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What can marketers learn from Wilko’s failure?

Gordon Young, editor-in-chief and co-founder of The Drum, reacts to the news that retailer Wilko is on the verge of bankruptcy. Where did everything go wrong?

I’m sorry to learn that the well-known UK bargain store Wilko is about to go bankrupt. Some would argue that the possible failure is a typical example of a broken Britain, with inflation, Brexit, and rising living costs. These headwinds will undoubtedly not have helped. But I believe the true reason for Wilko’s problems was a faulty marketing strategy.

 

As things now stand, the company, which lost £36 million on sales of £1.2 billion in the fiscal year ending in January, will enter administration within days unless a buyer is found. It plans to file an administrator notice with the high court to safeguard itself from creditors for ten days while it works out a deal. The company’s demise will be a significant UK story, given it employs 12,000 people across 400 outlets.

 

Few in the retail business will be surprised by this result, since Wilko has been heading for trouble for quite some time. The Wilkinson family, who founded the company in the 1930s, still owns it (at the time of writing). According to its website, “because we are not a PLC, we do not have shareholders to answer to, like many other high street giants.”

“This is a two-edged sword,” one retail expert told me. If they had shareholders to account to, they might have been able to stop the rot sooner.”

Wilko’s marketing plan was a disaster.

When viewed through the lens of the four Ps of marketing, this becomes clear.

 

Wilko’s product has lost sight of its proposition. Some Wilko employees are represented by the GMB union. “Wilko desperately needs a new direction,” its national organizer Nadine Houghton told The Grocer in January. GMB members at Wilko have long argued that the company can be successful if it returns to doing what it does well.”

 

To accomplish this, Wilko must be truly affordable – a good value retailer for hardworking families with customers who appreciate what the brand symbolizes.Wilkos lacked distinctiveness in the crowded bargain area, which meant there was little reason for people to shop there, with a range that could be purchased everywhere.

 

Place

Wilko’s primary difficulty was that it had the wrong type of stores in the wrong places. Its estate was mostly concentrated in high streets and commercial malls (footfall in these areas is down 30% from pre-Covid levels).

In stark contrast, the 701 B&M UK tales are mostly from outside the city. This also explains the disparity in financial performance – B&M is a retail powerhouse. “The B&M near us has plenty of parking,” said our source. It’s more of a destination store. You have to walk to all the Wilkos I can think of.”

 

Price

Wilko blamed its problems in 2021 on severe supply chain disruption as it sought to reduce the impact of Covid and even the closure of the Suez Canal. However, companies such as B&M were not as badly affected. In the instance of B&M, it has cultivated a wide supplier base and strong ties with several household companies that have formed sub-brands expressly for the bargain sector.

As a result, Wilko has unable to compete on price or range. “I went into a couple of stores over Christmas, and the stock levels were so low they didn’t have what I needed,” one retail professional wrote on LinkedIn. They appeared to be closing down and had been for the past year.”

 

Promotion

For a reason, this is always the last item on the marketing list. Promotion is unlikely to help unless you have a clear strategy surrounding the product, place, and pricing. And these flaws were evident in the commercials I watched. It made little attempt to differentiate itself, instead focusing solely on price with the line; lots of small victories.

 

Unfortunately, all this method produced was a slew of little losses. It’s a shame, since there’s an amazing brand somewhere in there, and let’s hope it lives to fight another day. In the meantime, the saga serves as a timely reminder that, while many marketing methods have evolved, the fundamentals have not. So watch your Ps! 

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