Hundred Up: the ninety-ninth year in the High Street

In 2008 over eight hundred British Woolworth stores still offered market-beating prices on a wide range of CDs, videos and games, ninety-nine years after the chain had sold its first music sheet in Liverpool.

During the Eighties, while part of the Kingfisher, the stores had gained the coveted number one slot for chart music and had pioneered the sale of videos.

The parent had secured its supply chain by acquiring the wholesaler Record Merchandisers in 1986, renaming it Entertainment UK. In 1999 it had added VCI Group Ltd., a rapidly expanding music and video publisher, which had played a pivotal role in the turnaround at Woolworths.

Woolies had become a value brand for all the family, with a mix of chart, catalogue and budget lines.

After a run of success, by 1999 Kingfisher was a diverse, international group. Progress was derailed by an abortive merger with Asda. A tie up had synergies which would have helped the High Street brands. Investors were furious and demanded changes.

After much soul-searching Kingfisher decided to withdraw from the High Street. In 2001 the Superdrug chain was sold privately, while Woolworths, the music and video specialist MVC, Entertainment UK, VCI Group and the leading e-tailer Streets-on-Line floated separately as Woolworths Group plc.

The CEO set a new strategy for Woolworths, which targeted mums with small children, and sold MVC. He built up the Wholesale and Publishing Division, agreeing a joint venture between VCI and the BBC as 2|Entertain, and buying Total Home Entertainment and the wholesaler Bertrams Books. By 2008 the Group supplied three major supermarkets, Asda, Sainsbury's and Morrisons, and much of the High Street, including Zavvi and W.H. Smith.

Entertainment played an important part in the strategy for the High Street stores. It accounted for around twenty percent of the total space and sales turnover.

Alongside chart sales, the Group was able to leverage its publishing arm to build a strong budget offer. The back catalogue and marketing skills of 2|Entertain provided a rich vein of titles, on the Crimson, Demon, MCI and Emporio labels, and also as the toys brand, Chad Valley. Titles were licenced, authored, duplicated and sold within the Group.

The 2000s saw a substantial decline in the sales of music and video across the globe, which experts put down to Internet downloads, piracy and satellite TV. The downturn prompted intense price competition, which was accentuated by some supermarkets opting to sell new releases at below cost price.

The typical price of a chart CD fell from £12.99 in 2002 to just £9.97 in 2007.

The chain joined the price war, balancing its margin by selling more budget titles.

In 2007 a new value range called WorthIt! was introduced across the store. Initially this was limited to blank tapes and accessories in the Entertainment department, but these quickly illustrated the potential to do more.

The following season the chain launched a range of WorthIt! CDs and DVDs at jaw-drop prices. This drew on capabilities from right across the Group. Many of the tracks came from the 2|Entertain library. The publisher also designed the discs. The high throughput of Entertainment UK allowed the budget range to be distributed with the minimum possible on-cost. Woolworths piled the displays high and sold the output in record quantities.

WorthIt! brought a sustained increase in shopper numbers, after five consecutive year-on-year falls.

In introducing WorthIt!, as Woolworths approached its centenary, it appeared that the chain had gone full circle. With up to forty original artist tracks on some CDs which sold for £1, the price per song was not a penny higher than on the first Little Marvel Five Inch (12.5cm) 78rpm Gramophone Records of the 1920s. If the price per song had risen with inflation each album would have been £87!

Ironically in 2008 the chain sold more music and video than in any of the previous ninety-years. As in the early days the unit price was low but the margin was good. The firm's fortunes appeared to be improving as it rediscovered its value roots.

As Entertainment staff attended training sessions in August 2008, they were promised a great release schedule for the hundredth Christmas, and improved availability to maximise sales. They returned to store enthused by what was to come. No-one predicted that the stores had just weeks to live.

In the end it wasn't so much declining store sales as poor budgeting of the cashflow required in the wholesale division that marked the end for Woolworths Group, particularly after credit insurers withdrew cover. The new contracts to supply Sainsbury's, W. H. Smith, William Morrison, Zavvi and others proved vulnerable to a downturn in the market as unsold stocks backed up at EUK.

As the cash ran low Woolworths Group Directors tried to secure a top-up from their bankers, but failed. Instead the banks demanded repayment of all their loans, amounting to over £300m. Unable to pay, the Directors were required by law to take the Company into Administration before it became insolvent. It plunged not only Woolworths but Zavvi, W.H. Smith and the supermarkets entertainment offers into chaos. Across the industry DVDs and CDs destined for Christmas stockings became embroiled in contractual disputes between the manufacturers and the Administrator, as efforts were made to find a white knight to save the ailing Stores Group. Just forty-one days after the collapse the stores began to close. For a spell it appeared that the Woolworths name was to be consigned to the pages of a Museum. Fortunately Shop Direct Group stepped forward to revive the brand, and have since established a world-class website.

Today you can order CDs, DVDs, Blu-Rays, Games and Consoles from Woolworths on-line, with the convenience of home delivery on a wide range. It builds on a tradition that began 3,000 miles and 125 years ago. When you shop woolworths.co.uk you follow in the footsteps of five generations. If you haven't visited yet, why not give it a go?

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