Woolies turns to click n mix

Just like James Bond, retailer Woolworths is discovering that you can indeed live twice. The almost 100-year-old brand is being reborn online after it fell into the hands of administrators just before Christmas.

Despite questions over Woolworths’ relevancy as a brand – the store network saw much of its traditional high street market share eroded by supermarkets and online retailers – the name has been snapped up by the millionaire Barclay brothers’ company Shop Direct.

Woolworths is set to become an online brand alongside its children’s clothing label Ladybird. Shop Direct, which also owns mail order businesses Littlewoods and Great Universal, is ­canvassing customer opinion via the Woolworths.co.uk site ahead of revealing how the brand will manifest itself on the web, so it is currently unclear exactly what form it will take.

Sources suggest that as many as 80,000 people have visited the site following the publicity over the Shop Direct purchase, but there is no indication yet as to how many comments the company has received. Consumer forums suggest that most people have remained silent about the potential new direction for the brand, with some sceptics questioning whether something known primarily for its “pick ‘n’ mix” sweets could work on the web.

A former Woolworths marketer reveals that some website orders made at the end of 2008 were left unfulfilled due to the chain’s collapse and despite the administrator overseeing full refunds. She questions: “I wonder how much damage it would have done to the Woolworths brand and whether consumers would trust a Woolworths website again?”

Analysts and industry observers have reacted in a similarly confused pick-and-mix fashion to the click-and-mix potential, although a consensus of sorts is emerging. David Smith, operations director at the Interactive Media in Retail Group (IMRG), says that it’s possible that Shop Direct could use the family-pulling power of Woolworths alongside Ladybird as a route into the parenting world. “Ladybird is a good solid brand, and if it allies that with the Woolworths brand, rather than subsumes it into Shop Direct, then it could use it as a springboard into the whole parent and kids market. It looks like that’s the way it will go,” he predicts.

Shop Direct is not giving much away, but a message posted on the retailer’s website fuses the Woolworths and Ladybird symbol into one area (pictured), which may support Smith’s theory. A source close to the group confirmed to Marketing Week that the Ladybird brand will be relaunched via Woolworths alongside a range of family-based entertainment products. The source claims that shoppers will even receive pick ‘n’ mix bags of sweets with their orders.

Shop Direct is understood to be ditching any associations the brand had with homeware goods, however. Washing baskets, pedal bins and ironing boards are out; games, toys and children’s wear are in.

All this may be good news for family brands. A spokeswoman for Disney Consumer Products says that pre-administration, Woolworths was a key account and it is looking forward to re-starting its “positive” relationship. “It’s always a good thing to have more retailers selling our licensed products,” she says.

Rival retailers will be eyeing the development with interest, but have no need to panic just yet, according to Numis Securities retail analyst Andrew Wade. He believes that Shop Direct will take its time building up the business.

Ben Gordon, chief executive at retailer Mothercare and Early Learning Centre is reluctant to comment on “speculation” as to the expected shape of his rival’s re-emergence. “We’ve been competing with Ladybird for 40 years, so it’s nothing new,” he says.

While Gordon might not be keen to say too much, Mothercare would certainly face tougher competition if the Woolworths and Ladybird tie-up did occur. Mothercare has remained unrivalled as a mass market specialist since it bought the Early Learning Centre chain for £85m in 2007. It reported a 94% rise in its pre-tax profits to £9.6m for the six months to October.

The supermarkets have already moved into traditional Mothercare territory, stocking a wider range of children’s toys, games and clothes than ever before. Mothercare has responded by moving into online content, such as its Gurgle online social networking community for mums-to-be and parents of young children.

Perhaps as a sign it is gearing up for a fight, Mothercare recently confirmed it was seeking agencies to pitch for a new campaign this year. St Luke’s is not the retained agency but carried out the most recent campaign to promote Gurgle and has been invited to pitch.

Other retailers that will be watching the Woolworths re-emergence include Borders UK, Toys R Us, Amazon, all supermarkets and other entertainment specialists such as HMV.

HMV claims it is too early to tell whether the new click-and-mix Woolworths will impinge on its market, but it does concede that its online-only rivals can be slicker.

Kate Stevens, analyst at Planet Retail, suggests that while Woolworths is inevitably facing tough competition from the likes of HMV and potentially Mothercare, it could still have a trump card up its sleeve in reaching consumers who are currently underserved by web retailers. She argues that Woolworths might focus on the “less affluent consumer”. Adding: “Argos does not fulfill orders completely online so there isn’t a ‘pound store’-like general retail proposition on the web. Woolworths.co.uk could fill this gap.”

Ian Wood, strategy director at brand consultancy Landor, goes further, suggesting that Woolworths is so strong as a brand that Shop Direct can’t go wrong, as long as it makes clear to consumers exactly what it stands for. “Woolworths needs to put out a clear statement about what it will be offering and how that will differentiate it from the likes of Amazon and Argos,” he says.

“It’s one thing to have a lack of clarity on the high street, but if you have that online you won’t survive because people need a reason to type in the address; they won’t just be passing by.”


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