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ilko’s last high street shops will be shut for good this weekend after the retailer’s financial troubles became insurmountable.
The high street chain fell into administration in August, more than 90 years after it began as a single hardware shop in Leicester.
Administrators for the firm confirmed last month that its 400 stores would shut after rescue talks with potential suitors failed, with almost all of its 12,500 workers losing their jobs.
Here, the PA news agency looks at what led to Wilko’s collapse and what the future could still hold.
– What is Wilko?
Wilko was founded by James Kemsey Wilkinson in 1930, who opened the company’s first store on Charnwood Street in Leicester under the Wilkinson Cash Stores brand.
By 1941 it was simply known as Wilkinson and grew as a hardware chain across UK high streets.
The company, which simplified its name further to just Wilko in 2014, grew to operate about 400 stores and employ 12,500 people in both its shops and Worksop headquarters earlier this year.
As well as expanding its number of stores, the company has also grown the breadth of products it sells, like pick-and-mix sweets and garden furniture alongside its traditional DIY products.
– When did it first start facing financial trouble?
The retailer had remained robust for many years despite wider challenges on the UK high street, growing as rivals such as Woolworths suffered financial problems.
Wilko reported strong profits for most of the 2010s and saw its turnover peak at more than £1.6 billion in 2018, but by this point it had seen profitability begin to decline amid pressure on high streets.
Turnover has decreased in every year since, as it saw challenges in the sector compounded by the Covid-19 pandemic and tighter consumer budgets in the face of higher energy costs and mortgage rates.
Administrators for the company at PwC said these factors contributed to “cashflow pressure and a deterioration in trading”.
– Why did it see fewer shoppers?
Wilko also saw shopper numbers drift as it faced increased competition from rivals such as B&M and Home Bargains.
These shops have continued to grow, with shoppers going in droves to their stores which are often based in out-of-town retail parks.
Retail parks have seen footfall rise sharply in recent years to the detriment of many high streets, where Wilko has the vast majority of its sites.
Phones 4U founder John Caudwell also said it was “not surprising” Wilko faced weaker consumer demand due to a challenging economic climate.
He said: “Individuals and businesses are facing hard times as a result of inflation, post-pandemic situation and the Ukraine war, so there are hard times ahead and they aren’t going to get easier in the short-term.
“With that said, it’s surprising that a business like Wilko is struggling because a DIY environment usually prospers a little bit more in hard times because people tend to do things themselves.”
– Were its stores too big and in the wrong places?
Retail analyst Richard Hyman told the PA news agency the retailer’s store estate has also been a hindrance for its recent trading.
“The stores they have are a burden and mostly too big,” he said.
“They have excess space where they are selling a wide variety of products which they probably shouldn’t be selling to start with, stretching into all sorts of different markets.
“They are quite large for a lot of high streets, so have the expense of rents and rates associated, but also don’t have the practicality of retail parks, let’s say.
“There isn’t parking next to a lot of these stores, so for many people it doesn’t make sense to go there to buy large amounts of paint, or other core things like that which they sell.”
– What attempts were made to save Wilko?
Administrators PwC held talks with several interested companies, some of which wanted to buy some of the stores while others were interested in rights to the firm’s name.
The main hope lay with HMV owner Doug Putman, who had been in talks to take over the business as a whole and keep about 200 shops as a “going concern”, but no agreement could be reached mainly because of “infrastructure” costs.
– What is happening to its stores?
PwC agreed a deal with rival B&M to purchase up to 51 Wilko stores.
Meanwhile, rival Poundland agreed to buy up to 71 Wilko stores in a separate deal. Poundland has already reopened 20 of these shops under its own brand.
The remaining stores will see their lease agreements come to an end and it will be up to their landlords to find new tenants.
There are also concerns that not all stores agreed to be bought by B&M and Poundland will become new shops after the Times reported the new owners were accused of delaying completion amid efforts to set up new rent and lease arrangements with better terms.
– Will shoppers see the Wilko brand again?
Yes, potentially, after administrators sold the brand, wilko.com website and related intellectual property to rival retailer The Range for £5 million.
The Range said it will sell Wilko products “in-store”, although it is currently not expected to set up standalone Wilko shops.
It is set to restart home deliveries through wilko.com after the closure of Wilko’s remaining stores.
-What is happening to workers?
Almost all of Wilko’s 12,500 workers are facing redundancy after they were transferred as part of administration deals.
The Range said it would take on 36 workers from Wilko’s digital team after buying its brand and website.
Meanwhile, Poundland has offered jobs to over 200 former Wilko workers in recent weeks.
There are also concerns over the pension plans of former Wilko staff, after a recently filed creditors report showed the retailer’s pension fund was left more than £50 million in deficit and is unlikely to receive more than £4 million following the insolvency process.
The Pensions Regulator body may have to intervene in order to protect these workplace pensions.
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