WILKO is loved by thousands of shoppers, but the reason it’s popular could actually be behind its collapse, according to one expert.
The budget retailer has something for everyone to put in their trolley, from DIY essentials, cleaning products, stationery, kitchen and bathroom goods, as well as snacks.
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So it has come as a surprise to many that Wilko has plunged into administration after failing to secure a rescue deal.
The fact that it sold a range of items, rather than specialising in certain areas likely played a part in its downfall.
Retail analyst Richard Hyman told The Sun: “I’m not certain that Wilko selling lots of different products was beneficial to the customer.
“My view is that Wilko was a jack of all trades, master of none.”
While Wilko could be relied upon for picking up almost anything ranging from doorknobs to pet food, and cleaning suppliers to plants, this hasn’t made business sense.
It means more items left on the shelves tying up cash needed elsewhere in the business.
Wilko has 400 stores across the UK, with most of them on the high street- another big reasons it’s loved by shoppers.
But while this is handy for shoppers, it means Wilko has been forking out for high rents at a time of low profit margins.
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For some businesses this locations makes sense, but not for Wilko.
Richard said: “High streets are the most expensive shopping locations and the typical tenant will be connected one way or another to fashion.
“Shoppers don’t really need fashion – they have to be persuaded to want it.
“That’s why stores in high visibility locations pay more, so passers by are lured in – it’s literally their shop window.
“Wilko doesn’t need those locations – or at least shouldn’t need them.
“Most of its shoppers go there with specific purchases in mind already – what we call a destination shop.”
Other budget chains, like Home Bargains and B&M, are mostly situated at these out of town locations.
It means not only are rents lower than on the high street, shoppers are more likely to buy more and bigger items – something Wilko has not been able to take advantage of.
Richard said: “Most businesses selling the kinds of things that Wilko sells trade from retail parks, where rents are lower and free parking is available.
So while high street shops made it convenient for shoppers without a car, having large stores in expensive locations did not help Wilko stay in business.
But like many shoppers, he thinks it would be a “great pity” if Wilko doesn’t manage to find a buyer.
He added: “Hopefully, it will find a new owner and continue to trade under its present name, but lots of investors will be attracted by the opportunity to buy a large amount of stock at knockdown prices.
“It could be that the business ends up being broken up.”
Why did Wilko go into administration?
Wilko was founded as a hardware shop in Leicester 1930, but quickly expanded across the UK and it currently employs 12,000 people.
It launched a turnaround plan earlier this year after its sales and shopper footfall came under pressure as consumer budgets were hammered by the rising cost of living.
Wilko said it saw “real progress” against many areas in its plan and made significant cost savings but was unable to improve its finances quickly enough to avoid insolvency.
Administrators will now seek out potential buyers for the firm’s store estate and its brand, while shops continue to trade as usual for now.
Wilko, like many other high street retailers, is said to have seen a big drop in footfall and has “stopped performing to its full potential”.
Chains have been feeling the pinch since the pandemic while shoppers are cutting back on spending due to soaring inflation.
High energy costs and a shift to online shopping after the pandemic are also taking a toll and many brick and mortar shops have struggled to keep the lights on.
If you want to know how your local high street is affected, you can check out our handy guide to all the shops closing down in August.
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