sorry borrowing, to keep the economy bouyant - who are we to borrow from as it seems to me everyone is borrowing from everyone else. I was utterly shocked to hear Woolies has fallen, less surprised at MFI, but clearly we are heading for uncertain times as if the Banks caving were the snowballs thrown, what is to follow in the avalanche that has taken Woolworths with it? The Government needs to find a better solution.
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Did Alan Sugar ever complete his purchase of 4% of the shares?
One way or the other not the time for an Apprentice "you're fired".
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Sadly (for the staff and suppliers that have lost money) Wollies has been a busted flush for years - just compare their shops to Wilkinsons for how to run a "Premium Poundshop" and you;ll see their problem.
All this turmoil may have an eventual good effect on the high-street - we may end up with the emergence of more businesses with a less short-term profit-driven view of doing business. Not good for shareholders but pleasing them was the cause of much of the short-term nonsense in the first place. Has anyone else noticed that the discount supermarkets from the continent (Lild & Aldi) always seem to do very well and are private busineses with no shareholders......
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Farewell £1 bags of Haribo. You shall be sadly missed. Where now shall my mother go to purchase those cheap kitchen utensils that were a feature of my student years? Those odds and ends that somehow were all found under one roof.
It has been a long time in coming. Woolworths has for many years appeared well worth avoiding if the brightly lit but deserted aisles were any indication. Should we mourn its passing for nostalgia's sake when we did nothing to keep its heart beating, save for the occasional 'emergency' purchase?
The sad sight of an empty site will no doubt have an impact on the local shops around the fallen retailer; perhaps a scavenger with an eye for an opportunity will pick those bones from its carcass and make something of it. Perhaps not.
This will come as small comfort to those who will find themselves unemployed as a result, however, we should not shed a hypocritical tear. If you didn't buy from Woolworths, you can hardly cry for the place. Those whose lives are impacted maybe. Ultimately though it was the relic of a bygone age, a retail dinosaur that had failed to capture the minds and business of the modern consumer, who had apparently little concern for the price tag, only that they get exactly what they want.
In one of life's little ironies, as we enter a recession, the need for somewhere like Woolworths may be resurgent. An inexpensive retailer where you can get all the little things you need without breaking the bank (sic).
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We are all to blame to a degree for Woolworth's demise.
We seem to be getting out of the shopping habit, big-time, and I cannot see us going back.
I last went into a Woolies shop 10-15 years ago, and have never been in one since. Same for MFI, Do-It-All (Focus Group now?) and so on.
There is an inner resistance to buying big-ticket items that has reflected onto the smaller retailers as well, so if we don't go out to buy something large, we won't go out for something small at the same time.
Ebay has a lot to do with it; We buy a lot of kit on-line. Prices there are never going to be matched by the High-Street so why bother looking?
We just have our roof off, literally, new trusses arrive tomorrow morning. We got a lot of the materials on-line rather than the builders merchants who traditionally would have supplied us, another potential problem looming as building slows down.
As the high streets become just a row of Building Societies and Video Hire shops, nobody wants to go there any more.
Peter
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Sad day for Woolies - yet more retail woe will come.
Beyond that what about UK plc? Mr Brown says that our debt (43% of GDP) is lower than that of Germany (65% GDP) but what about the private finace debt, unfunded public pensions and the bank bail-outs. According to EH Amory in the Daily Mail this amounts to £2,366billion (157% of GDP). Who is right and when does UK plc become technically bankrupt. Need to act now and cut cloth accordingly. Can we all please get real.
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Derek53 - Your argument that suppliers won't lose orders because we will simply buy goods from other stores isn't so simplistic as that I'm afraid.
Take a bag of own brand teeth and lips sweets for example. Woolworth's, Tesco and Morrisons all sell them, but they may well be supplied by different companies in different areas of the country. Therefore, a supplier has lost its main/only customer and may be forced to close with the loss of further jobs. In turn, a haulage company will have also lost a customer at a vital time (delivering the sweets from the factory to Woolworth's), as will the producers of the sweet's ingredients.
Even if Tesco and Morrisons do raise their order, it will probably do nothing to help the redundant staff from the Woolworth's factory or replace the lost business further down the supply chain.
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#19 "How is it possible for them, presumably, to benefit if they had sold the chain of stores and, yet, the parent company doesn't pick up the tab if it goes under?"
Limited liability means that shareholders in a company are not liable to make good that company's losses out of their other assets.
Adam Smith thought that all limited liability companies were a fraud perpetrated against the public. But the system was originally designed to protect individual shareholders not involved in the day to day management of a firm. It could also be argued that if a firm sets up a limited liability subsidiary, it encourages innovation and enterprise because failure of that company will not destroy the parent company.
However, the system is open to great abuse and has indeed been abused many times in history.
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MFI deserved to go to the wall years ago as it failed to innovate. It started the self assembly chipboard revolution in the 80's. Whilst IKEA boomed in the late 90's early 2000's MFI should have followed the market trend to simple, low cost, stylish products and use it's huge network of stores to reduce IKEA's market penetration.
Woolworth's may be the butt of many jokes but it is the cornerstone of many High Streets and they'll be much duller places without it.
Whilst I don't think that any one business deserves special favours, we do need to solve this 'confidence' issue where as soon as there is any whiff of a problem the credit drys up and business ceases. Therefore the rumour becomes a self fulfilling prophecy.
I struggle to understand how a retailer with prime real estate and a £3bn TO can't make a profit, even with debt at 12.8% of TO.
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I swept up on an evening after school at my local Woollies, very sad to see it go.
But like a lot have said and will no doubt say today - it was inevitable
I'm starting to think the High Street is to Labour what the Mines were to the Conservatives..... only without the union leader
Back then we had an industry producing coal that no one wanted (the idiocy of Scargill bringing his guys out on strike with nearly a year’s worth of coal above ground still astounds me)
Now we got high streets employing hundreds of thousands of sales staff dependent on lending that isn't going to happen again in our lifetime - get ready to see the ladies from Pick n Mix become the next Flying Pickets....
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Oh no! Not woolies! The poor sheep has finally collapsed and died from it's financial ovine AIDS
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In your article you mention the pension deficit. How long before the government has to step in and support the Pension Protection Fund? As taxpayers already underwrite generous public sector pensions the government could not morally refuse.
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#25 From what iv read people are blaming woolies for the collapse of woolies.
Take the blinkers off!
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So now I get it. It's less the banks' willingness to lend than credit insurance drying up. Who can blame the insurers when they have to price their risks on the basis that someone like Woolies is a cert to go under?
It's a great shame, part of how the retail scene is changing, but there it is. Not just competition from people like Tescos but the internet. I doubt we'll see too many domestic electronic shops on the high streets in 10 years' time.
Looking down the line, all these "town regeneration" schemes will probably fall flat unless regeneration means downsizing of high-street shopping facilities.
My thoughts go to all those who face the festive season with the knowledge that they'll be out of jobs very soon.
Yet, elsewhere in this morning's business news I see car markers are hoping for a bailout. It would be extremely unfair for them to get it, not to mention protectionist which is not what we want right now unless we're turning the entire nation over to communism.
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Robert, I will tell you what really shocks me. It is that any professional commentator such as yourself can write 'a decade of benign, debt-fuelled trading conditions which we now know to have been unsustainable '. Anyone with half a brain has known that the apparent success of Brown's policy has been no more than a consumer boom based on easy loans. Yet the general public have been told for years, by your colleague Evan Davies as much as anyone, what a brilliant job Brown has done and what a great bloke he is. We deserve better.
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While I agree it is sad to see a household name like Woolworths on the precipice, one also has to have a sense of reality. Businesses fail because they lose their customers and this is precisely what has happened at Woolies.
Many years ago, a major re-structure of the business helped to re-launch Woolies back on to the High Street, concentraating on its major strenghts. But since then, nothing has changed. Woolies has stayed exactly the same, competition has increased dramatically in that period particularly from the supermarkets.
Woolworths hasn't died due to credit problems or global factors, it has died due to bad management and lack of customers. The problem with the current crisis is that there are too many bad businesses using it as an excuse to lay blame away from themselves. Dare I suggest we could include a few banks in this list?
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Robert,
even by your own melodramatic standards, your performance on last night's BBC 10 o'clock news took the biscuit.
Please stop patronizing us and start to treat us as reasonably intelligent adults.....or was I the only one that felt patronized?
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Government policy is not to prop up lame ducks," our correspondent said.
Robert you said this.
If this is the case why did HM Government prop up the banks? They are the lamest ducks that we have and it they that are still dragging the rest of the economy down.
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To be borrowing that sum of money plus trade creditors on falling sales and lack of assets is beyond belief. Management and lenders must have been over optimistic for years. And now everyone losses more. No good everyone talking about buyibg things in woolies years ago, i doubt if todays youngsters would be seen dead in it!
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Robert says "Although Woolworth had been one of the UK's weaker retailers for years - propped up by a decade of benign, debt-fuelled trading conditions which we now know to have been unsustainable" and "And it's the suddenness of how everything turned bad that shocks"
When do we get the blog from Robert which goes something like
"Although NuLabour UK had been one of the UK's weaker Governments for years - propped up by a decade of benign, debt-fuelled trading conditions which we now know to have been unsustainable" while GB and AD say "And it's the suddenness of how everything turned bad that shocks"
How can this be sudden when everyone was expecting this for years !!
Woolies and NuLabour - 'Cheap and Nasty." !!
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Another doom fest.
So Woolies could have limped on if sales hadn't fallen off a cliff 4 weeks ago. Not that is should have or be propped - it's in administration and pieces of it will be scooped up and rise again in a better more suitable form to survive in future.
When did that nice Downturn logo and the doom laden media coverage really get going - when was bad news, the news every hour of every day. This is negative advertising - as oft stated if advertising didn't work then no-one would do it. Advertising doom sells doom which is why I return in this post to the theme. A part of this decline can be squarely placed on the media and the tit for tat political childsplay the Tories and Labour have engaged in.
It wasn't going to be nice for everyone but it perhaps need not have been as bad as it is going to be for fewer.
People with jobs do perfectly predictable things - they fear for the future and stop spending in case they need the money later becuase they lose confidence. The news has advertised that in future you may be worse off so people react.
The new media and sorry but Mr P very particularly have accented all the bad news without the tempering of any sense of scale.
I will give you a very clear picture that even now there are positives in the climate which are going to help bottom out the problem.
An EU company manufacturing abroad sells in the UK (we are a big market) so gets lots of GBP from customers. Over the last years it was OK to swap these for Euro/Dollars or whatever currency needed to buy more raw materials. It would even force UK suppliers to sell in Euro as this transferred the one way strong pound pain to the UK supplier and the GBP they got could be swapped for more Euro/Dollars.
Now - the GBP has declined in value. Today the company still has lots of GBP from customers but it not worthwhile swapping them for anything else - what to do - actively look to buy raw materials in GB.
If we hadn't had the cityfest for so long we may well have more companies able to take advantage of this - but the strong that remain will start to benefit very shortly.
To use an oft used analogy:
The economy Titanic has hit the iceberg, it is damaged and worth less than before it sailed. There is a hole in it but the engineers haven;t yet established how badly she is holed. Certainly at least 2 possibly 3 compartments but not neccesarily the 4 required to sink the
vessel.
Repairs are being attempted to stem the flooding and the outcome is not yet known.
But the media are suggesting that it is time to jump into the sea having advertised there are not enough lifeboats and even if you are lucky and get one you will probably freeze to death.
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High street shops had better take note of the demise of woolies ; a lot more will follow unless they realise that the customer comes first. People , thanks to the internet , now know how much they should be paying, and unless the high street shops compete, then they will be out of business. There is no god given right to make a profit in this world, if you do not compete you go under. I suspect unless M&S get their act together, ( no longer customer friendly ) they may well go the same way. Primark has shown the way ahead and it has nothing to do with ripping off the customer because you happen to have your shop in a town centre.
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to gordont10 - ARE CAPS REALLY RUDE? I ALWAYS SAW THEM AS INDICATING SHOUTING....WHICH IN ITSELF CAN BE SEEN AS RUDE, BUT MY GRANDFATHER DOES IT ALL THE TIME; HE ISN'T RUDE THOUGH, JUST A LITTLE DEAF.
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To 20 Young Mr Grace
Thanks for the answer, but I checked it out and it seems the first thing Anthony Eden did was call a general election in 1955 which he won with an increased majority over Clement Atlee.
Anyone else have any thoughts on it?
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#12 - are you sure you were working at Woolies? Sounds more like you were at Downing Street to me.
"...they have not moved with the times and are stuck in the late 80's with thier ideas and structure. There are so many managers, that some of them don't even have any staff to manage, there are little empires all over which do not work for the good of the company. They accept failure as part of daily life and everything they do is a tactical, short-term fix, there seems to be no clear strategy and long term plan as too many managers have their own little agendas."
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oh Bert bert bert - give me strength
the credit crunch has done for Woolies - not likely
its been a shambles for years and you know it
there are vultures who will resurrect it so the job losses will not be as much as you claim
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I agree, Woolies has been past it's sell by date for a long time. The town where I live lost it's Woolies years ago to the poundshops and Wilco. Woolies used to be the sixpenny store, cheap, chearful and eclectic as you say; I can't remember the last time I went into one. It now belongs in the time of rose tinted glasses and long hot summers...
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Quote #30 sachaclarkson
"This is the most frightening bit: "...administrators will probably keep the stores open for the next few weeks, and slash prices to shift all the stock.
That would be good news for shoppers, very bad news for weak competitors."
Doubt it somehow- they'll probably be low on any decent stock to shift to make a dent to anyone else!
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Chronic mismanagement has done for Woolworths in terms of its failure to modernise.
It was treading water at best during a sustained (artificial) period of economic grow so why the surprise that it falls on its face when the going gets tough.
Personally I cant wait until every shop is a Tesco.
(that is irony btw)
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I just want to know who stocks Ladybird kids clothes apart from them? Because it's a fantastic, well priced brand and, apart from pick'n'mix, I'll miss it.
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"Woolies hasn't known what business it was in for years. This is more a marketing disaster than anything directly to do with the current economic climate"
I could not agree more!
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According to my late relatives of previous generations, Woolies started out as a sort of pound shop, where nothing cost more than 6d (old pence). It gradually turned into something else and forgot its roots. I suppose a true modern equivalent would be Wilkinsons.
A big problem now is that other firms, who started out with a "pile 'em high and sell 'em cheap" strategy are so huge that they dominate the market. They squeeze producers on the one hand, bully government (national and especially local), and overcharge (almost) captive consumers. No names mentioned for legal reasons but we know who they are. They really do restrict choice. The middleman is king. They should be broken up and, where possible, boycotted.
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Very sad to see another old name go. Another example of a company being passed around with no real passionate true owner. Piled with debt and, like the country. no substance or assets to call on.
The problem with the withdrawal of credit insurance obviously speeded up the process and this is one factor that will bring many more companies down. I work in construction supplies and the credit insurers
have withdrawn almost ALL cover, despite having taken the premiums for years. The choice is, do you continue taking the orders or simply reject the risk and downsize the business. Many are doing just that instead of finding themselves with a massive debt and their own company going to the wall.
Massive job losses are the result.
Still Gordon doesnt GET IT !
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Robert you wept for Woolies did you?
That sounds a little too Barbara Cartland for my taste. Perhaps you should get together with a few theatrical types at the BBC and produce "Woolies" the musical. Perhaps you could get the dog and the sheep from the advert to do a poignant duet about a love lost.
For most of us we don't care except perhaps about people losing their jobs and pensions.
I have been in Woolworths just once in the past 5 years and it was pathetic. Woolworths had become emblematic of why our midsize high streets have been lsoing out more and more to the internet.
Nasty Junk. Poor Value. No service.
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@ 49
I thought Robert was trying to impersonate Rory Bremner last night. He was ridiculous and patronising. Nice to drop a reference to the blog though, as subtle as a self publicist on a talk show!
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Wooworths has been a bust business model for years. It's a mess. It has / had no clear identity. What do you go to Woolworths for, for heavens sake?
What is alarming is that Woolworths became an unworkable business as soon as its credit insurance was withdrawn. That is when it should have pulled the plug. There is no way on God's earth that it could have got itself out of that hole. Questions need to be asked.
Is credit insurance necessary? It's very expensive and is a business health indicator...but it's not always accurate. If it remains a prerequisite for businesses trading with each other, everything is going to come to a grinding halt because there is going to be a wholesale withdrawl of credit insurance from thousands of businesses in the next few months.
Perhaps it's time for companies to save money and forget about credit insurance. It's certainly not part of the insurance industry that should be propped up.
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So the poor old banks pull the plug. Their secured lending is fine.
That just leaves SUPPLIERS not getting paid then. Unsecured creditors will be £500M at least in stock they cannot get back. They have no choice in the "pulling the plug".
How much does Woolworths owe VAT and NIC? Back of the queue Mr Brown for your cheque I am afraid - unsecured creditors now.
Whilst Woolworths, MFI, the Car Industry are all big names, the cost to smaller suppliers with good business models is IMMENSE. They are the ones who will not get paid by the Administrators, or get some very small % in £.
Up and down the UK on industrial estates in towans and cities, manufacturers, wholesalers and distributors are dying and their job losses in the 10's and 20's are only about to start. Thats the real news to report here Mr Peston - the local losses most of us can relate to.
Banks lend recklessly to Woolies flawed business mdoel,
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And what about MFI? One word...IKEA
MFI was really boring. IKEA is interesting and vibrant.
Let's not cry too much!
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Didn't anyone at the top level of Woolworths management think to stream-line their stores years ago, close un-profitable ones and re-invent themselves by setting up 'Mini' Woolworth Stores with products maybe not found in other shops? Re-invention - a business practice successfully used for over 40 years in Western Europe!
Who were ‘they’ the management board, kidding when they thought all their mounting debts could be solved by borrowing more money?
Remember C & A Stores? Refused to change with the times and went the way of the dinosaurs!
In a nut shell and I am now going to mention ‘names’. Curry’s, Pc World, T J Hughes and Argos – Streamline, re-invent and re-focus, quickly! Or the now defunct slogan ‘the wonder of woollies’ will quickly morph it’s self to become ‘the blunder of follies’ for you lot as well!
I’m sorry but that’s the way I feel!
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I remember going into Woolies as a nipper and buying a pound in weight bag of broken biscuits for fivepence. Perhaps if they had stayed selling that sort of thing rather than filling the shelves with Chinese produced tat, they might have survived. The true fact is that this should have happened some years ago.
Who next i wonder? Surely at least one of the DIY chains may fall. And the news from electronic sector this morning is not good.
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Alexander Curzon
You have a massive beef with 'new' labour. Do you really think the Tories would be any better?
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The common link between Woolworth's and MFI is that they are not very good and have not been very good for some time. Current conditions may have influenced the timing of their demise but have not caused it.
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# 66
Brilliant. Sale proceeds for the Musical tickets should go to the pension fund.
BBC could also do an X Factor job to cast the lead role of Wooly: who should wear the wooly suit? Again, all phone call proceeds to the pension scheme.
I can see a final eliminator between John Sarjeant and Bobby Peston.
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Media Doom Gloom or Enlightening?
Ladies and gentlemen, I see many posts here about how the media are 'dragging the country down'.
This is rubbish.
In China the state media reports that the economy is doing well. So thousands of factories get closed at a moments notice. The employees, unaware of what is going on, get shocked, stung and (unheard of before) start demonstrating and rioting.
In Russia, again the media is 'dissuaded' from objective reporting. So the stock market gets suspended, what? 4 times? And what of all those millions of Russians with small shareholdings that got told nothing. Yes, bankrupted.
May I suggest that if you dont like free media then you should stop reading the news, turn off your TV and get an allotment..
The media will NEVER be ideal, but freedom is paramount, and I respect your rights to post your rubbish.
And seriously, if you all think Robert Peston is solely responsible for this crisis may I suggest you lobby parliament to give him 300billion so he can fix it.
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#70
"And what about MFI? One word...IKEA
MFI was really boring. IKEA is interesting and vibrant.
Let's not cry too much!"
You need to add as well - expensive! Most stuff in MFI was probably twice the price of an equivalent in IKEA and you couldn't pick it up on the day and still had to build it yourself.
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As businesses go bust, credit insurers will pick up the tab-question is, with repossessions at high levels too, just how long will the insurers be able to pay out?
Credit insurance will dry up quickly as their criteria are likely to be more stringent now. (echos of bank lending policy?)
The next step in this upheaval is waiting for insurance companies to go to the wall. Watch premiums rocket!
When all this hit the fan with the banks, I was wondering about insurance companies being next. Perhaps Robert, you could do some digging on this one?
And please correct me if I'm wrong, but isn't Morrisons owned by Walmart? So not shopping at Tescos and shopping at Morrisons supports an American Supergiant company. Sainsburys would be a better pick maybe?
We are in an economic revolution/reformation of a kind previously unknown. It will take more than a 2.5% VAT reduction to sort it out. Like it or not, the time to stop the chaos accelerating has past, and we've all got to do our best to hold tight.
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Robert
Very sad to see Woolies go, but basically it didn't sell what people want. Management had plenty of time and chances to correct course, but despite their best efforts failed.
On another economics/business issue, I read in the papers this morning that the gov't is actually proposing to increase employers' national insurance.
It's very simple: making it more expensive for any business/public sector body to employ workers means less of them will be employed.
Shouldn't Labour have tried to actually cut employers' NI to encourage greater employment during the recession? This is what people really need, rather than the dole. Sorry, sickness benefit.
The gov't seem to say one thing but when you look at the small print, do another. Surely we should be aiming to maximise employment even if this means taxes go up elsewhere? Lowering the cost of employment would also reduce the number of job outsourced overseas, etc etc.
Views?
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Totally unrelated to the retail sector, but just as worrying is this
http://www.contractjournal.com/Articles/2008/11/26/62443/york-house-construction-in-administration.html
I run a company that provides services to our biggest construction and House Building Companies (Firms like Balfour Beatty, Taylor Woodrow, George Wimpey) and we are now struggling to get paid from them, which is obviously a bad sign.
If any sector needs help now from the Govt now it Construction. These companies tried to cut their cloth 6 months ago with jub cuts etc, but now things are taking a turn for the worse and many are going to go to the wall as they are unable to service their debt.
We are being asked to spend our way out of this recession. That WILL NOT happen.
We could however build our way out of it, but if the powers that be dont act quickly there will be no one left to actually do this.
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PROPPED UP FOR FAR TO LONG
GOOD RIDDANCE TO BAD RUBBISH.
INCOMPETENT MANAGEMENT AND STAFF
A BUSINESS WHICH WAS SO PAST ITS SELL BY DATE ITS A JOKE.
M&S SHOULD GO NEXT.
THEN DIXONS
AND PCWORLD
UTTER RUBBISH
MFI = MADE FOR IDIOTS
AND RUN BY IDIOTS
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# 69
Suppliers have been demanding cash up front from Woolies for a while, so unlikely to lose much.
It's actually the suppliers who appear to have been the catalyst for Administration. Cash up front seems to have caused Woolies to hit its debt ceiling.
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This comment was removed because the moderators found it broke the House Rules.
Woolies like Mfi and others were lucky and survived ONLY because of the credit bubble which maintained for awhile the fantassy that debt could be rolled to infinity and beyond
Labours "things can only get better "secular religion was the "Tooth fairy " peddled to the mass fodder product of the enlightenment, who by their abominable actions[labour] scoffed at the word of the living God
Politicians thought[they called it thought] fractional reserve banking and the pumping of easy credit was, a one way ticket to home owenerrs parrodice [for those already well up the housing ladder] instead it turned out to be a delayed day return to paloooooookahville
about which they are still in a denial destined to turn to anger and blame etc etc
Democracy that only pays lip service to overiding heavenly law whilst ,twisting its precepts ,is no more than a closed loop for the delusional insane, whos main wish is to bounce reality cheques until forced by mortality into oblivion where no further bouncing is possible
The credit bubble allowed the Par lammentable lunatic fringe to be pulled over the ayes,the disapearance of "woolworth " leaves the mperrors once into sheeps cloathing looking for new tailerrs ,to spin their woolly balls with their nitting needles into the latest Armani [our money]transparent fasion statement
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It has suffered basically the same fate as Kwik-Save and for basically the same reasons.
There is no room anymore for large retail outlets on High Streets if they are competing against outlets in out-of-town retail parks. And high street business rates are little short of outright theft.
Watch out for the slow but sure demise of decorating franchise Fads over the coming months and one of either bargainbooze or boozebusters to wobble.
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#5
Neville Chamberlain never faced a general election.
John Major served 499 days until facing a general election. Gordon Brown has so far served 520 days. Its quite normal NOT to call a general election when you take office in the incumbent party.
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So sad! Today is market day in my little Cumbrian home town. Very wet. Off to get some fell bred lamb for a hot-pot, home made cakes & a browse round warm, welcoming Woolies to look for stuff I have forgotten I need, but definitely including a couple of egg-cups.
Says it all I guess. I don't eat sweets, have a baby or play computer games so rarely need a lot more of what they offer.
But market day will never be the same......
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"Take a bag of own brand teeth and lips sweets for example. Woolworth's, Tesco and Morrisons all sell them, but they may well be supplied by different companies in different areas of the country. Therefore, a supplier has lost its main/only customer and may be forced to close with the loss of further jobs. In turn, a haulage company will have also lost a customer at a vital time (delivering the sweets from the factory to Woolworth's), as will the producers of the sweet's ingredients. "
You might be write but not necessarily true.
I worked with a woman whose father was a director of a large food company in Sheffield. They made Christmas cakes for all the major supermarkets. The only difference was the packaging and the quantity of the expensive ingredients. M&S has more of the expensive ingredients than Tesco. However the cakes were all made in the same factory.
I don't doubt many companies may go to the wall or have to lay off people as the knock on effect continues and I hope they get some support or new employment.
'Govt policy doesn't support lame ducks'
Not strictly true. As others have mentioned why are many banks being supported?
The answer is obvious.
People would be out on the streets and our politico's would be hanging from lamposts....
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The sharp drop in Woolies sales was a direct result of the marketing of fear by the politicans via the media in order to justify the intervention or 'bail-out' in the financial sector. A significant proportion of the public objected to the concept a 'gift' or 'free aid' to bankers. The bail-out was mis-sold both here and in the US. It was never effectively said that the taxpayers money would be secured or that the taxpayer could in fact make money on the deal if things went well. Because of this the fear had to be ramped up and up to gain intervention. It is a coarse mechanism and was bound to overshoot. If you put the fear of god into people you will stop them doing what they normally do. They will stop and look around, sit on their hands for a bit. You change buying habits, which in terms of the high street economy is the last thing you want to do. That is all you are seeing. It is governments job to smooth discontinuities, not exacerbate them, but both here and in the US exacerbation has been the story, both on the way up and on the way down. In a highly geared economy with tight coupled supply chains even a short discontinuity is disasterous. Any retailer who peddles goods seen as a deferrable purchase is vulnerable, and there are a lot that fall into that catergory. From the suppliers point of view the seizure of sales is compounded by the buffer of goods in flow in the supply chain so the subsequent loss of orders with the supplier is amplified and the supplier can be in very real problems very quickly. Both retailer and supplier cannot restructure quickly enough, particularly with an old school model business. Much of this situation is the direct result of poor policy and communication by government. It is an inescapable fact. Note - I posted that fear was being deliberately used as a tool prior to intervention and that its effect would overshoot so this comment is not with hindsight. This still has several months to travel, with businesses and therefore jobs to go. The sales are not made up elsewhere, because the purchases are deferred, and therefore may never be made. Having created the quicksand HMG is finding it has relatively little room fo manouevre, therefore little impact. This is probably true whoever is in government at this stage. The main contribution from the oppo to date has been negative messages. This shows the size of the problem. Politically the objective seems to be to chip away and discredit Brown, with some success, but the blowback is that as no perceived positive policy is proposed the opposition is not seen as providing a solution. This just further destabilses the situation and does not help the stunned public recover confidence. It is difficult to see divergent policies developing until economically progress is started to be made. That is when the bill will start to arrive. The public are reluctant passengers on a ship between ports at present, with some being cast astern in lifeboats on the way to ligthen the load.
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Whilst the loss of jobs is a sad thing, I can't say I'm too bothered to see the end of Woolworths. Their retailing methods are (were) completely outdated. By trying to sell a wide variety of things the staff were often clueless about much of what they were selling and crucially, I'd find things I'd want always out of stock.
Whatever you might want to buy on the high street, there's usually a specialist shop nearby which would sell the same product as Woolworths, but with knowledgable staff selling it with cheaper prices. Except for the pick 'n' mix of course.
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As usual the BBC goes for the "crisis crisis, doom & gloom". Please be realistic "Woolies" have been failing for years it not a credit crunch or recession thing it that woolies are 10yrs out of date, the market and consumers have moved on woolies has stood still. Funny that theres no report on how many internet companys are having a bumper christmas, but heh good news doesn't sell
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# 53 - Good post - 90% of the current problems are media-induced, resulting from doom laden reporting undermining confidence in the general population. Couple this with Bankers reverting to type and behaving like a bunch of spineless, money-grabbing crooks and we are where we are.
As I've said before on this post:
THE HOUSING MARKET IS THE ECONOMY.... GET THIS RIGHT AND THE REST WILL FOLLOW.
A good start would be to suspend Stamp Duty across the board for a period of 12 months.
Who knows, even a business as fundamentally flawed as Woollies could be re-structured and reconfigured to produce a profit - but only if customers feel secure about their property values and jobs.
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78. Tigerjayj
correction:
Asda is owned by Walmart not Morrisons which is a UK plc.
Credit insurance is already incredibly expensive and as note in the original piece the loss of this was a major part of Woolies problem. No supplier could get it so they demanded cash up front for stock - Woolies either had to borrow to get stock or the supplier took a risk. Can't imagine too many suppliers who would have done that with Woolies.
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For at least two decades the globe followed the business plan of easy credit and high debt and produced budgets accordingly.
No one had the courage to march 'out of step' and present the alternative business plan.
Now we are all wiser and 'in step'.
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#78
"And please correct me if I'm wrong, but isn't Morrisons owned by Walmart? So not shopping at Tescos and shopping at Morrisons supports an American Supergiant company. Sainsburys would be a better pick maybe?"
Close but not quite right - Morrisons is a British owned business (it absorbed Safeway a few years ago) whilst it it ASDA that it owned by WalMart so it you're allergic to big supermarkets they're one to avoid!
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Mr Peston and Comment No 44 Rangeray.
Thank you for bringing to my mind the pensions timebomb.
I had forgotten this issue,
I am not 'au fait' with the pension fund market, however I feel that this is deep deep merde.
Type 'Pension fund hole' into a search engine.
I feel (but dont know) that as this crisis races towards its peak that there is a nasty 'double whammy' for employees and taxpayers alike.
Maybe the subject of future comment?
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49 Sapperpj:
' ... was I the only one that felt patronized?'
Yes.
What do you want Robert to do, reel out endless abstractions that mean little to anyone? Yak-on endlessly in a semi-academic tone just to please the intellectual snobs out there? His conversational style is based on sound journalistic standards. He's good at his job, conveys information in a clear and lively way and has encouraged many people to think about wider economic issues. If you want a sermon or a lecture go to church or to university. If you don't like how he conveys his 'message' then don't watch him.
He's not perfect but he's never boring. So give it a rest.
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#80 "Construction company woes..etc"
It's a shame Robert and the rest of the media didn't notice the writing on the wall for these companies when they were busily talking the housing market down 12-18 months ago!
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#78 Tigerjayj "And please correct me if I'm wrong, but isn't Morrisons owned by Walmart?"
No - it's Asda who's owned by Walmart. Morrisons is still (largely) British owned and still based in Yorkshire. They have a website which is quite informative.
I must say I also have a lot of time for a couple of German owned firms who offer good value and treat their staff well by all accounts.
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@2
The economy is shrinking the 3 billion thats was spent in wollies wont be spent in other stores because people are not going to have the money they did have.
Robert.
I think wollies have been looking in a bad why for some years, but the final nail in its coffin was the crash of the ftse and collaspe of the banks. i dont believe for one minute that wollies would of gone into adminisration so close to xmass if this had,nt of happened.
Also why have the govt put money into the lame duck banks? Surely this is just throwing money down the blug hole. lets face it the banks have not been lending. Yet tens of thousands of people have been paid for really doing nothing. because these banks are not in a postion too.Surely the money should of been put into the better banks. Like HSBC for those to lend. nobody in the last great depression put good money into lame duck banks they where allowed to go to wall. at some 600 a week worldwide i think back in those days. Only citi group the other day needed bailing out, how many will fall before there is no more money to bail these banks out. I know it will mean great job losses, but to carry on in this way will be even worse.
They should put the money in the good banks sending out a tsunami of good credit which meets the bad tsunami coming the other way.Somewhere down the line they meet and hopefully things .i.e economy starts to grow.
NUTTY FRUIT CAKE I KNOW
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The comment about credit insurance is very apposite. In business this is a relatively recent phenomenon as I can remember the days when credit risk was assessed by measuring rating lists and reading the London Gazette. In developing markets it was often a speculative punt. Now an insurance company does all that work and charges accordingly.
Maybe business-men have been dumbed down along with the schools and universities that produced them.
Woolworths has been a badly run business for years. You had only to walk in the stores to know that.
Possibly the modern dumbed- down business-man does not realise that old buffers like me who have been there, done that and worn the T-shirt can smell commercial rot quite easily.
There is a lot of it about and, you are right Robert, this is going to get very nasty before it is all over.
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"A perfect democracy, a 'warm body' democracy in which every adult may vote and all votes count equally has no internal feedback for self correction. It depends solely on the wisdom and self-restraint of citizens...which is opposed by the folly and lack of self-restraint of other citizens. What is supposed to happen in a democracy is that each sovereign citizen will always vote in the public interest for the safety and welfare of all. But what does happen is that he votes his own self-interest as he sees it...which for the majority translates as 'Bread and Circuses'
"Bread and Circuses is the cancer of democracy, the fatal disease for which there is no cure. Democracy often works beautifully at first. But once a state extends the franchise to every warm body, be he producer or parasite, that day marks the beginning of the end of the state. For when the plebs discover that they can vote themselves bread and circuses without limit and that the productive members of the body politic cannot stop them, they will do so, until the state bleeds to death, or in its weakened condition the state succumbs to an invader--the barbarians enter Rome."
RA Heinlein
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For sure, there are many poorly run businesses out there, of which Woolies was one, that have limped along for ages. It is only when the times get really bad that their incompetence unravels. However, this time, the wheat is unlikely to be so easily separated from the chaff.
We are entering a depression and the effects will affect good and bad businesses alike. What is likely to be the determinant factor is how essential the goods sold are and the respective costs. We are all going cheap - those Lidl, Aldi, Primark, Amazon and so forth. This is bad news for luxuary goods sellers, electronic firms, bedding etc. and stores who don't really know what they stand for and keep their heads in the sand.
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"Now what's significant is that Woolies is far from being the only retailer pummelled by the sharp contraction in Britain's economy and also by a sharp and painful rationing of credit insurance.
Many thousands of British businesses have had their insurance cover withdrawn for supplies to companies perceived by insurers as poor risks - and that's causing havoc on the high street.
Unless something can be done to persuade the big providers of credit insurance to reinstate cover - and that would probably require taxpayers to provide some kind of guarantee - Woolies will not be the last substantial victim."
Have you nothing to say about the other implications of extending State guarantees to businesses who no longer satisfy the requirements of the credit insurers? Is it only good news that will result?
Is Labour's eristic approach to communication down to the fact that it has a hotline to truth, or because it recognises that it has no way of prevailing in an intellectually honest discussion?
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#34 No, Sugar couldn't find a vendor...he got a lucky break !
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Aha !
I have always understood that it is the 'insurance' issue which has pulled the plug on travel companies, leaving their customers adrift in mid-holiday.
If it spreads to the high street it will mean only "survival of the fittest". But Woolies has been the weakest for years and years so its hasty demise comes as no surprise.
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Very sad to see the demise of Woolies. When I was a child in the 50's, it enabled me and my brother to buy Christmas presents for mum and dad with our five shillings a week pocket money - it was the only place we could afford to shop! I remember fondly the old wooden floors of the store in Hackney and all the little compartments on the counter containing just about everything. I can still picture it now.....
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82 JayPee28pbr
suppliers brought down woolies..
It is always a moot point whether a retail business trades on the supply chain payrolling the goods and therefore increases overall efficiency and lowers prices at the retail point or hides its inefficiencies by exploiting and abusing the supplier to payroll a retail business which is lacking in innovation and inheritently unresponsive and inflexible and ineffiecient and therefore in long term decline. I would say Woolies was the latter. All these warm memories of I used to like to buy my pic n mix there are meaningless unless that goodwill can be converted into current sales. One impact of this recession will be to increase the cost of goods in the medium term as burnt suppliers move to demanding cash up front, thereby reducing the overall cost efficiency of the supply chain. There are too many outlets selling basically the same imported goods with little difference in price. The current discounts are distress sales.
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#92 Houseflogger
I am sorry to say I couldn't disagree more with
"THE HOUSING MARKET IS THE ECONOMY.... GET THIS RIGHT AND THE REST WILL FOLLOW."
We can not sustain an economy on simply building and selling houses. The housing market is a by product of the general economy.
The porridge in my stomach feeds me, the shoes on my feet keep them warm and dry, my house (home) is a place where I and my family rest there weary heads on an evening. Nothing more, nothing less.
The alleged though none existent wealth built on the back of unsustainable rises in property prices has all but disappeared. Time to get with the new realities.
Simply turning the clock back to where we were pre-crash is simply not an option
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I wonder when Robert Peston last actually went inside a Woolies store. He seems to be talking about the ones of 50 years ago.
In every town (and there are several) where I've been aware of Woolies stores over a time scale of decades, they have been in a continuous drift downmarket. Cheaper shop furnishings and fittings, cheaper goods, smaller shops, smaller product range, even smaller shops...
In any thriving economy, they would have been wiped out 20 years ago and replaced by something relevant. Let 'em burn. If they take a dozen more basket case high street retailers down with them, so much the better in the long term.
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#100
"They should put the money in the good banks sending out a tsunami of good credit which meets the bad tsunami coming the other way.Somewhere down the line they meet and hopefully things .i.e economy starts to grow."
I assume that you're clever enough to have your savings in one of the good banks then? The reason that the banks had to be saved is because if one went down and people lost thier savings there would of been a run on most of the other banks bringing down perhaps half of them - the others would be ok as they would of got the savings but there would of been a much worse mess than we actually had - a controlled crash landing rather than the plane flying straight into a mountain side.
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MFI=Howdens
same stuff 1/2 the price and once owned by the same company
you go into MFI they do the plans - quite well I might add - and toddle of to Howdens - hey Pesto!
nice business model - not - who do they think they were kidding
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many thanks everyone for correcting me-got no decent Internet at the mo, just this daft phone, so can't check first!
When I wasn't working, iused to visit all manner of shops to make my pennies go further-I had time to shop!
Now, I get as much done in one place because of time constraints-I would imagine many are the same. but still like the german ones as you say Sasha C!
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at work yesterday a cardboard box was (correctly) traced back to me..... two members of management were involved in this process. I was notified of the "unhappyness" this box placement (forgotten) had caused, the other 120 boxes, places in their alocated location and the other boxes flattened and allocated to a correct location were not mentioned or "seen".
Thank god that such good practice and positive process management is in place and the fact that "people" have been made irrelevent to the process of interaction. ( this contract expires in three weeks....) "long live the credit crunch and the potential for learning?"
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#35 "Has anyone else noticed that the discount supermarkets from the continent (Lild & Aldi) always seem to do very well and are private busineses with no shareholders......"
FYI, even most private businesses *HAVE* shareholders !! They may be private shareholders, possible all members of one or more families, but still shareholders !!
However, since the shareholders are family members, it is easier to convince them to take the longer term view instead of the get-rich-quick short term view taken by many businesses these days.
There will still be a great many family-held companies in Britain that will survive this recession whilst the get-rich-quick brigade drop like flies !!
The only other store, that I know of, that operate like a family-held company but isn't is the John Lewis Partnership, a limited liability partnership !! *ALL* their employees are limited partners that get a share of the profits !!
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Q What did Woolworths and Railtrack have in common?
A After Railtrack's demise, its CEO took over at Woolies (until last year).
Did they ever have a chance? Where will he pop up next - or has he already done so?
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This comment was removed because the moderators found it broke the House Rules.
I am not suprised Woolies has founded. For some time now it has been looking less and less like it used to be . From what I have seen it consisted mainly of toys and sweets ! with some kiddies clothing . The advent of PRimark , Wilkingsons etc has cut into its customer base . I will be sorry to see it go (if it does so ) but cant help feeling the managerment must take a lot of the blame .I hope all the staff are treated as well as possible, I have never had any thing but courteous service from them .
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What a crazy system. Insurers only want to insure what doesn't need insuring and by refusing to cover some risks, create a self-fulfilling prophesy.
Having been saved by the tax payer from the disaster of their own failed business models, banks are now smugly picking and choosing which small business projects they feel are safe enough to warrant a loan of what is our money,
Those whose greed led us to this disaster are now quaking in their gucci loafers, afraid to make the decisions that could help solve it. Each time the government does what they want - salvage banks, stimulate the economy, reduce interest rates - they just cry 'I'm frightened. I need more!'
Why are we going to such lengths to rescue this flawed global system that makes a few very rich (still) but has millions of people without the basics of life like shelter and clean water?
This is a great opportunity to come up with a new model, one that is good for the majority not the privileged minority.
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I'll miss Woolies, just as I miss British car marques like Wolseley, Riley and Sunbeam...
The saddest thing about it is that boarded up shops are a very depressing reminder of the state of the economy, and in the current climate those old Woolworths stores could stay empty for a very long time.
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Post 56. eddixon
I stand corrected. Perhaps GB would be the first not to contest an election if he were ot go before the next one.
You're all doing very well !!
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Robert,
You say "Unless something can be done to persuade the big providers of credit insurance to reinstate cover - and that would probably require taxpayers to provide some kind of guarantee - Woolies will not be the last substantial victim."
A question....
Would that be a better use of funds than this temporary cut in VAT, which most folk I speak to can't see working and just ADDS to small business costs?
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Poorly trained staff, poor service - who is really surprised ?? Its a management failing , pure and simple.
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Get smart and evolve - or go out of business.
That's the lesson for retailers.
Shame it doesn't seem to apply to bankers or politicians...
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As soon as Tesco et al were allowed to branch out of food only retailing, the writing on the wall became apparent not only for Woolworths but also the white good retailers (one has already gone).
Clothes retailers are OK for now as the Tesco's do not yet have large stock ranges. CD and DVD retailers will also probably be next in line for the same reason.
The Tesco's etc are also better placed regarding credit crunch as their cash reserves are masive - large profits made in the past have been earmarked for future capital and cash reserves. They only use banks to pay in their sales receipts - loans? You are having a laugh mate!
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#92 - no, lending based upon overinflated house prices was part of the problem. The real economy is based upon buying based upon earnings. House prices were too high and you have to accept your losses.
The demise of Woolworths was inevitable, it had had its day. The market for cheap tat is better supplied by others, in particular internet retailers. DSG will go the same way, who in their right mind would buy something from Dixons etc. which is cheaper online. The high street will shrink, it is inevitable and purchasing patterns change.
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102 weejonnie
Yes but we are not Rome are we, and we do not have a slave population and a Senate elected only by citizens of the city of Roman only. Nor are we as wealthy as Rome was or drink nothing but water and wine heavily contaminate with lead. Nor do we adulate genocide etc etc. At least not last time I looked, and certainly not today.
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I have been in woolies, a few times and almost regularly. I am concerned about the product supply chain and jobs in that area of the north which we call China!
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@111
So the tax payer pay billions on keeping people in jobs that are not doing anything?
Surely the money could of been spent on guaranteeing the publics money.
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MFI have failed because their business model was junk.
you used to be able to go to MFI pick up what you wanted flat pack and take it home.
They got caught up in the idea of value add service and when you went in there they expected to design a whole kitchen for you not just sell you the one cupboard and doors that you needed.
Last last few times I went in their just in time model meant you couldnt take delivery of what you needed for 12 weeks.
Exit stage left and go somewhere that can supply the items today
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#46 "Looking down the line, all these "town regeneration" schemes will probably fall flat unless regeneration means downsizing of high-street shopping facilities."
...or take a leaf from the East and have megamalls with masses of tiny mom-and-pop shops !! Where shopping is concentrated into one area (the department store concept) but the business is done in many tiny penny-packets (the High Street shopping concept) !!
All that needs is for the mall owners to have a radical change of philosophy. Instead of chasing after a few large retail chains and be dependent on them, have lots of little units at reasonable rent to the small businesses. This way, if some close down, it is easier for others to take up the space and carry on paying rent (income stream, in American) !! And the mall provides the parking space needed by the shoppers !!
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#92 Houseflogger
OK your scared and have moved from denial to panic. Your lashing out at anyone, everyone, anything, begging for something to save your house of cards from collapse.
Before getting involved in my current life of trading online and playing poker i was training to be a priest. Clearly i was not very sucessful but i do remember some important lessons about psychology, charactor and courage.
Fear and anger are the two closest emotions. Your anger is simply a manifestation of your fear of your new reality and its consequences. You are losing in the real world and producing empty rhetoric devoid of any merit to, as someone else here recently said, to reinforce your 'confirmation bias' motivated out of nothing more than self interest.
No doubt a year of 2 ago you were one of the cheerleaders proclaiming the new paradigm and a housing market that could never fall. You no doubt celebrated the Daily Express article that heralded the average UK house price of £1m by 2020 while the young of this country were being enslaved by greedy 'buy to letters' denying them of any hope of homeownership.
Now is the time for you to be quiet you have nothing to say. You gambled and lost. Others are winning in your place and they will have their own interests to protect.
You are now a statistic and cautionary tale.
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The poor financial environment has precipitated Woolworth's and MFI's collapse but it hasn't caused them. Both brands were stuck in the 80's, both outlets were poorly run, poorly staffed, poorly presented rubbish. Yes - badly run businesses fold. Welcome to economics 101. If you make an effort with what you sell, make it look good, sell it at a reasonable price and give customers both value for money and either good service or a price and convenience low enough that they'll put up with rubbish service, then you will survive a recession. What happened to Woolies? Tescos and other supermarkets took part of their customer base. High street pound shops took the rest. Their market split, their market moved on and they couldn't change. They've had 20 years in which to change, they still haven't, screw 'em. MFI are the same. IKEA have come in and showed them how it's done. MFI still plod on with the same old rubbish. So they don't deserve to survive - diversify or die. It's sad and I feel most sorry for the people who will lose their jobs in this - not just at the outlets but in warehouses, wholesalers, other suppliers and other ancilliary companies. But business is business and where a provider can't hack the market place, they will go to the wall
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First I must declare an interest - I loved Woolworths. The fascination started at age 10 when I would go in to buy Airfix model planes and bits of wire, light bulbs, batteries etc for my electrcal experiments.
Even nearly half a century later I still experienced a thrill when I entered. It was Aladin's cave - you never knew what you were going to find.
But my local Woolworths closed a few months ago. It will become a Waitrose. Looking back, I realise sadlyalthough I passed it weekly, I probably went in only 3-4 times a year and bought items twice. It just didn't have much I wanted, and those it did, I could buy more cheaply and conveniently elsewhere - often on-line.
And it can't have been just me - often there were more staff than customers in the store.
So I'm surprised you were surprised it folded. In my view the surprise was it survived so long.
I feel sorry for the staff. I don't even blame the management. They tried a few ideas over the years but the underlying problem of an outdated business model was too great.
Another poster referred to this failure as "evolution" and he is right. This might trigger a large change on the High Street. When the dust settles lets hope some of those stores are bought by those with a better business model, selling more things we all want to buy.
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#109 I quite agree. The housing market is one of the major causes of our current woes. In particular the myth, encouraged by all governments since 1979 that houses are a source of wealth an will continue to increase in value in real terms. This has fueled "investment" in property rather than in production, and borrowing to spend on imports. No choice about the imports in many cases when things aren't produced in the UK, or even the EU.
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#109
Unfortunately the Housing/Property Market is the Problem.
Like it or not every homeowner in this country guages his or her personal wealth to the value of their Home/Property/cash in bank/shares/pensions, and usually their home is the biggest asset.
If peoples homes begin to fall in value they will feel poorer - result consumer confidence is reduced and they think they need to retain their other assets, in other words save their pennies and not buy the latest Ipod or 4x4 car.
So consequently the fall in house prices is a major contributor to the problems the high street is about to face. Once property prices begin to rise confidence will return and we will start to spend again.
The only way out of this cycle is to try and make houses percieved to be more as homes than investments, but that will never happen because those who play the property market (the mega rich) do very well out of boom and bust.
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#13 I was always told me that it was rude to wear caps indoors - I guess he´s OK providing he goes outside to write his messages.
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The banks favourite time to pull the plug on retail businesses is often in the new year when shops often have their best cash position following the Xmas season.
This way the banks can ensure that they lose as little money as possible. January and February will probably see a purge of many weaker retailers.
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The collapse of Woolworths is, as you say, no surprise. And usually such collapses are sudden, which is equally no surprise (think Lehman's for example).
It surely is positive that ailing retailers such as Woolworth and MFI are dying. They already had been replaced by others and were living dinosaurs.
It is difficult to have any sympathy with suppliers to these two organisations who will now join the long line of creditors that are unlikely to be paid. They should, as suppliers, have been well aware of the risks they were taking and, if their Finance Directors were competent, would already have made provision for write downs and cash losses in their accounts and in their tactical plans. If some suppliers have not done this - well, more fool them. They probably don't deserve to survive either.
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109 RobKirton
House sales, whether you want to see them as the cause or effect of ecomonic growth are critical. The fact that Labour appear to have used them as a vehicle for a boom does not mean they are not needed. Incidently Labour were just taking Thatchers strategy to turn everybody into a houseowner to its logical conclusion. In fact it is not house building prices which are the problem - it is building land prices which are the problem. The cost of actually building is pretty constant. As there is still plenty of land it is obvious what the solution is, but it is unlikely to be taken. Upset too many people.
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Credit Insurers are the shark in the water. Over the last 20 years the retail sector has become overly reliant on them and many chains have based their expansion plans on the expectation of ongoing ever-burgeoning credit facilities. In fact many of these businesses consider their access to credit a bit like how many consider credit cards to be an extension of income.
The problem is, a credit insurer can withdraw credit overnight based on a set of poor figures or just the general feel-bad factor. The fact that they all communicate with each other means a business can have it's credit facilities withdrawn overnight and they become a leper in financial circles. Retail always relies on credit, its the only way it can finance the stock on the shelves until someone comes into buy it. The real problem is that too many retailers have over-expanded, very few own the freehold theirs shops sit on and they are paying extortionate rents to be seen in prime sites.
In the current economic climate many insurerers would rather take a loss now rather than prop up failing businesses such as Woolworths. The fear is that they will put up the drawbridge altogether and take down a lot of healthy retail businesses into the bargain. Woolworths was a basket case and on a commercial basis was not worth government intervention, but I do expect Mandelson having to roll-up his sleeves and intervene in the future.
The only silver lining I can see, is that in future with loads of empty shops, we may see city centre rents for retail sites at a realistic level. That will encourage independents to move back in and a bit of character in our clone towns.
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I worked for three years as a consultant for this company. Their management was poor and for countless years failed to adapt to a rapidly changing retail environment.
For example the £1 stores chain would never have succeeded if Woolies had been on the ball. But the main reaon for their failure is not just bad management.
The retail sector is saturated. You cannot build ever more retail parks, shopping malls and outlets. There is a finite amount of cash available for spending in retail and suturation point was reached a long time ago. The credit crunch has simply made that apparent.
Watch the new Westfield centre. It will succeed, but at the expense of other retailers. Look for store failures in Oxford St and Bond St in he New Year. In the same way Woolies demise will actually give a boost to its competitors once the inevitrable cut-price closing down sale has happened.
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#68 "Perhaps it's time for companies to save money and forget about credit insurance. It's certainly not part of the insurance industry that should be propped up."
You seem to think that credit insurance is an optional extra. It is not !!
It is the supplier, who fears that the purchaser cannot pay for the goods delivered, who insist on the credit insurance in order to get his money, come what may.
If the purchaser has a high profit profile and has a good reputation, there will be little or no credit insurance needed.
AND if the purchaser is flushed with cash, he just pays cash and not have any hassles with credit or insurance at all !!
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I don't think it's all a case of whether Woolies deserved to go under or not. There are a large number of people who do not look in too much detail to the cause and effect of the credit crunch. Many just get on with their lives as best they can and hope for the best.
But then they hear of Woolies' fate and it's an emotional reaction. When asked 'When did you last vistit a Woolies?' they can't remember. 'When did you last buy something there?' Can't remember. But it's Wollies! And although it probably deserved to go years ago it will have an effect and just reinforce the hard times are here. Just beacuse it's a name that's been with people for so long.
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A few months ago Alistair Darling was interviewed and said things would get very bad. He was roundly slated for this especially by the Tories calling for his head. It would seem that he was a bit of a rarity a politician telling the truth as he saw it.
Im not sure a tory Chancellor would have been that honest. And for those of you blaming the current Govt for this, this started in the Thatcher/Greenspan era, along time before this Govt even took power. Tories conveniently like to forget this fact.
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#92 said
"THE HOUSING MARKET IS THE ECONOMY.... GET THIS RIGHT AND THE REST WILL FOLLOW."
Depends what you mean by "right".
In my view "right" would be a price fall of 50%, regulation that limits mortgages to no more than 2x salary and the inclusion of house price inflation in the BoE interest rate deliberations.
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Young-Mr-Grace ,
I think you will find Eden was party leader at the election of 1955. He called an election after taking over WSC.
It would seem politicians of that era were too honourable to fathom leading without a mandate. Oh how times have changed.
Perhaps a little reading before the pedantic sarcasm next time?
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I bought my very first lipstick in Woolies in 1962, a hideous chalky orange colour.
I loved Woolies then and although it has changed a lot over the years it has been one of the most useful stores in any town centre.
I'll miss it when it's gone.
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121 "Perhaps GB would be the first not to contest an election if he were ot go before the next one."
Neville Chamberlain succeeded Baldwin in 1937, but was himself succeeded by Churchill in 1940 without a General Election.
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Agree wholw heartedly with 91. Am really fed up with your doom and gloom when there are are good news stories out there.
One point though, if as you say "Woolies owns a substantial wholesaler of books, music, games and DVDs, Entertainment UK, whose turnover is well over £1bn. Entertainment UK has also gone into administration, which has raised the alarming prospect for some big supermarkets and high street stores that they won't be able to get hold of vital stock during the all-important Christmas selling period"
How can this be correct if we are all as poor as you say we are and are not buying things?
Perhaps your reports need checking for inconsistencies. A word to the wise though, dont use the same team that edited Brand and Ross!
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@111
what you wrote to me i said the very same thing weeks ago on roberts blog. And many was and still are of that opinion. My opinion as now change. You see these banks over the pass few weeks have not been lending and yet thousands of people are being paid ,Meaning the banks are getting even more into debt. these banks are lame ducks and will never recover. the very fact the people where in the opinion to save the banks would make things less of a blow on our economies, which at the time included me means that the things to come will now be far worse. And if the thinking doesnt change then dont be surprised to see HSBC come runing for help in the near future.
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#147. "It would seem politicians of that era were too honourable to fathom leading without a mandate. Oh how times have changed."
Labour won the last election comfortably. Under the British system you do not elect a PM directly and Brown was always expected to succeed Blair. The current situation is actually better than Majors succession to Thatcher.
If you're looking for a PM without a mandate look no further than Churchill in 1940. he certainly didn't win any election.
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While i understand the financial complexity of Woolies cash flow difficultys i cant help but think that their demise is really due to poor stores, poor management and the most unhelpful,surly staff on the highstreet. If you work in retail and dont fancy been unemployed this Christmas try looking after the very people who pay your wage THE CUSTOMER.
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Banks not lending, Insurance Companies failing to provide cover etc etc.....more than just one financial institutions / Govt's to blame for the present circumstances other firms and individuals are facing. I hope Woolworths has a huge closing down sale as a last act of defiance, perhaps those circling predators in the form of Asda,Tesco, WHSmith etc etc will get a nosebleed!
During UK summer vacation 4 weeks we visted Woolworths weekly, with purchases everytime!
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140. Glanafon.
Of course house sales are one important part of the economy. I would never deny that. A lot of livelihoods are sustained in building and associated industries. I was responding to the view put forward that they "are the economy"
I would however like to add, when my family next move (we will - we've done it several times before); we will be looking for a suitable house and home. Not an investment. We've both "made" and "lost" money on previous moves. Neither situation of course being real. We were never going to cash in our chips and live in a field. We needed a roof over our heads. At no time have we ever allowed the "growth" in value of our property to cloud our judgement when deciding or not whether we could buy a new car, hifi, holiday whatever...
Speculation in any field, whether it be property or complex financial products is a risk. Those who live by gambling on the growth of property prices (as you say - tied very closely to land values), must now learn the new rules. i.e. It is now a new game.
I suspect it will be a long time before property / land speculation becomes a national past time for the gifted or otherwise amateur.
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We run the risk of being too sentimental as we face up to the harsh reality of so many years of irresponsible spending.
Let us be honest and admit that for many years now Woolworths has offered a wide assortment of incomplete ranges of products. I have lost count of the times I have tried to purchase several associated products only to find that the range offer is not sufficient to meet my needs. In an attempt to attract the most cusotmers they have become the jack of all trades and master of none.
Like it or not, consumers have been switching their buying from Woolworths to Tesco, Asda and other mass merchandisers for many years. The emergence of on-line music stores put the final nail in the last remaining category in which Woolworths remained attractive.
RIP
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What exactly was that 385m? A credit facility or a covenant limit imposed by smaller loans?
If it was the former, then pulling the plug means the banks lose most of that money. That in these circumstances was suicidal, except they reckon they'll be bailed out by the Fed Reserve.
If it was a covenant, then Woolies get what they deserve, they should have told the UK it'll be a rough Christmas as they wound up tidy.
The circumstances, that it was spent on stock, argue the former. It is the nature of most businesses to run in debt - Woolworths' underlying position was about 175m short, which is far from excessive on 3500m turnover with 2000m in the Christmas period alone - the 385 itself isn't even outlandish, it simply means they're piling high and selling fast. It also means there's around 1500m of stock in the pipeline which suppliers aren't going to be paid for, and that should leave certain Chinese with very fixed grins.
Viewed from this angle, this is a classic case of banks offering an unbrella when it's sunny but removing it when it's raining. That's exactly what the Chancellor was on about, and it isn't going to be allowed to continue - or so he says. His problem is that these facilities aren't offered by UK institutions, but American ones over whom he has no control other than to pull their Licences.
For many centuries, the Treasury danced to the City's tune as it tried to pay off debt which started in 1200, as I said on the previous report. That was finally done a couple of years back, but suddenly we find the UK banks being bailed out by HMG using debt borrowed from the US, so he daren't complain when the US comes in for a second bite of his cherries - don't forget, the UK banks are in debt because of dodgy packaging from the US banks. The end result is that the Chancellor seems to be held by the proverbials by US banks.
Perhaps the answer is to tell them exactly where they get off by cancelling all credit agreements with US institutions, either in absolute or just in the case of Woolies as a warning shot - after all, if many an African nation can do that with less provocation, why can't we? That should put a smile on many a Treaurer's face.
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Ha Ha, referred to the mods for brining up poor reporting!
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Last night I did something I have never done before; turned the BBC 10pm news off in frustration at your comments on Woolies' demise! You seemed very clear that it was a direct result of the 'credit crunch' and recession that comments like these seem only to talk up!
For years Woolies' has had an unsustainable business model; poor store format, poorly defined range and unclear market position. High debt has been their answer. Undoubtedly the looming recession has hastened their fall, but to blame it all on the current econnomic climate is wrong.
We are undoubtedly facing once in a lifetime economic issues. However, please try and report fact not apparently uninformed opinion.
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87 lowstublick
you might well be the only household in the UK needing to got to Woolies for eggcups. I am sure I have some at the back of the cupboard gathering dust but mainly fine I can survive without them. If you really have to get some, I am sure your nearest charity shop will have a splendid range to suit all tastes!
All -
MFI = Made For Idiots
Not bad... I will offer
Monumental Financial Incompetence
Mostly Foreign Instructions.
I am sure others can do better though
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I am totally relaxed about all of this. Why? Because you couldn't make it up: it is a well-deserved payback for 11 years of greed, wanton excess, lies, deceit and cheating (there is nothing more cheating than taking out loans and mortagages you know you can't pay). The bad habits of millions have bankrupted the country.
You can bitch about the politicians but we know where the final responsibility lays: with us for doing it to ourselves.
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High-streets require bargain hunters and price movers (who enforce an "invisible hand" in a free market). Shoppers have abandoned high-streets in the electrical sector and gone online. Does it matter? Yes, Woolworth's "soft sell" is the opposite of Dixons, Currys and PC World (all DSGi) but men shop with their families. Electricals is evident of a "flight of persuaders" where it leaves others bereft of choice and those continuing vulnerable to exploitation. Government needs to enhance reporting and respond to unfair practices. Such as: prices unaligned with products, displays of comparative models but using "stock outs", regular advertising of deals "sold out" within hours and rogue selling of security software. Why the high impact on Woolworths? Men increasingly hate the high-street because of this electrical monopoly. Now wives and children have less time to buy bric-a-brac while he’s captive of the electrical display. Government action is required to regulate high-streets of new and future sharp practices created by the growing virtual/physical shopping choice. Else more men will vow to "never step inside" a high-street electrical. Unfortunately that means less idle time on the high-street for families and less profitability for national high-quality bargain chains as woolies. DSGi press releases on their own "losses" are bogus. Monopolies are always best placed to plead and manipulate economic climates for their own strategic goals.
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Ah well, if employers, including the Gov't paid their Staff realistic pay rises, the tills would be ringing out there on the high Street.
Come on Gordon !
Inject some demand into the economy!
Give the Public Sector a ten percent rise!
Who lnows they might even vote FOR you in the next election ..................
Mind you if you buy a rail ticket your Inflation rate is 4 to 11 percent.
If you pay rent it is 5 to 8 percent.
If you buy fuels it is a lot more.
Not many of us buy tellies every day !
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155 Robkirton
Can't disagree other than I do not share your optimism that speculators will not be active shortly.
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Also: you are a great reporter and have done a fantastic job on this event. Ignore the people who try and shoot the messenger.
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I do find myself feeling sorry for the ever expanding unemployed.
These folks thro no fault of their own could be facing years on benefits.
Not a prospect anyone would want to face.
What we need is a plan.
A plan to rebuild Britains manufacturing industry.
Our exchange rate is likely to sink as time passes.
This would give manufacturing a boost.
But it will need a concerted effort by Gov't and big business to get manufacturing off the ground again.
Come on Politicians tell us how you are going to rebuild Britain !
Remember we can't sell hot air to the rest of the world as they already have a surplus!
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I cannot understand why the credit crunch with so many "economics experts" making comments!!!!!!! Wake up to the real world.
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Our household is in mourning at the demise of Woolies. The Burton on Trent store is a real treasure trove and rarely a week goes by without one member of our family popping in for something. Many times I have struggled to find an item and then Woolies would come up trumps.
The main problem Woolies had was that they kept going with the depts that didn't do so much business instead of scrapping them and enlarging those that were much busier. Woolies is STILL the only place in town with a decent toy dept.
I sincerely hope that a way can be found to keep the stores operational but my head is telling me that it's very unlikely.
R.I.P Woolies and thanks for the memories.
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Robert,
now the government have opened the Pandora's Box of price fixing (bank lending rates) and mandatory lending targets then they should also openly pressure TESCO who have recently threatened thousands of suppliers' businesses by using their monopoly position to bully suppliers into accepting much longer payment periods.
This is totally analagous to banks tightening credit. It has the impact of sucking credit out of the economy, threatening otherwise viable businesses, allowing TESCO even more leeway to dominate.
IF the government can dictate to banks (which is a big if, but this is economic-fascism after all) then they should dicate to TESCO.
Of course, TESCO's ongoing lobbying and influence in Downing Street means it won't happen, but it would be nice to make the point.
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You could say that the "Credit Crunch" (awful, awful name) is just the wave of change that finally gets rid of obsolescent CD, DVD and multimedia high street stores. Why am I going to buy a DVD for a recently released film for £12 from Woolworths, Zavvi, HMV etc. when I can get it for a third of the price from amazon and their ilk?
It isn't bad debt that's the main culprit here, it's changing shopping habits. I wouldn't be surprised if in ten or twenty years the only high street stores that are left sell food and clothes. Everything else you can buy online.
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#163. Why would I vote for Brown if he gives the public sector a 10% pay rise? Seeing as I'm private sector and had zero percent this year I'm hardly going to welcome a huge tax hike to pay for my local council's rises, especially not when the majority of my council tax already supports their final salary pensions. It certainly wouldn't lead to 'the tills ringing' especially as with the pound so weak (and hardly going to get stronger with your pro-inflation policies) that imports already cost a fortune. Not much British made goods on sale in Woolworths.
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#166 "What we need is a plan.
A plan to rebuild Britains manufacturing industry.
........
Remember we can't sell hot air to the rest of the world as they already have a surplus!"
Absolutely true!
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Instead of looking for the reasons in the wider economy as to why Woolies (and for that matter MFI) have failed. Read the posts by those who have worked for them. Not such a headline grabber, with no sensationalism, just the tale of a badly run retailer, with nothing to sell. When was the last time you went into a woolies and actually bought something. 20 years ago, virtually every week. Lately, I bought a wok in the sales 3 years ago. That is the truth, sorry Mr.Peston
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In the early paragraphs of his post Robert does allude to Woolworth's outdated business plan, one that was never successfully refurbished to establish a clear identity. Even M & S floated a bit close to the same plughole a couple of years or so back.
As for explanation, need we look any further?
Meanwhile Tesco look set to report 3bn trading year profits. It is evidently possible to know how to sell. Thankfully for the consumer in these times.
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Aside from being a tidy headline, we should "Weep for Woolies", because Woolworths is simply the first big casualty on the high street. It won't be the last. In fact, the damage caused by the crisis in its Entertainment UK arm could help take down some other surprisingly large high street names as they struggle to get games, CDs and DVDs in time for Christmas.
The difficulty is what's happened to Woolies (and MFI) can so easily happen to the rest of the low-hanging fruit on the high street. Which at the moment means pretty much every store on the high street. You could see the high street decimated (in the Roman Army sense - one in ten gone) before Easter and if things don't brighten up, the high street could be little more than a parade of empty buildings with the occasional hairdressers by this time next year.
I've already seen similar events happen in my area (I'm associate editor on a consumer electronics trade magazine); the downturn came early in hi-fi, when the iPod generation stopped buying CD players, amps and loudspeakers. Those who were still interested in buying hi-fi, went to online discounters. The result was the retail sector shrinking by about two-thirds in the space of a year, and continuing to shrink after that. Those who fared better, adapted... but many still struggle to survive. And that's with continued lines of credit and insurance.
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170 "food and clothes. Everything else you can buy online."
Including food and clothes. Is the Internet the culprit? This is only another source of price competition and choice: nothing new in retail.
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The passing of Woolies was rather like the passing of an old friend, who has been ill for a long while, shock followed by resignation.
Woolies passing (and MFI) are an indication of a credit squeeze, but not necessary an indication of many. What are the real sales figures out there?
I was always told a short recession is always good in the long run, with firms that shouldnt realy be there disappeariing. Looking at the Woolies stores especially the Big W, stores, Woolies should have gone long ago.
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...to paraphrase Spike Milligan
'I told you I was ill'
Retail has regularly reported this over the past year.
Add in Banking, Building and Small Businesses struggling with the spending slowdown and the whole business infrastructure is approaching collapse.
So Darling introduces a monster pre-budget package, mostly directed at all the wrong things and wonders why the People don't swoon over it.
eg
VAT is reduced on Petrol and then immediately added on again.
Create and Retain more jobs he shouts and then adds an NI increase.
Spend,spend, spend he cries and then takes money off us through such proposed fripperies as Bin Taxes which are already paid for by Council Tax.
Keep on eroding the wage packet and there is nowt left over in the disposable income box after NewLab's anti-people measures of congestion charges, hospital parking charges, HIPS, payments for Quangos, MPs expenses etc, etc, etc.
Perhaps Spike might have said
'It is the New Labour policies that are ill and they won't see it, so the People will suffer and suffer'
As for Woolies having a poor business model, perhaps it is Brown who has the poor business model.
correction - Brown definitely has the wrong business model of Taxing the middle earners until there is nowt left to spend or save.
Projected Result - more Brown inspired bankruptcies
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#172 Sashaclarkson
I very much agree with your posts over the last few days. I think the campaign would be better than the "none of the above" I have been thinking of.
One point though. In order to rebuild British industry I think we would need some kind of protectionism, both from cheap imports and from capital flight.
Any Thoughts ?
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#176
Most of the major retailers have an online presence, including Woolworths and DSG.
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To all those giving woollies the "bird" and saying "good-riddance", you obviously don't have a child under 10.
When my 9 year old heard of the demise of woolies, his face was a picture of despondancy...
Where now could he spend (what seemed like) an eternity scanning the shelves for a toy to match his pocket money budget.
Where now can he find those elusive Dr Who trading cards.
Where now can his father read the newpaper without paying for it whilst waiting for his son...
Spare a thought for the children.
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FlyingAlex2012 Post 38....
There is an historic parallel in the situation re UK National debt
I think it was back in 2007, a long time ago I know; when many Banks had this system of using off-balance sheet debt instruments to hide stuff they didn't want to think about.
This was called a new paridigm , which, basically, meant all previous, old common-sense rules were shown to be completely wrong.
Off-Balance sheet debt didn't count because it never had to be repaid like old fashioned debt.
I do recollect that this idea took a bit of a knock and there was actually a bit of trouble with some Banks at one stage, but it wasn't really anything of significance and I think it all turned out all right in the end...anyway it all happened absolutely ages ago ....
...... So far back that it pre-dates us finding out that Gordon Brown is the figurehead sage and sole saviour of the Global Economic system... so as you can see it all happened so long ago that any lessons to be learned couldn't have any relevance to our modern age anyway?
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I blame Poundland ........ or more specifically the customers who shop there.
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Sorry if this off topic, but I've found out the the government wants the NHS to do most of it's £5bn 'efficiency savings' (between £1.35bn to £2.5bn)!
So stay (or get) healthy, keep (or get) fit till 2016 because it's count the 'deaths in the corridors' time for the NHS.
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Much of retail as a value added distribution medium is now becoming an anachronism. The real long-term winner will be online retailers and trading platforms, who offer the convenience of shopping without all of the logistical penalties of having to drive, park, hope that the item is in stock and then transport it home. Retailers have created massive brand dilution by not focusing on the core offerings that drive traffic to their stores - M&S. This drive to massive diversification and expansion has commoditized retail and destroyed long-term shareholder value.
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Why worry about Woolies- In my life time we have lost hundreds of shops - Victor Value, Timothy Whites, Home and Colonial,
Budgens, Mac Market- Rumbelows, Oters will come along and take their place - Woolies is no loss unless you work for them
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Supercalmdown 163,
Your off your head!
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Robert
Northern Rock and bradford and bingley. Woolworths and MFI. What have they got in common? there the weakest link. how many banks fell after those 2 banks? well what ever the number times it by 10,000 the number of companys to fall. By then HSBC will be on its way under. Getting sucked in by all this mess
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Remember WH Smith were not in a good shape a number of months ago but have been turned around by a good managment team. It does show that perhaps Woolies managment needed to be changed a while back.
Thinking about it Smiths may benefit from Woolies demise as theyespecially if they broadened their range. One mans meat!
The demise of Woolies has not been helped by councils imposing ever more expensive parking charges.
In my town Woodbridge, this has happened recently with effect that shoppers think, oh ------ this, and drive a few extra miles and go to Tescos at Martlesham where parking is free they can fill the car up and the prices are good. As a result businesses in the town are struggling. The Manager of Tescos must be laughing his socks off, he should send a nice xmas card to the local council.
We used to live in Croydon where the same thing happened (Car Unfriendly, expensive to park) and people just got intheir cars and squirted round the M25 to Bluewater (20 mins) or like we used to do go down to Brighton (40 mins) and made a nice day of it.
I wouldnt set foot in Croydon town centre with its big Woolies now if you paid me.
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178
Come now, you really mean that Darling's (admittedly dodgy) fiscal package immediately brought down Woolworth's, or that Gordon Brown means curtains for sweets and DVD sales?
Of course they were ill. Footfall I think is the word; knock-on to credit, knock-on to cashflow - is that not what we are told today?
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I have to say that Woolworths have been near the top of my list of lame-duck retailers for 1-2 years at least - my only surprise is that they've soldiered on for as long as this.
As the retail sector focused more on niche markets, Woolworths kept diversifying their product range - Mr Peston described their product range as 'eclectic' - I would take that further, and describe it as 'mental'.
As a result, Woolworths simply couldn't compete with other retailers who adopted a more focused strategy towards one product type - electricals, basic homewares, garden accessories, clothing, kids toys and sweets - you name a random item, Woolworths probably had it. Each of these product types has more than one specialist retailer, each of whom are able to offer the same products for less money, and all of whom feature on every major UK high street or shopping mall (i.e. next door to Woolworths).
For a supposed value-added retailer, woolworths quite simply didn't add any value. This fact, coupled with the glaring lack of a USP, signalled the beginning of the end for Woolworths' retail division. When you think of electricals, Woolworths isn't the first name that springs to mind. When you think of CDs or DVDs, most people probably look online first.
Thanks to the lack of focus on one product group, Woolies didn't have the buying power that the more specialised retailers enjoy - hence Woolworths pay more, and either can't compete price-wise with their rivals, or watch as their profit margins are slowly asphyxiated along with their business.
Perhaps if Woolworths had re-structured things differently, and focused on their more profitable wholesale sector, jobs could have been saved by means of transfer or a buyout of the retail arm. As it stands, 20,000 pour souls are waiting to hear their fate. There's never a good time to have your job threatened, but December is the worst time of all. Pity the workers, shame on the senior management for failing their employees.
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Ref 29:
hairyhouseoflords
There has not been any society that would have survived with 50% consumption of the GDP (apart from war periods). In the Soviet Union, during the industrialisation it was 65%, in Rumania, during the attempt to repay the debts in the 1980s was 60% (and ended up in revolt).
The 70% you mentioned is suspicious. I wonder if it is about 83% or higher.
Recessions do not come from falling demand for consumer goods (the insufficient demand theory is for economists who do not want to think - recession is when the sales fall, and the cause of recession is the falling sales. The worst tautology, yet the vast majority of economists say this.), actually recessions are preceeded by higher consumption, but by falling investment which is due to falling profits.
Production is not stopped when there is no demand (just try to flog off Woolie's goods for free, there will be huge demand), but when the additional sales does not increase profits (does not cover variable costs).
It's called capitalism.
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What amazes me is that Politicians and the Bank of England are still maintaining that the way out of this slowdown is for Banks to resume lending.
Lending to whom? The same people who defaulted on Credit Cards and mortgages? or
Businesses who have been surviving for years by constantly refinancing and insuring their debt?
or
Young first time buyers who do not have the means to save a deposit for their first home because they have been brought up in a world of spend spend spend?
If i was a bank i wouldnt lend to anyone at the moment who was in need of money, as their circumstances are not likely to improve in the short term.
So who exactly do they want the Banks to lend to? People with savings or well run Businesses? They didnt borrow in the first place cause they were sensible and prudent.
Why dont they just admit the culture of lend and spend is over. There is going to be a long correction and it is going to be painful, Alaister Darling let this slip a few months ago.
The best we can do now is re-access and plan for the future, because it is going to change, not necessarily for the worse, but very different.
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I note the Beeb website is happy to do a vox pop hatchet job on MFI today. Somewhere else I am sure people are also pointing out how dismal and themeless the Woolies' stores have become. I wonder if 'getting real' is conceivably a minor plus point of an economic downturn. Maybe we can afford to be just a touch wise after these events.
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#186
Can I add to list:
Kwik Save
Beejams
C&As
Ratners
Vaux breweries
Rover
etc
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The reality is that the UK and world economy needs to retract to a level that is conjucent with net cash availability instead of non sustainable credit.
In providing so much loose credit it was enevitable that economies would grow to meet this flakey demand, hence now economies will retract closer to actual spending power instead of overinflated credit levels.
Woolworths tried to compete in so many areas by just maintaining its core products in expensively re-vamped stores.
It,s no good just making something look pretty, its the substance that counts and Woolworths failed in providing the substance consumers wanted.
Woolworths is STILL a good proposition for a buyer as creditors will only receive much less than half that which is owed, so a potential buyer could improve the payment and get it for 50% of net debt, which is a giveaway and excellent long term investment, if only to sell off store sites as the economy improves.
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#189
"We used to live in Croydon where the same thing happened (Car Unfriendly, expensive to park) and people just got intheir cars and squirted round the M25 to Bluewater (20 mins) or like we used to do go down to Brighton (40 mins) and made a nice day of it.
I wouldnt set foot in Croydon town centre with its big Woolies now if you paid me."
Too true - In Birkenhead they're hacving one last throw of the dice by building a massive ASDA on part of the town centre with it's own (still paying) car park but I beleive that you'll be able to count the charges against your shopping. It'll be interesting - you may have to lie down with the devil (supermarkets) to keep town centres alive.
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Well said 181.
Too little concern for the individuals who suffer when a business goes under. This even applies to the poor smurfs who have laboured in the great financial services marketing rip-off.
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Alexander Curzon - reading between the lines - has it about right...... And Robert Peston has at last caught on to the issue of of the complete freeze in the credit insurance markets. Every one of the insurers has been frantically slashing cover - and the great majority of this has been in November. Most are not writing any new cover and there are rumours that at least one major player will be shutting up shop because the prospect for the next two years is major losses. The "real economy" is being completely shafted by this latest contagion and as AC says it will soon be only those who have cash and can pay pro-forma who will be able to trade. MFI and Woolies are but a foretaste of what is to come. Perennial poor performers it took little to push them over the edge. But this is not just about retail - it's affecting every sector (even my auditors tell me they are asking for payment in advance on some of their clients audit fees - a good indication of a going concern qualification if ever there was one). If September was the watershed month for the bankers, November is the equivalent for those of us outside the ivory towers trying to scrape a living trading real products.
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It was a badly run company with outdated business model. The stores were shabby and had a pound shop feeling. There were always long queues at till because there would be only 1 or 2 people at the till and you could practically buy all what they were selling at supermarket or online (and many a things you would not even buy if you did not end up seeing them displayed at woolworth - i.e. all unessential stuff).
And for those who were pushing all supermarkets and pubs to "create value" last year by selling their property portfolio and leasing it back - woolworth did sell out all its stores and it was leasing it. That creates more pressure on the bottom line. A good lesson for those who resisted such pressures on corporate raiders.
They had a good business in the form of entertainment UK and they should have separated it long ago to create value.
Afterall it was a story of poor management. Had it not been for the "cheap debt" they raked up they would have been out of business a few years ago.
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I heard you say that we are at the 'eye of the storm'. I doubt it. The 'eye' is actually the centre of the vortex, a place of calm. I suggest we are at the outer edge of the high-speed part of the vortex, and that we are only just beginning to experience the whirlwind.
We can expect the 'cards to fall' in this order:
1. Construction
2. Furniture and furnishings
3. Service industries and optional goods such as computers
4. Clothes (except children's clothes)
Suppliers of foods should survive but may have to reduce prices.
It is not a hopeful analysis
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Let us look on the bright side. We might emerge from the recession with cahnged attitudes; no longer will people regard shopping as a leisure activity, no longer will women waste money having guitar picks stuck on the ends of their fingers, no longer will people fund worthless advertisers by buying overpriced brand named products, no longer will people measure their self worth by the labels on the wrong side of their clothes, no longer will men boost their egos by driving oversized vehicles with darkened windows (penis extension surgery costs much less and is permanent*), no longer will parents be forced to waste money on "cool" trainers...
Am I just dreaming? Probably, I have little faith in the great unwashed.
*so I'm told.
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Woolworths has long been a property play.
The financial structure of their property portfolio could simply not sustain the current environment.
How many other retailers are in a similar position?
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What do Woolies do? What is their identity? For what good or service would you go there above another retailer?
I have been asking myself this for many years- I still cannot answer (other than pick and mix sweets).
A chain with no brand or identity will always struggle- I'm amazed it has taken so long for Woolies to go under, I wouldn't have been surprised if we had received this news 15 years ago.
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Seems from the comments no one is actually weeping for Woolies, more the idea of the cosy golden age that they represented. There's a chill wind blowing and more will go down, you've probably already named them... The high street where I live has been charity shops and pound stores for years, a very bleak uninspiring environment that never recovered from the 80's slaughter; a small northern ex manufacturing town that lost its Woolies in the '80s along with everything else. The harsh realities of the market spare no one... On an upbeat note however Woolies the musical sounds great ... I'm composing a score right now!
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Reading through the 180 posts (switched on quite late), I can't help feeling like being with my MBA students: so many prejudices, so many out of the book statements and so few facts.
1. Woolworth was a highly recognised brand, but it happened to be brand for the cash-short layer of the society which is not very helpful when everybody is aspiring higher (who would have thought that middle class people would ever cross Tesco's doors 15 years ago?)
2. In terms of service in the shop, Woolworth consistently came out at the top, now you may say that it is because of the expectations of their (once) customers, yet it is the case.
3. Woolworth provided higher number of hours of training per employee than most supermarkets.
4. Internet sales by the goods Woolworth stocked was unimportant for the business.
5. Woolworth was fully aware of its most important problem: a completely useless supply chain management system and stock keeping system. These two were sufficient to kill any hope of serious profit. Yet, neither the board nor the shareholders felt it was in their interest to spend a huge amount of money on this. Most successful retail companies combine these two with size and this is reason for their success, the rest (brand, training, service) is only the frivolous cream on the cake.
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Very disappointing news. You are right to blame the credit insurers who are killing off businesses unecessarily by spreading panic and creating a self fulfiling prophecy. Also the government could have helped by instructing the BBC to purchase woolies share of 2entertain, rather than stand on the sidelines in the hope of picking up a bargain.
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#192
"Recessions do not come from falling demand for consumer goods (the insufficient demand theory is for economists who do not want to think - recession is when the sales fall, and the cause of recession is the falling sales. The worst tautology, yet the vast majority of economists say this.), actually recessions are preceeded (sic) by higher consumption, but by falling investment which is due to falling profits." No,
Falling sales --> falling employment-->lower incomes-->less to spend-->falling sales. Not a tautology, just a negative feedback loop. What causes the falling sales to begin with? Sometimes it is an expectation of falling sales that leads to more saving (less spending).
Are you sure "recessions are preceeded (sic) by higher consumption"? I thought it was higher consumption preceded by recession!!
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#179 iwanttoscream "In order to rebuild British industry I think we would need some kind of protectionism, both from cheap imports and from capital flight.
Any Thoughts ?"
This is a difficult one - I don't know the answer.
On the one hand, if protectionism spreads out of hand, then the global economy will be in depression longer. On the other hand, the logic of globalisation is that food security, energy security, and the ability to provide essential goods for a country's own people don't matter, and can be left to the market. This is a form of free-market ideology. It helps the winners of the world and stops the losers helping themselves.
If we are to have globalisation of any kind, it must have some kind sense behind it. Look at the "Tiger Economies". They protected themselves until they were fit for free trade. I'm afraid I think we no longer are.
On the other hand, protectionism and tariffs can entrench inefficiency and poor quality in industry.
The next question is: what should be the "true" value of the pound? Given the balance of payments deficit, it should be rather lower than it is. But other factors, financial and political, have shielded Britain from economic pressures to mend our ways. The "free market" is a myth really - it is rigged by the strong for their own benefit.
I think you are right, one way or another we must protect. We must try to force the next government to put National Security first - and that doesn't just mean military, it means food, energy and essential manufacturing.
The down side of this will be a "lower" standard of living for us all. Eg no more all-year round asparagus grown in Peru flown to the UK and sold for 99p in a supermarket.
The upside: force self-sufficiency: tax all waste punitively, but give big incentives for recycling. Eg how much of our sewage still goes into the sea? This is a resource: not only can it be used as fertiliser, but it can also generate heat and yield burnable methane. We need massive state support for real education and to encourage new technology. Perhaps with manure and glasshouses we could have our own asparagus all year? (But not for 99p)
Sorry if this is a rambling response. There are no really simple answers. We need experts, but ones we can trust.
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Dear Robert and all blog contributors,
I'm coming in late to this debate but I've been out at work. I work for myself so time is money. I'm sad about Woolies but confess I haven't shopped there for years. I fear this is the first of many.
There will always be a shakedown in the economy and eventually it will find it's level again. Massive boom = massive bust, even basic economics tells you that.
Lets not get emotional about this. When my small one man band gets into trouble is the Prime Minister going to do anything to save me, I don't think so.......
I just have to pay more tax apparently. In anticipation of this I will not be spending anything for a very long time and I doubt I am alone.
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#202
"Am I just dreaming? Probably, I have little faith in the great unwashed."
I think that you're going to be disapointed on that front - the human being is an indiviual at heart and will always strive for ways of expressing that through possessions. It will all start again in a few years!
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#202 13thMan
*so I'm told - gave me a great laugh.
Then it occurred to me, what it would be like in the case of the industry you refer to going through a recession.
Penis surgery - now 30% off !!
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Woolies, MFI have one thing in common besides poor management - incredibly poor service - an attitude that spreads from the management.
All the comments are right - both were going to go at some point, everything has just accelerated.
Comet, Currys Digital will probably follow soon. Thought times were hard, I walked out of both after trying to buy an ipod touch for my dughter's Christmas present. the staff were too busy talking to each other to be bothered. I bought it on line from Apple, much easier, and delivered in less than 48 hours.
IKEA - superb and stylish.
Retailers- it is time to wake up and stop taking the customer for granted.
Robert - when are you going to think of something new and imaginative to say instead of over using "credit crunch".?
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I must be a silly person. In order to save 30.000+ jobs in the UK, all the government has to do is what has been done here in France. Guarantee insurance cover. This would have given Woolies time to organise some kind of "Chapter 11" status, thus allowing management to attempt to restructure the debt situation.
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Sad about Woolies but companies have been going bust since time began..
The even sadder thing is that they are only the first in a long line.
Only to be expected in an economy that has relied on spending in shops for nearly 10 per cent of its GDP.
Balance of payments will improve though 'cos imports will be far more expensive next year and there won't be as many of them.
That is if exports can hold up but that looks doubtful as well.
Day by day everything is deteriorating and everyone just looks on helpless.
Asked last night how high unemployment might go the Employment Minister said he didn't know he wasn't Mystic Meg.
A flippant remark for sure. It's his job to have some idea.
Trying to talk up up the economy is no longer believable but having some plan of attack is.
Sadly there is no sign of this at the moment
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Earlier comments apart, I strongly agree with the point that anti-car councils with their swingeing business rates are much to blame for reducing footfall in formerly typical high streets. Woolies have long been shadowed by tatty, short-lease bargain shops. Mind you, that trade was there for the taking.
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Robert.
Any news on the car companies, i here there handing out the begging bowl, they employ 850,000 in the uk. do you think they should get the money? Wollies went under due the lack of sales and bad management. but uk car sales are down by 25% and set to fall much futher next year. surely just like wollies lack of sales and bad management. i.e. the need to be more competive.
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BBC
!!Breaking News!!!
Indian PM vows to do 'whatever it takes'
later in the programme:
Angelina Jolie vows to do 'whatever it takes'
UEFA vows to do 'whatever it takes' too
Sheffield mum has twins
Repossessions up 12%
GC
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#195 scouseflyer
C&A is alive and well on the continent. You'll find at least one in every major town and city in Germany ... and in my experience it is usually packed with shoppers.
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SupercalmDown Leads the way to disaster………..
Gordon, Alistair are you listening
give us a 1, give us a zero
Give us our 10 per cent
Cos if you don’t I’ll go on strike
Then I’ll not vote for you,
I know I’ve got a great pension,
I know I am a public sector space cadette,
But give me my 10 per cent!
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I'm wondering whether we - as in the collective we should think about suing the irresponsible banking chaps for getting us into all this mess. Afterall their general duty of care to the respective companies and individuals hasn't really held true. Of course there will be water tight argreements disclaiming any such rights and restrictive covenant this and that, so of course practically and legally this wouldn't stack up. But on the basis that the Terrorism laws were used aganist Iceland and thus extraordinary measures were used we might consider some sort of remedy.
Joking aside we should really look at forcing those same banking chaps to help out with any companies such as Woolies at no cost.
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I'm sorry for all those who will lose jobs and suppiers that wil lose money because Woolies and MFI going into administration. I hope large parts can be saved.
What makes really annoyed is that posters are spreading the doom and gloom about other retailers.
For example, Peter_Sym wrote in post 14 "The miracle is that Woolworths (and WH Smiths) have lasted so long... they try to sell a bit of everything and therefore do nothing well".
I do wish Peter_Sym had done some research. WH Smiths are doing well, thank you, and have had a particularly good day today on the stock market. Their share price is up nearly 20% in the past year to 380p. So please don't talk down British companies, particulary ones doing well!!!
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# 206
Sorry, but I don't think an MBA is needed to work out Woolies' problems. Virtually nobody writing on this blog has shopped at Woolies' for years. When they did, it was for small, very low value products (eg pic 'n' mix).
Woolies could have spent any amount of money on stock control and supply chain management and the result would be the same. They would simply have been better informed about how much of their stock wasn't being sold.
Woolies ROE in 2007 was 1.5%, and in 2008 was 3.0%. They could have done better leaving the cash they didn't have in an overnight deposit account at the bank.
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I see the PM has promised to dsupport Woolies over the Christmas period - let us pray that this does not include using taxpayers money to recapitalise them. looking round the city centre shops this lunchtime, most have 30-50% reductions. At that rate, we will see a lot more retailers disappearing over the next year. This further illustrates the futlity of reducing VAT - far better to cut NI and / or income tax
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#179 iwanttoscream "In order to rebuild British industry I think we would need some kind of protectionism, both from cheap imports and from capital flight.
There's a very easy protection from cheap imports and we'vve implemented it now:
its called devaluing the pound.
Relative to the dollar its fallen 30% which means imports from countries with currencies linked to the dollar (like China) are now 30% more expensive. There ARE NO cheap imports at the moment.
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# 208
It's a list of events and not a chain of causal relationships. Why do sales fall (in the first step).
Wages increase the fastest before recessions ever since 1825 and so does consumption. The start of recessions actually collerate with higher sales, it seems to be a paradox, but it is not).
It is quite simple: increasing sales do not allow the devaluation of existing assets, thus increasing sales eats into the rate of return first, then into profits too, hence the devaluation of assets and reallocation of capital happens in the form of recessions.
Apart from the commonsense recessions have nothing to do with lower demand (lower demand is the recession and not its cause).
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For me personally, tis a very sad day, to hear that, almost a British High Street Institution, Woolworths is in financial trouble. I have very happy childhood memories of my late Mother and I, shopping for my first Ladybird woolly hat and mittens set, their delightful Rayware brand of tea cups, saucers and dinner services. Also, following the closure of our local haberdashery/sewing shop, it was the only shop in town, to buy a packet of needles and a spool of cotton. What more doom and gloom awaits this country?
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It doesn't surprise me that Woolworth's has gone under. I always thought of it as rooted in the 1950s - kids toys and clothing untidily displayed, the smell of pick n mix permeating the atmosphere. The sort of store very popular in post war Britain but without purpose once there was full employment and prosperity.
Ironically if they had managed to survive another 12 months their cheapness may have become attractive again.
Odd that in Australia, where I have friends, Woolworth's has a much better image than it does here, so much must be down to image and marketing neglect in the UK over a number of years.
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Just to gain a little more experince, I would suggest Team Messrs Brown and Darling take over as Admistrators for Woolworths plc.
Retail plc today....our competent team will be ready for UK plc tomorrow.
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No 201 Foolishblogwatcher.
I agree with your list except item 4 clothes.
I returned to UK for 6 days 3 weeks ago, my wife wore a pair of ankle boots that cost just 5 quid where we live. CZ
She was stopped in the street in Croydon centre and Ashted town 5 times by women asking where she bought them.
Good fashion will never die.
The UK is full of the same boring clothes in the same boring shops in the same boring towns. Homogenised sameness.
Where theres a woman, a little money and true style, clothes will always sell
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#206 - well said.
#213 - that might be your experience but certainly not mine. I would rather visit my local Comet or Curry's any day of the week than venture across the doorstep of IKEA. Going there is my idea of hell on earth. Having spent 30 minutes in a queue at the undermanned and undertrained tills my wife & I dumped our purchaes and walked out. We were not alone. And this was after traipsing round the warehouse looking for items that were meant to be in stock but in reality were not. Looking for an assistant to help - don't make me laugh.
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#222. WHSmith may well be doing well but I don't see how: it sells a small range of many items just like woolies did, its online store redirects you to amazon and it has huge overheads from it high street stores.
Clearly there's more profit in stationary & magazines than I'd think. Anything else I'd want that Smiths sell I'd get on-line far cheaper.
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And, just one thought... somewhere in the USA there are three men....
No.1 Thought up the scheme to sell mortgages to muppets.
No.2 Thought up the scheme to insure said muppet mortgages.
No.3 devised the scheme to sell these on.
'Lets ged 'em lads'
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Gifted Gordon's pledging again, how he loves to pledge..
"pledge - a binding promise or agreement to do.."
GC
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#223
This was exactly my point... But MBAs love to talk about identity, brand and alike, when the whole thing is much more prosaic.
It does not matter much about the number of people shoppping there in THIS sense. Bang and Olufsen didn't achieve much better result by increasing the number of customers, but by reinventing their business model (in many respects BandO shows great similarities with Woolworth).
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I too have come to this late having been on a one man mission to save the retail sector.
Like most people I used to shop regularly in Woolies but haven't been in for years. The answer is simple. Why should I pay two pound an hour to park in a multistorey in a city centre then have to lug my shopping around all the time before trekking back to my car?
Like most people, no doubt I shop out of town where you don't have to pay to park and can get near the store with your car.
I live in North Birmingham and if I go to Tescos to do my weekly shop there is also a Next, M&S, Boots, Currys and a Holiday Hypermarket in the same retail park.
If I go to sainsbury's at Castle Vale there is a Comet, Argos, Lloyds Pharmacy, TK Maxx and a Thomas Cook. Why would I want to pay for the privilege to go to to someone's shop?
Woolies were badly managed and stocked goods people could get cheaper elsewhere. It's sad but true.
Moving to credit insurance people are blaming the insurers but it is the customers fault. Lets be blunt, if you don't trust your customer to pay or be able to pay why should an insurer have any more faith in them than you have?
The answer is simple, if you are cash rich offer to pay cash on delivery for a discounted price. Why buy two sofas for £500 each on two years interest free credit offer them £900 cash for the pair?
In any recession the weak are the first to go to the wall. Its sad but true.
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#206 & #192 redjsteel
"Reading through the 180 points I can't help feeling like being with my MBA students: So many predudices, so many out of the book statements and so few facts.
So are you saying that you are our lecturer and mentor. If so then now i know how it must feel to be a student of yours.
Boring.
By the way you spelt Romania wrong.
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To #145 - alanfrench:
'...Im not sure a tory Chancellor would have been that honest. And for those of you blaming the current Govt for this, this started in the Thatcher/Greenspan era, along time before this Govt even took power. Tories conveniently like to forget this fact.'
I find this comment staggering, as what you're saying is that Nulabour couldn't change what previous Governments did - absolute cobblers - NuLabour have three massive majorities that enable them to more or less do what they wanted - they could have changed what previous Governments had done, however Blair and Brown were too busy fighting each other rather than keeping their eye on the economic ball - Brown wanted to prove he was 'The Man' - we now paying for his profligacy - why do you think the international money markets have hammered the £?
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Totally off-topic, but RP and others may not have noticed that we look like we're heading for our 4th straight day of a rising stock market. The US achieved this yesterday. Not normally something of particular note, but in the US case it was the first time since May that the market had risen for four straight days.
Also interesting to note that basic materials stocks (oils, miners) are amongst the best performers. Suggests that a number of people are drawing back from the "we're doomed" scenario.
Stock markets are usually 6-9 months ahead of the economy, ie a leading indicator. If this bounce is more than one of the other blips we've seen recently, then it suggests that forecasts of the economy bottoming out in Q2/Q3 next year will be about right. I haven't seen the volume numbers for the past few days. In the blips to date, we've had low volumes driving markets up, and overwhelming selling driving them down (not a good sign). If volumes have been high over the past few days, it's a much better sign of recurring confidence.
Anecdotal evidence suggests that the rescue of Citibank has stabilised investor confidence. We may look back and see that as the turning point.
I think RP should start looking for more of these good news stories and start blogging on them. He doesn't want to be behind the curve and lose his perceived Messianic qualities!
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The problem is that Retailers used to have big balance sheets that helped them through these tough times. They released the capital tied up in property and usually made high priced acquisitions or paid out big money to shareholders- added to which they piled on debt often because of overlong supply chains from the far east. And of course insurers are happy to take premiums when there is low risk of having to pay out but as soon as there is a Whiff- off comes the insurance and up goes the cash outflow from the business. Other major retailers have a lot of leverage on their suppliers- Woolies had sadly been diminishing as it did not seem to know what place it could hold in the market and others took away so much of its custom.
What is so ironic about what is going on is that we want to consume less to save the planet from us- want to use fewer cars- but when the mantra is jobs and the economy it all goes out the window. And what is sickening is that the more we find out the more we realise that people regulating financial markets were just unbelievable- did none of them ask the question of how much trade in derivatives was going on- with a value greater than world GDP- someone must have spotted it surely!!
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And I forgot to metion, Taylor Wimpey is up 35% today. Presumably they've managed to renegotiate their lending covenants with the banks.
RP - you should be telling us about this. You got the kudos for starting the crisis, get in there and capture the glory of calling the bottom as well.
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#45
I just said some people, perhaps you need to take the blinkers off and read before trying to make a point.
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Article on eFinancial news today, as follows:
"At least three buyout companies are believed to be lining up bids for Woolworths after the stricken retailer entered administration this morning, with one investor saying he would seek UK Government support to help offset the cost of any acquisition."
Time to turn off the tear glands yet, RP?
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Don't know why, but the Mods don't seem to like me pointing out that Taylor Woodrow is up 35% today, actually 37% now (see # 241). It's a statement of fact, guys.
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Wolworths stores have been drab and lacked a niche for almost as long as i remember. They have not moved with times. How is WHSmiths doing?
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The government is working to ensure that Woolworths stores remain open over the Christmas period, Prime Minister Gordon Brown has said.
The administrators had already stated that this was to be the case.
Brown is trying to claim credit even though he has done nothing at all
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#225 "Relative to the dollar its fallen 30% which means imports from countries with currencies linked to the dollar (like China) are now 30% more expensive. There ARE NO cheap imports at the moment."
True. Except that Chinese imports are still cheap even after this devaluation. The Chinese Government effectively provides something like a 70% subsidy to all exports (comparing the fixed exchange rate of the Yuan/Dollar relative to purchasing power parity). If we wanted a level playing field that would require us to place a 200% tariff on all imports from China.
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The prime minister said: "The important thing is in the long-run that employees in this company - where the businesses and the shops are not going to stay open in the longer term - can get other jobs quickly.
"That's why we're going to move in immediately to give advice to employees in the company."
He is so funny when is his one man show coming to the Gordon Craig theatre?
I would think that the last think Woolies employees need is advice from Borrow more spend more Brown
Barker is this your idea of do something?
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Woolies was rubbish, end of story.
I hope Wilkinsons buy their shops.
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what a well-written and poignant piece Mr Peston
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# 247
If you want a level playing field with China, you'll have to accept a 90% wage cut in the UK, not to mention a repeal of much health and safety legislation.
Cutting imports from China does not automatically lead to increased demand for goods made in the UK. If the cost of locally produced goods is higher, demand simply falls. Don't believe me? Then check the retail sales figures over the last few years. Whenever retailers have tried to put up clothes prices, sales volumes have fallen.
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Its tiring flogging through the blogs but the occasional glimpses of humour cause a smile. 237 debunks 192's poseur piece to remark on spelling.
With so many posts should there not be a rule that each post is prefaced by a 25 word max. precis?
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#249 majesticsproggo
I hope Wilkinsons buy their shops.
Or perhaps Tesco Direct?
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#239
why would RP report that, it would remove an opportunity to have a hang dog expression, wave hands around talking of gloom and "victims of the credit crunch". Too up beat to report.
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#246 - Ah - I'm reassured now. Its when he does do something that I worry.
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Not bad today only three bloggers bothered to poison pen me.
WELL DONE.
At least one of you has Labour leanings?
I incidently have NO POLITICAL leaning.
Other than contempt all round.
~~~~~~~~~~~~~~~~~~~~~~~~~~~#
Re RETAIL CREDIT
CASH IS KING: NO CREDIT.
Would that be such a bad thing??
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RE GORDONt10
QUITE CLEARLY YOU DONT UNDERSTAND
PLAIN ENGLISH.
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#255 Indeed, there are several other aspects where China can undercut us - lack of anti-pollution controls is another one. In many ways the biggest losers from the Chinese export subsidies are other developing nations whose own attempts at industrialisation have been badly damaged.
I also agree that reduced imports from China wouldn't immediately lead to huge growth in demand for home produced goods - but it would provide some help to existing UK manufacturers who are finding it hard to compete. And it should reduce the trade deficit, which is something that needs to be addressed as well.
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Double standard! The government have rescued the banks by lending them our money!
And why not help Woolies!! very small amounts needed when comparing it to the billions given to the banks. They are keeping the money for themselves and are not helping the companies in real need!
Woolies is a responible company and the banks are reckless!!
The government should have let , at least, one bank go down just to teach them a lesson!
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No 252 tantivy.
Yes, these blogs are long and take much time to read through.
However the points made here are very valid and do require exlanation and evidence.
If you wish an example of how awful a response page that is truncated looks then try timesonline. Its awful.
(even if the punctuation and pound signs do work there).
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Actually the shouty bloke :) at No. 256 does have a point.
If a business can not afford to pay cash for stock then should it be trading?
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Now, folks, is the time to sow the seedcorn for the next set of successes. The market's thinning the opposition out, now you'll stand a chance if you get your timing right coming out of this mess...
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216 - Buisness rates are not set by councils, they just collect them.
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"192. At 1:56pm on 27 Nov 2008, redjsteel wrote:
Recessions do not come from falling demand for consumer goods (the insufficient demand theory is for economists who do not want to think - recession is when the sales fall, and the cause of recession is the falling sales."
Recessions come when the debt consumes the credit faster than the credit is being created. If our monetary system was not fundamentally based on debt, recessions wouldn't happen.
The cause of recessions is insufficient BORROWING.
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#244 - Must be the Arabs looking for a free land bank!
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I heard something truly chilling today on BBC News. GB said:
"I think I can speak for the whole world"
Admittedly, he was about to condemn the Mumbai atrocities, but I found this choice of words very revealing. to misquote Wilde: "he lives for others, you can tell the others by their hunted look."
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Insurance is the scourge of modern life, once you are a believer you are happy to pay this tax on everything you do so you are "safe".
Lack of it stops village fetes to businesses from functioning.
Life is a gamble, if you want to take a risk do it. Why place a bet first to cover yourself in case you lose? We all know the odds are in favour of the bookie.
And here we have a case where the lack of someone to take the bet has ruined it for everyone, just at the time most money was about to be made.
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What is the point of saving Wollies. Their problem is that no-one shops there.
They are irrelevant to retail shopping in the UK.
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Im not weeping for Woolies. It's well past its sell by date. Bit late people saying they are sad to see it go. Why didn’t they spend more money in the shop when they could?
And as for Brown getting involved, how ridiculous. By not shopping there people have decided that Woolworths is dead.
How dare Brown use tax payers money to keep it alive when people have voted with thier feet not to shop there.
It feels like when Labour kept old decaying industries open in 1970s all over again. And what happened then? The UK had to go cap in hand to the IMF.
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MFIK were rubbish. I went into our local store 2 months ago and saw exactly what I wanted on display. On enquiring I was told it was a discontinued line, so I asked if I could buy the display as it was exactly what I wanted. I was told no I couldn't, it had a green sticker on it which meant end of line and do not sell display. On looking around 6 of the 9 displays had this green sticker. I went and asked to see the manager and he told me they couldn't sell me the display as they couldn't afford to replace it. I said if I bought it then he would have money to replace it with something they actually sold, the whole point in having a showroom...alas still no joy. They lost a sale and were still paying rent on space that displayed items they did not sell.
Doesn't take a brain surgeon to work out thats no way to run a business.
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While looking at the effect the demise of Woolies will have on suppliers, I guess it should be remembered that a large percentage of what Woolies sells is probably made in China. Therefore apart from the staff, isn't it quite likely that only a relative handful of importers, rather than UK manufacturers, will lose out?
Also, goods are now presumably more expensive to import from China since Sterling's decline against the dollar/yuan, which may not have helped Woolies balance sheet.
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No political point scoring from me, no smug, Vince-Cablesque I-Told-You-So, just sentimentalism and nostalgia.
What will happen to the Pick and Mix
Where addicts go for their fix of sugar and toxic chemicals. Will anybody still sell cheap sweets whose bizarre colours suggest they would glow in the dark?
We will miss Woolies - but not much.
http://greenteeth.blog.co.uk/2008/11/27/wonder-of-woolworths-and-the-the-pick-and-mix-recession-5120057
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#270 Dr Goats
Blimey! It seems MFI's demise was a no brainer. I don't think Woolies were that bad.
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Recent visits to Woolworths have been short and not very sweet. Dirty stores and badly trained staff seemed the order of the day. I don't remember how long it is since I actually waited to buy something - but it's years.....
Maybe they should have tried to sort themselves out a long time ago.
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Gordy ?
Would you like us all to be selling the
BIG ISSUE?
ARE you GORDY the BIG issue.
BLOoOGGERS complain that I have an issue
with YOU.
"Speak for the WORLD " HUH?
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Woolworths were offered £50 million for their stores not so long ago, sounds like another bad decision by their incompetant board not to have accepted it.
Mfi's demise will be welcomed by those who are fans of quality furniture - the doors have finally closed on their business, well one of them closed and the other had to be rehung and forced shut. Apparently the instructions were missing
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I'm broadly with #267 cjatcti, though Insuring to mitigate risk is not only taking the fun out of life but also relies on assumptions based on the usual statistical fallacies.
I prefer to think that we tend to compensate for perceived risk in many walks of life, in business and in pleasure. Rarely are we to be found acting in any way like the Homo Economicus model so beloved of behavioural economics.
Just to bring this back to the thread, a lot of your (and my) reasons for going to Woolies appear to be emotional and nostalgic rather than because they offered value etc. I can recall going to MFI in the 1980s because... well, you just HAD to go there or be square!
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Hello
A general comment on Robert Peston.
In my opinion this guy has given us a most welcome, original and in-focus view of the economic issues facing us.
I say original because this chap is way, way ahead of his fellow commentators in his knowledge and in his ability to pass that knowledge on.
He has "raised the bar" in what we now perceive to be the requirements of any commentator on economic issues.
Proof? Some weeks ago Adam Boulton was commenting on the re-financing of the banks. The studio presenter asked him who would actually provide the money.
His answer: "from National Reserves". At least he didn't say "Gringotts".
I rest my case.
Regards
amazingtristar
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275: lol
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Is Alex Curson our own EJ Tribb (aged 17 and three quarters)? Or Saki?
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Oh come on, Woolies has been in deep trouble since the late 90's, the same goes for MFI. They have been unable to keep pace in a changing sector simple as that. Nothing to do with the credit crunch, more to do with their competitors selling better quality at a cheaper price with more selection, oh and some stuff people actually needed.
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#127
Yes but we are not Rome are we,
No but the UK was once the centre of the civilized world with a massive empire
and we do not have a slave population
don't we? You have heard of the phrase 'wage slaves' - (remember the forcing of people into the same position as their parents in Domitian's time and the lack of social mobility now? - the multiple generations of unemployed and unemployable?)
and a Senate elected only by citizens of the city of Roman only.
Obviously in the past the British Parliament was elected only by those who had land - until the 19th century and it was in the 20th that women got the vote.
Nor are we as wealthy as Rome was or drink nothing but water and wine heavily contaminate with lead.
The UK is still one of the top economies in the world - we do drink lots of alcohol, we smoke cigarettes, we eat food filled with additives (FYI Plumber comes from the latin Plumbum meaning lead - which is why the chemical symbol for lead is Pb)
Nor do we adulate genocide etc etc. At least not last time I looked, and certainly not today.
Genocide - not in the UK today - but plenty elsewhere.
However that is not the point. The point is that the right to vote has been given to everyone (bar a very few special cases) - it matters not if that person has been through university, has had only secondary schooling, has made a study of the political situation in europe or asia or has given thought to such matters as : what should the country aim to do improve education/ health/ wealth (the first two being dependent on the last) - or if they have not worked a day in their life - all votes are equal. (Ever seen 'Remains of the day' - particularly the section where the butler is asked for his opinions on major political situations and cannot answer?)
So the needs of someone who has lived all their life without work on a sink estate should be : create jobs so that person can earn a decent wage, support their family and earn some self respect. The immediate want of that person is 'when will the social security cheque arrive? Which party will pay me most? What is happening in Eastenders/ Emmerdale/ I'm a celebrity? How is my football/ rugby team doing?'
It is the danger of the number of people who want the benefits of the wealth this country produces but who are not willing to contribute to the said wealth, against which I am warning. If there are too many then the real wealth creators get taxed to destruction and the total wealth of the country declines. In extreme cases the country's loss of wealth results in an inability to develop or defend itself. These days the attacks are mainly economic - the invaders enter Rome - I am not talking about immigration - I am talking of the fact that many of the companies in the UK are now ultimately owned by foreign companies and their wealth goes abroad.
Look at our balance of payments. Commerically the country is in debt to £1 trillion - that debt will be owned by foreign countries, who will have a say in what we do - hasn't Mr Brown changed the country's position on Tibet recently as compensation for China contributing to the IMF?
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#156
So, you mean internal affairs knew they had a mole in the organisation all along!?
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# 278 amazingtristar......also known as Bob Preston's mum...
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Very sad day, but if you don't move with the times like your competitors what do you expect? Hopefully any buyer will have the business acumen to do what needs to be done in order to save Woolies.
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No. 115 Ishkandar, I quote...
"FYI, even most private businesses *HAVE* shareholders !! ...
However, since the shareholders are family members, it is easier to convince them to take the longer term view instead of the get-rich-quick short term view taken by many businesses these days.
There will still be a great many family-held companies in Britain that will survive this recession whilst the get-rich-quick brigade drop like flies !!
The only other store, that I know of, that operate like a family-held company but isn't is the John Lewis Partnership, a limited liability partnership !! ..."
....................................................
And don't forget the Co-op, owned by its shareholder-member-customers, and not by greedy, panicky investors on the stock exchange. Despite an attempt by carpet-baggers to dismember it in the 1990s. For years many business journalists despised it as a dinosaur. Has its own bank, insurance arm, and even its own farms. Does it look like such a bad business model now?
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I've been reading this blog for some time now and i've finally decided to pitch in - thankyou sashaclarkson
what i want to say is, there are an awful lot of good, intelligent folk reading and commenting here, i'm sure concerned for the well being of themselves, their families, their country and their common man.
Perhaps we all have good cause to be concerned. It certainly looks, sounds and feels that way.
Sashaclarkson is right i feel, a rebuild britain party is what we need, so we can have government of the people, by the people - a proper democracy, i think some would call it
That way, whatever transpires, it can be dealt with equitably and compassionately. Rebuild a better britain for everyone
I would certainly like to be involved, so my first step is pitching up here, making contact. From what i've read there are enough well informed, intelligent people here to make a difference - so lets start doing it, organising, spreading the word - we can use the lessons of obama's campaign (i dont think we know for sure what he's actually going to be like in power)
Change. For the better. A better Britain
Rebuild Britain 2010
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There is a far too much pointing the finger here.
And I love the people who write "Smug? No" - when you clearly are.
We've all got to take responsibility for this as members of a board, business owners, employees, parents, friends or whatever.
I have a flat that may well go into negative equity, I may get paid off and I may not have enough savings to cover the months it takes to get the salary I need to pay my mortgage repayments.
But I'm not going to blame Gordon Brown, Alastair Darling, Mervyn King and the likes.
Wake up no politcal party is going to "fix" this - if this is the worst crisis to hit the world since the 1930s they are not qualified or experienced enough.
So we are relying on the decision making skills of those in the the most powerful positions. These skills are unfortunately only really tested in bad times - so who is to say the Tories would fare any better? Or all of you who write "they should do this, they should do that..." - why are you not in the positions of power rather than reading Peston's blog.
And stop giving Peston a hard time - this is his job, he's supposed to write the way he does. I'm sure if you put Peston into power he wouldn't be able to sort out the problems we have now.
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284
houseflogger.
Ah.... found you out. Your real persona is .......Adam Boulton no less!
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284 houseflogger.
By the way...I'm proud of my boy!
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#209 SashaClarkson
Yes, it's all very difficult - I always have the problem that I see all 3 sides of the argument.
I was always of the opinion that our old inefficient monopolies, Gas, Electricity, Water were very good ways of regulating unemployment and if they were a bit featherbedded it just kept taxes down. As long as they were monopolies then it didn't matter.
I admit they could have done with a bit of tuning but it wasn't beyond the public sector to manage that.
I fear you are correct that we will all have to drastically reduce our standard of living, remember the times when we had only 1 television set per household.
Actaully I would encourage everyone to consume less and get out into thier communities more, I've done it and I'm so much happier (yes I do recognise the irony of sitting here long into the night advocating the benefits of getting out more)
Self sufficiency and seasonal eating - nothing beats the taste of British (especially Scottish) strawberries, especially if you have waited all winter to taste one.
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Although I feel for anyone who loses a job in this climate I feel Woolies was doomed to failure - the just don't sell anything I want and the shops are dull and uninspiring
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Both Woolies and MFI have been bought and sold a number of times over the last ten years and both have had new management in the last couple.
Both sets of managment have been supported by high leverage loans and the answer as to why they failed is simple both were overloaded with debt and had virtually no realisable assets.
The latest incarnation of MFI management running the stores neither owned the stores they were in nor owned the company that made the furniture that they sold as such they were doomed to fail as soon as things got tough.
The only question is who on the High Street is next?
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Well, the inevitable has now happened. So many shops, so many freeholds been squandered over the years to artificially inflate the ballance sheet. Result anylists are happy, why? So many high paid analysts couldn't see it. Main question goes back to the banks and financial markets, why bother with highly paid anylists, they get most things wrong that matter, these institutiions should save their money. Our sympathies should be with the employees who do not have a golden parachute!
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When Gordon Brown decides to intervene in the long-anticipated demise of an over-leveraged retail chain whose business model has been overtaken by larger or more nimble competitors we know the nanny state has truly arrived!
What next? Direct advice from Number 10 when my local newsagent runs into difficulty?
Where does he find the time!
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Poor old Woolies. All those childhood memories of nicking the pick and mix as a dare with my brother!!!
Still the stores now are like a jumble sale - lots of horrid fancy dress outfits for little kids and tacky clothes.
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#264 True-Liberal
"The cause of recessions is insufficient BORROWING."
I can see how this could be true. I have been following up some of your earlier posts. I don't seem to ba able to find information on UK reserve ratios to test out my understanding.
If the bank has £100 deposit and a reserve ratio of 0.2 then initially it has a lot of money to lend (£80). As the total amount of lending increases then the rate of lending must slow so the total money supply reaches £500 asymtotically.
This cannot be the whole picture as debt has expanded and the rate of endebtedness has increased.
From my simplistic understanding then either the central banks have to print more money or the reserve ratios have to fall or we need some kind of magic which allows banks to create the correct kind of deposits on which to lend more (without the provider of that deposit suffering a loss of money).
I don't seem to bae able to get further than this, can you help ?
Thanks,
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263
Re: 216
If that is the case ('councils don't set business rates'), then councils could consult trade and public interest by being less anti-car. And giving the trader a bit more for his rates BTW. And giving him a bit more of a break in the capricious / partial planning approval that favours supermarkets. And getting to grips with the effect that short-lease tat has on the high street.
You hadn't much to say, had you?
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I'm not going to waste my tears on Woolies; I'll save them for the individuals who will be hit by this.
But I'm also hoping that maybe, just maybe, there will be some good side-effects from all this.
Huge numbers of people - probably the majority - work in jobs they hate to pay for things that they don't actually need. Huge numbers of people are perpetually anxious, worrying about whether they can re-pay the credit they have accumulated. Huge numbers of people are miserable, and all their extra possessions do not make them happier.
So maybe, just maybe, as the recession bites and we all have less money to spend, some of us will wake up and remember: "Hey: money won't buy me happiness!"
A Britain without flat-pack and pick'n'mix is hard to imagine right now, but it might just be a better one...
And before anyone says it, I know I am a naive fool (you can read my blog to prove it! http://gogowiththeflow.blogspot.com ) ... but I'd sooner live with hope than depression!
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It feels as if we are sleepwalking toward a repeat of the Japanese 10 year stagnation.
The frog analogy comes to mind. Thrown into boiling water, it immediately jumps out. Put into cold water which is slowly heated, it dies.
By relying on Keynesian approaches to try and get consumers buying again, Brown is just delaying and making far worse the inevitable pain. The alternative would be to raise interest rates, let asset prices fall as quickly as possible to levels at which demand will be rekindled, let all businesses based on poor business plans and low cost debt fail, reestablish incentives to save which will help recapitalise those banks which remain standing, accept a significant short-term spike in unemployment, but lower taxes on employment such as employers NI to restart the economy on a sounder footing quicker than this progressive 10-year decline we are likely to experience with the current Brown approach. Even Mrs Merkel was today criticising his pathetic VAT cut.
Keynesian economics are a busted flush, but provide a smoke-screen for politicians and central bankers to appear to be doing something. Unfortunately, it would need a courageous leader to take the alternative approach and not many of those are out there.
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#119 Saltaire Sam
Couldnt agree more - and Britain could and should use its global voice to be a thought leader in the change process
Rebuild Britain 2010
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#145 alanfrench
I believe thats true, we have to look much deeper and further back than the current administration - whatever our opinion of them - for the cause of this malaise. We need to recognise that fact if we are going to correct our mistakes
Rebuild Britain 2010
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#287 Mark: "Rebuild Britain 2010"
I like it - no problems will be solved overnight, but this gives us a deadline to prepare for.
Actaully I would encourage everyone to consume less and get out into thier communities more
#291 Iwanttoscream "Actaully I would encourage everyone to consume less and get out into thier communities more"
I have just come back from my male voice choir rehearsal and a couple of glasses of wine. Most choristers aren't rich, but also not facing the direst straits. There's a lot of concern about our little community, and the country at large. They want realism, honesty and a bit of humility from our leaders I think. (Of course, some just want another pint :-( )
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#300 "Keynesian economics are a busted flush"
People have no right to criticise Keynes without being familiar with his work. He was an empirical, even experimental economist, not an ideologue like some of his critics. Were he alive today, I think he would be highly critical of some who invoke his name.
However, his remedies were designed for a different age, not a de-industrialised society which hasn't got the resources to feed itself or make what it needs.
Keynes was a great and brilliant man who loved his country. What he did was try to come up with a working model of the society he lived in and suggest reforms that helped it work better. To an extent he succeeded in his time, but we have to face different realities, and frame new solutions.
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Check it out!
I suggested to Alex C he start a political party last week!
We now number 5!
Support is growing-the bloggers party is now officially the 'Rebuild Britain 2010'
My personal favourite post is Education-maybe and spelling booboos are very apparent! Common ones are loose and lose, but newly added are stationery and stationary! The first means pens and pencils, the second means standing still! My sincere apologies to those who already know this!
Good manners are also a big issue with me, including customer service! I would also love to ban lengthy telephone menu selections and on hold for 20 minutes, just to be told I was at the wrong place and had to start again!
Honesty, integrity, good manners, responsibility, respect for others and customer service.
Whilst none of these have a value on the stock exchange, I sincerely believe they are core values which defined our great nation, and for which we were famous.
Many businesses have forgotten the importance of their customers and their customers' loyalty. I suspect that only those businesses which value their customers will still be trading in 6 months' time.
The crux of competition lies with customer retention.
A good reputation is very difficult to achieve and easy to lose: a bad one is easy to gain and nigh on impossible to lose.
Perhaps some people in powerful positions would do well to think on this-their very survival depends on it!
Night all!
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Now that Woolies hv gone, we should be looking at the "DSG Retail" figures (ie PC World, Dixons etc). Their gearing is impossible.
Their lack of support thru' very expensive telephone support and cheap buyout of honorable warranties of major products, reduces their service to that of a wholesaler.
With such a narrow profit margin and an utter lack of service and commitment from any original commitment to the customer, surely their days are numbered.
Last weeks liitle rally of share price, will not encourage any serious investor in the current climes.
Dump now!
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Bit worried about not being offerred the oportunity to comment on a conservative MP being picked up by the police for doing his job
His job I assume is to simply being allowed to talk about anything whatsoever.
So I thougt to put my missgivings on this thread.
Paul
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all this fuss and bother over Woolworths and now an MP has been arrested using anti-terrorism laws!
Sensational-yes!
BUT his crime was....
Whistleblowing!
Arrested for telling the truth-and using the same laws as Iceland were very recently subjected to!
Unbelievable!
Why weren't the banking chiefs arrested instead?!
A case of misdirection of the highest proportions!
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sorry-my mistake-not anti terrorism laws-counter terrorism officers used to search his home.
Also, arrest due to crimes against public office -reporting to the nation what a whistle blower told him.
Still totally ridiculous!
Still unbelievable!
And guess what?
He's an outspoken TORY MP
Read the article on BBC news-see what you think!
Really, haven't our police got far more importantthings to do?! (bet this won't get posted!)
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#305 A man of great discernment !! What you've just said is what I've been saying for years now.
In the rush to get rich quick, customer service and satisfaction had fallen by the wayside. Customers are regelated to mere numbers and customer retention is a matter of mathematics and not of human interaction.
Many a time, I've come across large companies paying millions for a CRM (Customer Relationship Management) package only to treat their customers as numbers to be bombarded by spam when a fraction of that cost could be spent on improving the training and abilities of the humans dealing with the customers.
Outsourcing call centres and customer inquiries to the cheapest tender instead of staffing them with people that actually know the ins and outs of the company's business certainly has not helped retain customers !!
Everyone seemed to have forgotten that it is the customers that pay the bills and the wages at the end of the day !!
Sorry about this rant but it is one of my pet crusades !!
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#293 "The latest incarnation of MFI management running the stores neither owned the stores they were in nor owned the company that made the furniture that they sold as such they were doomed to fail as soon as things got tough."
The latest incarnation of MFI seemed to be owned by salesmen, run by salesmen for salesmen where the *sales is king* and no thought to after sales services at all. Witness the various stories published by BBC in its article on MFI customers.
Its corporate philosophy seems to be quite akin to that of Trotter International !!
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#286 "And don't forget the Co-op, owned by its shareholder-member-customers, and not by greedy, panicky investors on the stock exchange."
The Co-op is a conglomerate of businesses and not *just* a store. FYI, it also has what is reputed to be the *biggest funeral directors* in Britain !! They deal with you quite literally from cradle to grave !!
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#272 "Will anybody still sell cheap sweets whose bizarre colours suggest they would glow in the dark?"
All this had been taken over by any number of "stalls" in shopping malls !! Most of them seemed to be run by young enterprising persons !!
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So, a whistleblower arrested; a Tory MP arrested; what next ??
George Orwell was wrong only in the date of his novel !! If he had made it "2008" instead of "1984", it would be chillingly prophetic !!
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#267 Actually the suppliers *did* offer Woolies an alternative !! Woolies could pay for their purchases in cash since their creditworthiness could not be trusted and the insurance companies are not willing to insure the payment of their debt unless they pay a prohibitively high premium !!
This is what happens when no one wants to lend you any more money. The solution is either pay cash, *if* you have it, or go to the loan sharks !!
This applies to countries as well as companies !! Excessive borrowings can bankrupt countries as well as companies !!
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#247 "comparing the fixed exchange rate of the Yuan/Dollar relative to purchasing power parity)"
When was the last time you had a look at the Yuan/Dollar exchange mechanism ?? The Yuan has been floated for quite a while now and is up more than 15% against the Dollar !!
When some hick US Senator said the same thing and demanded a protectionist tariff against the Chinese goods, it was pointed out to him that the Chinese holding of nearly US$ 2 trillion in US$ debts is what kept the US$ high !! Nothing more was said after that !!
The Yuan has also appreciated against the Euro and Sterling !! If the Pound devalues very much further, we may be exchanging one quid for one Yuan soon !!
At that point, you wouldn't be able to afford any new mobile phones, computers or MP3 players !! No new TVs or DVD players either !! Then the BBC switchover to digital broadcast will have to be postponed for another 10 years !!
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#315
looking at the list of lenders Wollies had already been to the loan sharks.
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132 daytrader1
What is it with you, whinging about "buy to letters being greedy"?
I did BTL as a successful investment between end of 1999 and 2008, jumping out of the trade this year after using fundamentals and technical analysis. A trader/investor just the same as you and also doing day trading successfully selling WaMu and Wachovia and other financials.
Traders also get labelled as greedy but it is only that magic phrase really "Speculate to Accumulate"
One question for you and maybe a little tip as you like day trading. Direxion triple leveraged fund shares, BGU (Bull) and BGZ (Bear). If you have any guts, you can get 3 times the rise or fall in the Russell 1000 index (US Ticker symbols)
Apologies for this post getting on to Woolies blog, I loved their pick 'n' mix as a kid.
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post 280
Alex CurZon? Just the CURSE of authority.
##########################~
The New Economy Party.
30 year plan
Reviewed every 5 years.
Rebuild
Retrain/Re skill
Rebalance the Economy
Reinvigorate
Re house the homeless/evicted
Balanced budgets
Balanced Balance of payments
Credit controls
Proper border controls
Wind back of Blair/Gordys endless DRACONIC legislation
VAT at 10%
Renegotiate EU membership
Scrap stamp duty
Scrap inheritance tax
Raise income tax over 70K
Council tax at level rate say 1k
Social tariff for Water Gas Electric for benefit claimants/pensioners
Scrap ID card
END MEANS TESTED MEAN BENEFITS
INCREASE CHILD ALLOWANCE
END TAX CREDITS
############################
So labour supporters START THE SNIPE
CAMPAIGN.
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SAD to see ONCE AGAIN THAT THE POLICE
ARE OUT OF CONTROL.
THEY failed over CASH for HONOURS.
Mr Green gets BANGED up for doing his JOB.
WELCOME TO GORDYS BRITAIN.
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Mr Curzon. And BAE / Saudi Arabia
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320, You can get arrested under the prevention of errorism tract for walking along with shoe laces undone and then finger printed and placed under house arrest.
There is nothing ,no matter how well seeming ,that governing mperrors will not prostitute for their own purposes,which begs the question about every single pie ce of legislation that they pass "what are they hiding behind their legislative fig leaves and is it circumscribed ?]
The Tory propaganda about new labour a decade ago turns out to be true [remember Tony with the mask of zeros ?}
It was the Labour bendy actung men who took away the right to demonstrate in front of par lamment because they did not wish to see the genuine contempt in which they are held,prefering their Dorian Gray v train pictures out of the newspapers
It was Labour that promiced[how they must be laughing] an elected second chamber ,only to fill it with lord cronys and turn the people into Labour serfs with a return tricket to paloooookahville .
I suspect that the Green affair is no more than a slite of hand to hide some other event that might now play second fiddle in the news ,whilst near 0 labour carries on with first fiddle ,the right to roam burning .
And the labour wolves are still trying to hold onto "their Woolies "whilst the taxipayerrs can look forward to a complete fleecing by those that didnt sell the wool or the gold.
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just look at the timing of the "green affair" commissioner of Met about to leave office forced out by tory mayor....surely just a case of "blair's revenge".....
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Why should MR Green be any different to any member of the joe public, this kind of thing as been going on for a few years now.
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305 & 310
People after my own heart!!!
When I used to train customer service, or customer relations as we called it, we ended every course with
Remember customers make pay day possible.
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#324
"Why should MR Green be any different to any member of the joe public, this kind of thing as been going on for a few years now."
because he is not being treated the same......the government leaks everyday, we knew well in advance the contents of the recent pre budget report so why is Mr green singled out? This is a political arrest, probably so that this excuse of a government can slip out some bad news. I see the hand of mandelson...
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#322 "It was Labour that promiced[how they must be laughing] an elected second chamber"
Unfortunately they didn't. I can't remember the exact words, but I think they promised consultation and a free vote. The one who was passionately in favour of an elected second chamber was the and, at least by me, very lamented Robin Cook.
When he was selected, my local MP said he was in favour of an elected second chamber based on PR. (Didn't you Nick eh?) But when the "free" vote took place he was a whip, and because Tony wanted a wholly appointed chamber, that's what Nick voted for.
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# 319
AC,
Take a look at the success of planned economies in Eastern Europe post-1945. Centralised planning doesn't work. All you get are the pet projects of the senior planners, married to the worst excesses of pressure group power. Centralised planning is just about the best way known to man of misallocating resources: labour, capital, credit whatever.
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#319 Alexander, I agree with most of this, and what I don't agree with wouldn't stop me voting for a candidate with this as his program.
Personally, I don't agree with the abolition of inheritance tax and this is why.
Unless there is some form of inheritance tax, you will inevitably see concentration of wealth of power in the hands of a new aristocracy. Not only will this be unjust, but it will stifle the development of talent at the other end of society. I'm all for parents helping their kids get on in the world in the world: mine worked and saved to help me. But actually, it is not good for anyone's character to know that they can look forward to a life of leisure and no work. I think that inheritance tax should not be based upon the size of the estate, but upon the size of the legacy. That is, you are taxed upon what you receive, not upon what you give. Also, this tax should be variable depending upon what you receive. For example, if it's a share of a working company in which you are working, then that should be treated much more leniently than receiving just cash.
As for the EU, I have always been a passionate European, but the EU is failing my ideals. Far too authoritarian, unaccountable and tolerant of corruption.
EU or UK - we must vigorously fight all tendencies towards a police state.
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#319 "Retrain/Re skill"
Education must focus on getting students to be able to use their skills rather than just pass exams. I would urge people who care about this to read and sign the following e-petition sponsored by the Royal Society of Chemistry
e petition
Although retired, I regularly help my friends'/neighbours' kids with maths and science. I can assure you that this is a huge problem which is damaging Britain's future.
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This comment was removed because the moderators found it broke the House Rules.
Evryones right. They never adapted but they still were competative.
EUK supply tesco and asda - wollies' 2 biggest rivals for cds/dvds- so people will suffer.
The internet is not always the best place to buy cd's/dvds. u still have to shop around for the best price for everything nowadays.
The board are partly to blame, for not seeing it coming and the credit crunch affecting evryone. its been on the cards for 8 years since they left the kingfisher group.
But whilst you're all casting blame, and saying good ridance and how popel will live without woolies, think of the 30,000 people this xmas pooing themselves with fear they wont have a job next year!! people like me, who work for them, who dont have a say on how its run, and dont have a clue whats going to happen this year.
At one point or another, someone will have shopped at woolies and got a bargain but when your local woolies is gone, and HMV and the supermarkets wanna charge you more, you'll miss woolies then. and when your child wants pick n mix and woolies are gone, you'll miss them. and toys, aside toys r us and argos, where are you going to get popular, bargain price toys?
So if people wanna feel sorry for woolies, please do, cos a british icon has gone.
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Woolies deserved to finally keel over, top heavy management, poor trained disrespectful unhelpful staff, coupled with high prices for poor stock signaled it was on the way out five years ago, a small wonder how it managed to stay open for so long really. As to MFI, any company that sells furniture which is flimsier than the packaging it arrived in should not sell anything. Simply put this is all a sign of the times, with dumb messages coming from Government on one hand demanding we all believe in their past prudence (despite the obvious lack of it in reality), whilst the other says to hock grandma and spend beyond what we could never earn to prop up the economy I think the only thing to become concrete is the leaderships in this nation from Government to Woolworth's are power hungry, self serving and utterly ineffective and in need of removal as soon as possible please.
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#53
"The economy Titanic has hit the iceberg, it is damaged and worth less than before it sailed. There is a hole in it but the engineers haven not yet established how badly she is holed. Certainly at least 2 possibly 3 compartments but not neccesarily the 4 required to sink the vessel.
Repairs are being attempted to stem the flooding and the outcome is not yet known.
But the media are suggesting that it is time to jump into the sea having advertised there are not enough lifeboats and even if you are lucky and get one you will probably freeze to death."
-Good analogy!
Anyone any idea what compartments 3 and 4 represent?
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#172 SashaClarkson
"What we need is a plan.
A plan to rebuild Britains manufacturing industry."
I was looking for a 5 inch sine bar two months ago. A UK or USA brand cost 95 GBP.
I bought a Chinese one for 5 GBP (BTW, is that now Gordon Brown Pounds?) and it was in a wooden box.
How are we going to go up against Chinese and Indian manufacturing at these prices?
I could not buy the raw material for a fiver, never mind machining, heat treating and precision grinding.
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#233 traducer
"... somewhere in the USA there are three men....
No.1 Thought up the scheme to sell mortgages to muppets.
No.2 Thought up the scheme to insure said muppet mortgages.
No.3 devised the scheme to sell these on.
'Lets ged 'em lads'"
_ Are any of the above things wrong in themselves?
What is wrong is they were sold, resold at far beyond their real value and that neither set of auditors or the FSA or the credit rating agencies or the Treasury saw this.
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I am very sad to hear of Woolies going down the pan. Although I agree it was a quite a weird shop with little direction/focus, it is just like a landmark on the high street.
I am also disappointed that Malcolm Walker's bid for the chain failed. I work for Iceland and I have seen first hand how he has turned the company around since he became the boss again - the company was quite near to going down the pan too, but Walker and his team saved it and we're turning around healthy profits again.
I think he would be a good man for the job of saving Woolies. I hope he and his consortium table another bid
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Just another comment on all of this - from someone who is a regular supplier to Woolies and to other retailers supplied by E.UK. The problems suffered by this group of companies including E.UK is also due in no small part to the appalling payment terms required by their major supermarket customers. These payment terms put even greater strain on their cash flows and borrowing and then onto the suppliers from the entertainment industry dealing with E.UK.
The payment terms required by the major supermarkets have bought and are brigning many businesses to their knees over the years but the press seem to scared of these evil beasts to flag this as another major issue for the business community and the country at large to deal with during difficult times. It is for these reasons that I will do all I can as a consumer not to shop in ****o and ***a.
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Is it really so bad that Woolworths has gone down? When I have been in there they just seem to sell imported things - like Toys - from China.
Like the banks, what do these large retailers actually add to the UK ecomomy? They certainly don't source UK goods.
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On a more flippant point, it all seemed to go wrong for Woolies when they stopped selling there alternative to Dunlop Green Flash!
A shame about Woolies, but we all move on.
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When I was a child of 5 I was aprehended by the supervisor as I left the store with a spud gun. It was on the counter and I thought yeah! I didn't know how it worked so I read the instructions on the back slowly as best I could at that age. Unfortunately I wasn't that good a reader and was still reading the card as I opened the big door to leave. I was mid sentance when She interrupted my painfull reading and asked me to come back into the store. Three times my height and a hair style Madge Simpson would be proud off she let me know that I was banned for life and my mother, who She knew well, (sic) would know!
This may sound silly, but to have your Saturday Mornining ventures of exploration and delight denied: and a spanking on the horizen too, such is the stuff of bad dreams.
I washed my face and polished my shoes for a week in disguise, there wasn't much I could do about my hair that hung triangularly across my face like a Teddy Boys worse nightmare: Brylcream turned to dust.
I learned how to play secret agent that following saturday, ducking behind the counters and smiling at friends, hoping they'd not realise else they'd let out a yoohaloo for sure!
I survived, and over the following years spent my pocket money on Birthdays, Mother's Day, Christmas and many other reasons for presents that a child could afford.
I even got my Mam a small picture in a frame of Cary Grant to chear her up. I remember finding it behind the egg cups in the Cupboard some months later.
I even built a fleet of AirFix aeroplanes, week by week over years, such was the constancy of 'Woolies'.
You have to wonder why they let themselves be extricated from such a prime and central position. Assuredly they got the best person for each managerial/executive position, but best in what sense?
I reflect upon the monochromatic lust for proffit which seems only to fracture the collective hues of socety's dreams and aspirations.
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Having just reviewed their accounts, Woolies are victims of a bad case of Christmas - or in more conventional terms, increased turnover not matched by borrowing facilities. 2/3 of their cost of goods sold, c.1500m, occur during the last couple of months of the year. Their debt at the end of July was 357.1m, and their current borrowings are about the same, ie their facilities have been pulled. Without Christmas sales, their business can't cover its overheads, and so is insolvent.
Next time you pass your banks, put on a Ghost of Christmas Presents mask and give their manager a Wollies bag of pick and mix, so you can hear Scrooge hiss "Bah! Humbugs1" for real. Because this is exactly what these bankers are, killing Christmas for thousands of children by killing the company who supplied them.
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Mmmm..800 high street stores which have made many millions of people happy over its long existence. Communities will suffer for the loss to often failing high streets, which makes us all the poorer.
Perhaps the answer lays in Woolworths becoming the home of 'Taxpayers' financial services. Subdivide each store into post office, various bank branches...a kind of mini financial arcade.
Not so far fetched and it would allow communitity to retain their core and also allow those miserable banks to close those oh so expensive premises and save even more cost. You never know, the taxpayer might just get a real return on their investment...tangible as well as intangible
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I credit insure most of my customer base against insolvency/default with a major player in that field. Yesterday I receved two zero cover notices on customers that we have traded successfully with for over 20 years. The reason given because that although the credit underwriters were happy to give up to 40k credit only two months ago, based upon these customers annual audited accounts, they are now reviewing their attitude to risk because of the current economic climate. Unless these customers supply upto date P&L information at their own expense and inconvenience then cover is void until their annual accounts are filed in Jan 09 as per the last 20 years. There is no negative information on these customers and they pay their invoices on time every month. I can see a time when there is no point in using credit insurers and I can also see a point when my suppliers will be regarding my business as less `creditworthy` than two months ago. If you multiply this by all those out there this will surely cause major financial difficulty for all in business. I am told that a massive spanish credit insurer is calling in much of its credit risk because of drastic losses paid out due to the collapsing proprty markets in spain, portugal and ireland etc. These are the brilliant credit insurance underwriting experts that failed to recognise that Iceland was going skint! Perhaps it should be mandatory that the maximum credit anyone is allowed is 30 days?
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I think some of the posters here miss the point that the friendly Woolies in the High Street is so much part of British life that the loss of the shops here will be sorely felt. Funny to think of a future without some of the cornerstones of town centre shopping,but that is what seems to be happening right now.I wonder who will be next to go?
The loss of so many retail sector jobs will also be a disaster to many struggling families in the UK.
The government might have done better last week to follow the Australian example and give the less the well paid large tax refunds as lump sums before Xmas...research suggests they are more likely to spend it in the High Street rather than save it.
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I cannot believe the lack of knowledge of the posters on your Blogg.
The possible demise of Woolies and MFI has nothing to do with the global credit crunch nor Gordon Brown.
Woolies has been struggling for years. Perhaps if some of your posters had used its outlets then it would have been successful
MFI has also been failing for years and of course was only recently bought by the "managers" as its previuos owbers could not make a success of the business.
Poorly run businesses go to the wall in good times and bad times
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Come on own up you lot. You liked the pick and mix because you ''sampled'' the sweets before buying.
Woolworth's used to be pick and mix...now
...it's just'a Pickled Mess.
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Robert, I agree with your sentiments regarding the demise of Woolworths, however it was not only finance that dragged them down. Most Woolies stores are not the place to go for a customer buying experience. Their marketing is atrocious, their goods pretty tacky, and their management should be shot. This nhas not happened over the last few years, it has been going on for decades. Lacl of professionalism at all levels, a "stack them high and sell them cheap" mindset has contributed to the company's failure. As bad as it is for the employees, the company is beyond redemption. What I would really like to know is what has happened to the ppension fund? who has had their fingers in the till, and why should the taxpayer pick up he bill?
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I am disgusted at those who seem to believe that the Official Secrets Act was intended to protect Govts and their Ministers from their stupid actions and incompetencies. The Official Secrets Act was designed and INTENDED to protect information that was vital to the Nations Security and Safety. In fact the employment of ILLEGAL immigrants in the security sector and the House of Commons was a far greater risk to national security than the leaks.
Get with it BBC
I have been trying to get this on BBC HYS
No luck - to much political bias by the BBC
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Woolworth ordered their xmas wrapping paper for this year from a Welsh company.
They were put on stop because they had not paid 300,000 GBP from last year.
I use GBP because a pound sign is like this: £
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About Woolies. Our local Market town, Nantwich, Cheshire, will certainly feel a great void if, and when they take Woolies from us. The Governament SHOULD save them. They have put millions of pounds into many different groups -= Lesbians, Homosexuals, immigrants etc. I think that this money would bebetter spent in looking after our own heritage companies. Woolies has been with us for 100 yrs. at least. They contribute so much to the local economy and life style.
For heavens sake, Gordon, do something for our country for once. Stop taking us all to the cleaners; try and get this country on the straight and narrow. and stop trying to say that you are saving this country from a monetary downturn - you are not. You are the one who caused this mess in the first place - with your sneaking taxes and hurting those who relied upon dividends to help their pensions.
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Whilst the big cities may barely notice its demise, in small towns it is as familiar, and in its own way as useful, as the post office. This is a real blow for rural economies.
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robert,
i was weeping for the closure of woolies...[woolworths]...
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What does woolies mean to you?
In nearly 100 years of trading, where does it stand for you?
Im a mere colleague of the woolies staff, and for me they gave me my break into retail in which time I have become very successful in my position and have enjoyed my time here, the one thing I immediately noticed was the strong bond amongst staff, ranging through many generations, and there has always been a good atmosphere.
Although these days there is a major cloud hanging over everybodys heads, and in large cases people are unhappy with the way in which they matter has been dealt with, people are questioning the following.... WHY ARE WE LAST TO KNOW..?
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What does woolies mean to you?
In nearly 100 years of trading, where does it stand for you?
Im a mere colleague of the woolies staff, and for me they gave me my break into retail in which time I have become very successful in my position and have enjoyed my time here, the one thing I immediately noticed was the strong bond amongst staff, ranging through many generations, and there has always been a good atmosphere.
Although these days there is a major cloud hanging over everybodys heads, and in large cases people are unhappy with the way in which they matter has been dealt with, people are questioning the following.... WHY ARE WE LAST TO KNOW..?
ARE DELOITTE DOING THERE BEST? WHY ARE WE BEING TREATED LIKE THIS and many more.
In stores people feel that we are not respected by the administartors and are just being left to rot, that they have not had any intentions to find real buyers for the stores, annoyed by being forced to work unreasonable hours, for instance 9am - 6pm Boxing day, which are trading hours.
And now you enter a woolworths store and would think you were in a discount store, and I now feel this is salt being rubbed in a wound, and the reputation of the company is dead.. How will people remember woolies now?
Watching the store disappear before our eyes is the biggest tear jerker ever for large numbers of staff, so whom have commited their employment lives to, and will end up with very little.
How many large businesses such as woolies end up selling their fixtures and fittings, including office tables, canteen seats etc..
This is disgusting.
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Few people shopped there so it was not making any money. The banks may be to blame for much of the current difficulties we face but why should they have to bale out a dead duck?
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