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Woolies Is Back!!…Well Sort Of

7 February 2009 by Stephen McNamara

Woolies has had a phoenix-like rebirth as an Internet retailer, the stories have enthused this week. The development is seen as a lovely, fluffy good news story to warm the hearts of Britons in these cold times. It is as though the Woolies name is so loved by us Brits that we don’t want to see it die (even if we didn’t want to buy anything from them!).

The reality is in fact that Woolies has not been revived from cardiac arrest at all. What has in fact happened is Shop Direct has bought the Woolworth’s brand. So essentially the new online Woolies shop will have nothing to do with the failed business except for using its familiar name.

But this is of course the point. In retail, branding is a crucial factor to success. Importantly, the Woolworths name has a marketable existing connection to people in the UK. We are familiar with it, many of us like it and many of us trust it. By investing in the Woolworths name, Shop Direct is leapfrogging the difficult brand building stage. It is buying established retail status.

Shop Direct CEO Mark Newton-Jones: “Woolworths is a much-loved brand that engenders huge affection among British consumers and is an important part of the country’s retail heritage.”

What is interesting in particular from my point of view is that Shop Direct believes that Woolworths can work as an online brand. The old company had a website, it wasn’t too bad, but it was not a titan of online retailing. So I wait with interest to see if it works.

What this move does reinforce is the realisation by UK businesses, especially retailers, that their future must incorporate an online element. In difficult times Woolies’ prohibitive high street overheads were ultimately its death nail. Web retailers have far smaller overheads to deal with and far bigger potential customer bases. So can Woolworths succeed in its second coming? Well its chances are better than on the high street.