The announcement yesterday by Woolworths that it would close 30 of their Big W stores and close two distribution centres over three years understandably played as big news. The closures represent 16% of the Big W rooftops.
Following the conclusion of the BIG W network review, Woolworths Group has identified approximately 30 BIG W stores for closure over the next three years and two distribution centres (DCs) that will close at the end of their leases. The cost of exiting these sites will result in a P&L charge of approximately $270 million mainly related to lease and other store exit costs.
Given the closures in our channel, the planned Big W closures over three years are lower than we have been seeing.
Looking at this news more broadly, I have comments in a number of areas:
POSSIBLE IMPACT FOR NEWSAGENTS.
Newsagents with a business in a centre with a Big W that is closing could be in for some disruption, depending on what the landlord does with the freed space. This would be especially true in centres that were build around the major tenant.
If I was in a centre with Big W as the anchor tenant today I’d be asking questions as well as redoubling efforts for stand-alone traffic generation.
ONLINE.
The Woolworths announcement points to online playing some role in the decision. I think there is truth in this. Department stores, including discount variety stores like Big W, are struggling with online as their shoppers focus primarily on price. Shoppers buying on price are not loyal. Loyalty is driven by service, value-add and exclusivity of product.
Australian department stores and discount variety stores are yet to reasonably face the challenge of online.
CONSUMER CONFIDENCE.
I think the announcement yesterday will impact consumer confidence as it gets people thinking about the impact of losing work and it gets other retailers thinking about their own situation.
BEING UNIQUE.
The Big W announcement is a reminder to every retailer large and small that you need to have a unique proposition. Your pitch needs to be competing, enticing and positively memorable. Achieving this insures your business against competition. however, it is hard work, relentless work. Plus, being unique is easier said than done.
WHAT TO DO TODAY.
In our shops today we should be happy, positive and engaged. We need to provide these experiences to shoppers, playing against expectations and ensuring we are not feeding into any negative thought about the Big W news.