There are a number of businesses out there that have been struggling recently as the pandemic, the cost of living crisis and political uncertainty are making economic consistency harder to achieve. A well-known and much-loved company who is feeling these detrimental effects is High Street giant Wilko, who announced recently that they are set to close their ‘majority of stores’. This mass closure will result in the loss of thousands of jobs and as such is a huge blow.

What Has Happened?

Wilko is a family-owned household and garden products retailer that has roughly around 400 stores throughout the UK. They also employ over 12,500 people in total. Naturally, there are going to be large job losses and big gaps on the high street as a failure of talks with potential investors has led to the company needing to call its administrators, PricewaterhouseCoopers.

These have been appointed as Wilko has steadily been running short on cash and as such needs assistance with closing branches or at the very least devising some kind of way forward. The administrators commented on the situation on Wednesday evening saying that it was “likely that there will be redundancies and store closures in the future” as they have not been able to find a buyer for the group.

That being said, no immediate closures are happening, as administrators have also commented that the stores will remain open for now with no immediate job cuts. There are still discussions happening with people that could be interested in buying parts of the business so until these are done no solid plan can be put in place.

People’s Comments on the Store Closures

There have been many comments about the closure of Wilko’s stores. People took to social media to express disappointment given it has consistently been a go-to for various household and garden items.

The joint administrators, Jane Steer, Edward Williams and Zelf Hussain also commented on the situation, acknowledging that they are aware this is going to add to the uncertainty that is currently felt by workers. They have also said that they are going to be supporting staff throughout this unsettling time, working closely with the JobCentre, unions and larger employers so that the employees who may be made redundant will be able to find work sooner rather than later.

The national secretary of the GMB union, Andy Prendergast, has said that they expect Wilkos stores to close in the near future. They have confirmed that when this happens they will continue to support members of the union throughout the process and will fight to ensure they are consulted as per the law, receiving every penny that they are entitled to in the process. They have also said that they will fight in order to make sure the Wilko bosses are held accountable as they believe their members deserve a lot better than what has happened to them.

Is Anyone Likely Going to Buy Wilko?

The Wilko stores are more than likely going to be bought up by rival bargain retailers like B&M, Primark, Poundland and Home Bargains. It may be the case that landlords of the sites need to divide up the space in the meantime though. Sky News reported last week that it is predicted Poundland could end up buying over 100 of the 400 closed stores.

The Failure of the Wilko Owners

Wilko was founded all the way back in 1930 when JK Wilkinson opened up his first store in Leicester. The company capitalised on the collapse of Woolworths back in 2008 and stepped into some of the high street gaps that were left by the company.

Last year the owners of Wilko paid themselves £3 million in dividends despite the fact that the company reported a loss overall that year. Andy Prendergast of the GMB commented on this as well saying that they “will not forget the incompetence that has led to this collapse and will not forget the dividends paid to the millionaires who gambled your jobs on their whims.”

Industry experts have commented on the recent news saying that it is clear that Wilko has failed to adapt to what is now a much more competitive landscape. Many other companies such as those mentioned above, Poundland, Home Bargains and B&M have expanded and as such have been able to undercut Wilko on price by working a lot more effectively.

Wilko borrowed £40 million last year from Hilco, they also cut jobs and moved its leadership team around, selling off a distribution centre in order to raise more funds that could help with ongoing debt. Once the company suffered a loss, suppliers paused (or reduced) deliveries, which meant that Wilko had lots of gaps on the shelves. They lost profit as a result and couldn’t pay their bills. Those gaps on the shelves also meant that fewer people were going to the shop and attended more stocked retailers instead.

The Importance of Good Administrators and Liquidators

Despite Wilko displaying a reasonable amount of incompetence in the running of their business, they have made the right decision in bringing in administrators. These are key when it comes to helping businesses that find themselves in hard times and need assistance with working out how to move forward. A good team of administrators will be able to act in a way that will benefit both the business, employees and creditors that the business owes money to, and therefore it is important to get them on board as soon as is realistically possible.

If your business is currently in a difficult financial position then it would be worth reaching out to some of these specialists. At Leading UK, we have a team of experts on hand who will sit down with you in order to find out more about your business, what your current struggles are and as such propose effective ways forward. If you have any questions or require any further information then do not hesitate to get in touch.