Wilko's "sense of inertia" and failure to keep pace with "stronger competitors" in the bargain retail space were key contributing factors to the brand's collapse after more than 90 years of trading, a retail expert has suggested.
Speaking in a parliamentary evidence session, Patrick O'Brien, global retail research director at London-headquartered consultancy Global Data, said the operator was trading in the "wrong locations" for too long before it was forced to shut 400 stores after entering administration this August.
O'Brien, who was giving evidence alongside Wilko chair Lisa Wilkinson and its former chief executive Mark Jackson, also argued that the brand was outdone by rivals, such as Home Bargain and B&M, who were quick to branch out into retail parks, dismissing suggestions that its fall from grace rested solely on the impact of the pandemic.
He said: "Wilko's demise has to be seen in terms of longer-term competitive context. The retailer was going quite well up until about 2012, but has really struggled over the last 10 years. It is not a just problem that has happened over the last couple of years [...] they've come up against much stronger competitors.
"They have been attacked from all sides and, what it seems to me, is that Wilko really [had] a sense of inertia – they didn't really do enough. They had the wrong store locations, the wrong store types, far too big their stores [were] – they had lower sales densities than any of their major competitors, and they didn't really react."
O'Brien added: "They kept on with a high street model, they didn't really push into retail parks at all, and that was where the likes of B&M and Home Bargains were having their successes."
During the session on Tuesday morning, it was also revealed that Wilko rents were 40% above market rate, which equated to an annual bill of around £90 million, according its former CEO Jackson.
When asked if Wilko could have survived under a different strategy, O'Brien said the business should have acted earlier, insisting that the opportunity was there to turn things around while the public were using bargain retailers more during the cost of living crisis.
"We've seen a lot of retailers fail over the last 10 years, and a lot of the inertia is down to the fact that they are plugged into long leases, which then are very expensive to get out of, so they stay put and hope for the best.
"They are in the value discount sector, that is an area all through the last 10 years of austerity that they have a real opportunity, because people are trading down from the mid-market into cheaper retailers."
Wilko's management of its expensive stores portfolio was a concern for the company, according to Wilkinson, who insisted greed did not bankrupt the high street retailer. This is despite MPs suggesting that the Wilkinson family received around £150 million in dividends from the company over 20 years.
Wilkinson told MPs that the group had been working on shaking up its portfolio: "That was an active stream of work for as long as I can remember, in reducing our lease obligations.
"We had been working over many years to reduce our rents bill and to reduce the length of our leases, and to get our stores in the right places. It was an ongoing job of work."
Wilkinson also took questions on why the group failed to act on advice from consultancy Teneo to enact a company voluntary arrangement sooner to renegotiate its rents and offload under performing stores.
Wilkinson said that the advice on performing a CVA was not interpreted by the firm as a "do it right now" action in 2022, and it was waiting to bring its spending down before engaging with the restructuring procedure.
She confirmed that verbal discussions about a CVA were first had with Teneo's restructuring advisers in early 2022. "At that time, I understand that my CEO and property director were told that it was not, because our financial position was not efficiently bad to do a CVA," Wilkinson said.
She added that it did begin planning a CVA with PwC in the first quarter of 2023, but it fell away due to a change around who would vote on the CVA, which led the firm to conduct a "much tighter cost reduction programme" to secure the votes of landlords. "The nub of it, did we listen to the advice, and did we follow it? Yes we listened to the advice and, yes, we followed it." Wilko recruited CBRE in June this year to advise on its estate ahead of talks with landlords about options for cutting costs.
Jackson pointed out that keeping stores open during COVID was a "big drain on cash", when others had closed to save costs. Reflecting on what she would have done differently in 2022 in order to save the business, Wilkinson said: "We could and were trying to rework our stores portfolio so that our stores were not over-rented and so that they were in either the right towns, the right place in towns, or on the right retail parks."