Alworths Managing Director Andy Latham
By Jon Whiteaker - 09:48AM - Mon 1st November 2010
Having opened 14 stores across the UK in the space of a year, Alworths is one of the main retailers filling the gaps left on the high street by the 2009 closure of town centre favourite Woolworths.
And with the company celebrating its one-year anniversary this week, the brains behind the variety retailer’s emergence, Andy Latham, jokes that you could make a television programme about his recent experiences.
“Our northernmost store is in Forfar in Scotland, we have a Welsh store in Llandudno and there are shops right down on the south coast in Newhaven and Tiverton,” he tells Retail Gazette.
“I spend a lot of time looking for new sites so there’s a lot of driving and seeing new places I’ve never seen before – you could make a show Around the Country in 14 Alworths.”
Latham would probably admit that a show with that name is unlikely to threaten X Factor in a TV ratings battle, but nevertheless his description of his day-to-day work neatly emphasises the journey Alworths has made since opening its first store in Didcot on November 5th 2009.
Rolling out five stores in time for Christmas last year was an ambitious target for the company, but it achieved its goal and has continued to build on those foundations ever since.
Positioning itself as “providing value in its truest sense” and somewhere in between value retailers such as Poundland and the more upmarket businesses like Marks & Spencer, Alworths certainly has its place on the high street.
As the new festive season approaches, the retailer is in a much stronger position than 12 months ago as it has experienced a year of getting to know its customers and how best to serve them.
Interestingly enough, sales at Alworths had never been better than they were during last week’s half-term when the business was set to “achieve its biggest ever volume week”.
It also bought its Christmas stock back in February, meaning it holds many of the best seasonal ranges and is well prepared for the inevitable surge in high street footfall as December 25th draws closer.
Woolworths and Christmas time once went hand-in-hand; having taken over 13 former Woolies premises and employing many ex-Woolies staff, Alworths will be hoping that its name will soon be associated with the festivities in the same way.
The obvious question to ask Latham, though, is how does Alworths expect to succeed when the company it essentially bases its business model on went bust at the start of 2009 making more than 25,000 people redundant and leaving 807 empty shops littering the British retail landscape?
“I’m fortunate to be in the position as an insider to know where Woolworths went wrong,” he responds.
Like the pick ‘n’ mix concept that made Woolies famous and continued at Alworths, Latham believes he can filter out the bad aspects and ensure only the tastiest ingredients of the business remain.
“There were still over five million customers visiting high street Woolies, the company was experiencing around £2.3 billion annual sales and it was attracting plenty of customers through the door.
“We’re trying to avoid making the mistake of having an extremely high cost base, which Woolies was in the process of trying to change before running out of time.
“Stock holding, operational costs and store leases were expensive but our key focus is keeping the business efficient and as low cost as possible.”
Alworths is doing this with the help of a head office team of just 15 - all of whom are former Woolworths workers. There are also Sales Managers who look after clusters of two to three regional stores.
Latham thinks this structure is cost effective and expects it to support between 60 to 70 outlets before any new head office staff are required.
“It’s positive for profitability because we’ll be driving more sales from stores without any incremental costs centrally,” he states.
“In truth this was one of Woolies problems - central costs were exorbitant and the business ran out of time getting them to an acceptable level.”
Much of Alworths’ success has been generated by its entertainment category, which includes chart CDs, DVDs and console games, with Latham explaining that the company grew this space by 50 per cent over the course of the year on the back of huge customer demand for this type of product.
It appears this flexibility, as well as the company’s focus on getting store layouts right so consumers can actually find the products they want to buy, is proving very rewarding.
“All too often retailers think the more products they put on the shop floor, the more they will sell,” says the MD. “In truth, trading will suffer if the customer can’t get around an untidy shop.”
Although its first year on the British retail scene has been encouraging, there is some uncertainty surrounding the use of the Alworths name.
The Woolworths brand has not been lost forever as it was snapped up last year by home shopping and online retailer Shop Direct, which has continued running the business on the internet.
Woolworths.co.uk’s owner won its battle to change the name of Wellworths - another firm which grew out of the ashes of Woolies - thus avoiding any misrepresentation of the Woolworths brand.
Latham would not be drawn into what the ramifications may be for Alworths, which received a similar letter from Shop Direct last year, but he revealed that his company has been in regular dialogue with solicitors at the Liverpool-based retailer.
So is Shop Direct’s ownership of Woolworths.co.uk preventing Alworths from joining the vast majority of the retail world in establishing an online presence?
“No it is not - online is not part of my strategy,” explains Latham.
“The whole proposition is about local high street shopping, consumers picking up products from the shelves, finding new releases and buying them there and then, so online is nowhere near being part of our plans.”
At a time when the wider industry is embracing technology in all its forms as a method of pleasing and gaining new customers, it is intriguing to hear of a retailer following old fashioned principles to win over communities and attract people back to what was once the mighty British high street.
Woolworths played this role for a whole century but allowed its cost base to rise out of control; under today’s careful management of Latham, could Alworths fill this position for the next 100 years?
By Ben Sillitoe