Wilko’s weak like-for-likes show offer is not resonating

Following today’s release of Wilko FY figures for 2019/20,

Matt Walton, Senior Retail Analyst at GlobalData, a leading data and analytics company, comments:

‘‘New chief executive Jerome Saint-Marc has his work cut out for him as sales fell again for the financial year ending February 2020, down 5.7% to £1.47bn, while its closest rivals continue to forge ahead. B&M’s sales grew by 11.8% between April and December 2019, Poundland also recorded sales growth across its European business over the same period, and continued expansion from Home Bargains and The Range mean they are both well placed to grow. Store expansion has, undoubtedly, supported competitors while Wilko’s estate has remained static at 416 branches. But, a comparison of like-for-likes suggests Wilko’s offer is not resonating with shoppers; like-for-likes remained negative over the period and B&M’s increased by 2.3% for the nine months to December 2019.

Wilko is taking steps to develop its offer, hiring Alexei Cowan as its first-ever head of design in November. Focusing on design is a wise move for Wilko, as nearly half of homewares shoppers in 2019 bought to achieve a new look, up 2.0 percentage points on average in 2018. But, this is an area where Wilko is playing catch-up, as B&M launched more trend-led collections in March 2019. Wilko should use its social-media platforms more to showcase its offer as it does not advertise on TV and footfall is heavily impacted by shoppers staying home.

Wilko continues to trade through the lockdown as an essential retailer, and while it has not reported on current trading, it has indicated that its cash reserves should support it for a six-month period of reduced trading before a lagged recovery back to normality. While, inevitably, Wilko is focusing on the short term, it must also consider how it can grow sales afterwards. Further to being more trend-led, Wilko should develop its online proposition. Restarting click & collect should be the short-term focus, but long term, Wilko needs to better use its online platform to showcase design. This would drive more frequent visits to its website and support Wilko should the post-lockdown shopper be more cautious about visiting stores.”

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