The Collapse of Wilko.
What was the main reasoning for the collapse?
The attempts to salvage the chain mainly failed as it continued to struggle to pay the supplier,
leaving more and more gaps on the shelves. This would lead to less stocks in the warehouses
and actual shops meaning that less products will be sold. One other main problem with Wilko
was that they had too many big stores that were based in expensive high streets. This would
mean people of a higher class will come down the street typically to shop and would have no
desire to shop in Wilko. Wilko is a budget UK homeware chain and has been around for over 90
years. The reason shops like this are going under more and more is due to the evolution of the
marker place. For instance, something you might have typically bought in Wilkos could be plastic
storage containers which are commonly used. However, with the world of online shopping and
things such as Amazon being invented, people will now go straight to there if they need
something like the storage container as it is easier to access rather than going into the shops and
looking around for the correct size.
What TWO things would I change as CEO, why, and what are the possible benefits and
drawbacks of making these changed?
I would, firstly, change the supplier. If I am able to find a supplier who is cheaper and can
potentially produce more of the product for the same price, increasing economies of scale, then
the company will benefit from this as they will have a higher profit margin. As well as this, they
will be able to make stronger relationships with the new supplier, meaning they could make
deals later on down the line as well. However, this could have a serious impact on one specific
thing. If the product is coming in cheaper, whether economies of scale has changed or not, the
quality of the product sometimes could be worse. Often, you get what you pay for, and here it
could mean the product you are buying is a really cheap quality overall. But, this is again a
budget department store and things will not be of the best quality in there so therefore, this
could be okay too. Contrastingly, a benefit of it coming in cheaper means the profit margins will
have a high potential of increasing back up to what they were before, if not higher.
Secondly, I would change the location. Not only of the major stores but all the stores. If you look
into the areas which are most successful, doing research on the areas around this then you will
be able to find the best suited environment for the department stores we are using. One benefit
of this means many more people, if the environment and area is correct, will come in and use it
more frequently as they will find it more economically beneficial and generally affordable.
However, one downside of this is if it is in a bad environment or failing place, there is a chance
that the store will get broken into and the produce stollen for people to sell to make their own
money. One way to come around this is having secure shutters on the front of all the windows
ensuring the property you are renting or own will be secure after hours.
