The Cornerstone Strategy 1983/4

Paternoster hired management consultants to take a long, hard look at their new acquisition and propose a new strategy for Woolworth. The result was the 'Cornerstone Strategy', a plan to re-shape the business for the 1980s. The Board made a particular point of sharing their plans widely with store personnel. The communication package included a video explanation from the Directors and a slideshow and speaker notes to be delivered by District Managers. The hard-hitting presentations were followed by discussion groups and a Q&A session.

The Chairman and Chief Executive, John Beckett, introduced the video. He explained that the High Street had modernised during the 1960s and 1970s, leaving Woolworth behind. Disposable incomes had risen. Two-thirds of shoppers had access to a car and had started to vote with their feet, travelling further afield to obtain the best value.

The Marketing Director, Colin Brown, explained that during a throrough review of the company's operations they had considered two options, either a 'single core' or a 'multi-core' strategy. The former, under which Woolworth would become a specialist and would offer just one product category, had been rejected as too risky. The Board felt it would not fit all the different sizes of store.

Instead a multi-core strategy was selected. The chain would thin its range and specialise in six 'cornerstones' or product categories. The offer would target "C1/C2" middle income shoppers, offering basic, good quality products at highly competitive prices. The company would drop its more 'aspirational', design-led lines. Prices would be lower, with more of the range costing £5 or less.

Brown believed that the strategy would suit stores of up to 20,000 square feet (1,858 m²). He planned extra categories for the fifty stores which were larger. As a first step, he announced an exercise to reduce clutter. The twin goals were to make the stores easier to shop and to reduce the cash tied up in stock.

The Marketing Director went on to explain that four of the six cornerstones built on established strengths. The chain would develop its offer of DIY, Leisure and Play, Homewares and General Convenience. The remaining two elements would require more of a stretch, as Woolworth attempted to build improved ranges of Clothing and Daily Provisions.

DIY built on an existing strength. At the time the chain enjoyed market leadership on hardware and tools, electrical accessories (principally from Astralec Industries and HH Electrical), paint (branded Cover Plus from Donald Macpherson and Company) and curtain track (from Harrison Drape).

Although out-of-town DIY stores were becoming popular (including Woolworth's own B&Q Supercentres), the majority of purchases were still made in the High Street. The cornerstone strategy would extend the range of tools and hardware and give it more space.

A much bigger challenge would be to establish the company as a major fashion retailer. Attempts to break into 'Apparel' during the 1970s had not been very successful, with the company targeting designer-style fashion in the High Street and falling some way short of the offerings of Marks and Spencer and C&A.

The new goal was to concentrate on the basics, offering decent fashion at highly competitive prices. Woolworth would offer clothes for all the family. It was believed that the most difficult part would be to attract shoppers to a new range of babywear. Because of the risks, initially clothes for the the under fives would only be sold in the largest stores.

The Leisure and Play offer would build on an established strength. Woolworth, Woolco and the 50-strong Shoppers World catalogue shops, led the toy market and dominated fishing and darts. They also enjoyed a growing share of chart music. Each range would be expanded and given more space in-store.

The Record Department was considered a major growth area. The stores would give more space to tape cassettes, and would also introduce a computers and gaming section. Arrangements had been made to stock the top three home computers, the Sinclair Spectrum 48k, the Vic 20 and the Commodore 64. A selection of software and games would also be offered, which would also include applications to run on more specialist Acorn Electron and BBC Model B machines.

New, purpose-made fixtures would differentiate the Record Department. If a trial was successful these would be rolled out nationally.

The General Convenience offer aimed to build on the chain's strengths:

- pic'n'mix sweets and confectionery, as Europe's largest sweetshop
- toiletries where Woolworth had the second largest share after Boots
- stationery and cards, where Woolworth was second to W.H. Smith & Son
- photo frames and albums, a traditional strength
- Christmas Cards, Wrap and Decorations, as the established market-leader

Colin Brown explained that the Board saw General Convenience as a key springboard. He believed that the stores would excel once the clutter was removed. Customers would then appreciate the quality and value of the range.

He reiterated that the goal was to offer good value on things that shoppers bought regularly. The space that had previously been used for aspirational, luxury products would be given over to faster sellers. This would allow the Woolworth value to shine through and would help to restore the mass-market appeal of the Woolworth brand.

The Daily Provisions cornerstone was recognised to be a big challenge. It comprised not only a convenience store range of grocery but also weigh-out delicatessen in the larger stores, and even cigarettes and tobacco. Despite the company's poor showing in this market in the 1970s, the cornerstone strategy considered such ranges essential to build daily shopper numbers. It set out a major investment programme which was intended to modernise the facilities both on the salesfloors and behind the scenes. A group of twenty stores was identified to pioneer the new approach. Each got a full refurbishment and re-opened with a new delicatessen counter, a grocery section and an up-scale offer of bread, cakes and take-away food. With this investment the offer looked credible and started to build sales, in marked contrast to run-down suburban stores like Catford in South East London, which is illustrated above.

The final cornerstone was Homewares and Household Goods. This had been a longstanding strength for Woolworths. While the Board's strategic review had noted that the overall market was in decline, it remained huge. The existing Woolworth range look drab and tired. It was believed that a makeover could soon restore the chain's fortunes in this area, offering up-to-date basic designs at rock bottom prices.  An early example of this policy in action was the decision to switch from dark brown buckets and bowls to fashionable red and buttermilk shades.

Most members of Colin Brown's audience of time-served Store Managers and Head Office personnel were relieved that the new owners believed that the patient could be saved. They were encouraged that so much of what they had built over the years would be retained. Most saw the sense in eliminating the more expensive lines and focusing on value for money, and also understood the rationale for reducing the amount of dead money tied up in excess stock.

Many Store Managers flocked to see the new-look stores, which were badged 'Woolworths' for the first time. Most liked what they saw and left uplifted and hopeful about the future. But the new Strategy was dead in the water. As it began to gel Dixons launched a takeover bid which contrasted the rapid growth and limited investment required by B&Q with the slow, capital-intensive High Street turnaround envisaged by Cornerstone. This forced the Board to develop a more radical solution in order to survive. As a result, less than two years after new Delicatessen Counters were installed in stores like Bedford and Orpington, they were being removed and destroyed as part of the new Operation Focus.

Shortcuts to Other Exhibits

The 1980s

F.W. Woolworth buys B&Q    21st Century Shoping in Bristol    Paternoster Takeover    Leveraging the Property Asset

The Cornerstone Strategy    Dixons Takeover Fails    Launch of The Video Collection   Video Trailer    Operation Focus Strategy

Ladybird launch    Introduction of Chad Valley Toys   Movers and Shakers    The Lighter Side

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