Future bleak for U.K.'s Woolworths

LONDON -- One of this country's most-cherished U.S. imports — Woolworths, the British descendant of the old American five-and-dime store — is in danger of disappearing after nearly a century of business.

Enduring affection for the store's old-school candy counters, toys and inexpensive household goods had sustained the brand's survival here more than a decade after it disappeared in the United States. Yet, amid a global financial crisis and changing tastes in retail, the company's directors said last week they were seeking administration, a move similar to bankruptcy protection in the U.S.

The news jolted the public so badly that Prime Minister Gordon Brown stepped in and vowed the British government would do everything possible to ensure that Woolworths' 815 stores would stay open, and its 30,000 employees would have jobs through Christmas.

"I will be sad to see it go," said Deborah Salloum, 45, as she exited the Woolworths store on busy Camden High Street in north London Saturday with a bag of just-purchased lights for her Christmas tree. "It's just always been there. I don't know what will replace it."

Woolworths — or "Woolies," as it's affectionately known here — started in Britain in 1909. The first store was opened in Liverpool by Frank Woolworth, who founded the American five-and-dime stores that carried his name in 1878 in Pennsylvania. Stores here were like those across America: They offered everything a household needed at an inexpensive price.

"You can get all that you want," said Salloum's husband, Michael, 32. He left with new salt and pepper shakers for his nearby restaurant.

Inside the Camden "Woolies," Christmas wrapping paper is available for the equivalent of $2-$3. You can get a cheese grater for about $5. Candy, DVDs, bed sheets, toys like Power Rangers, pencils and writing paper can be had for the equivalent of $1 to $20. Cluttered shelves hold everything from dishes to leftover Halloween costumes.

U.S. stores, called Woolworth's, began closing in the 1980s before the U.S. company that owned them gave up operating as a general discount retailer in the 1990s. A British firm bought the stores in Britain in 1982 and continued to operate. Similar retail stores carrying a version of the old Woolworth name operate separately in Germany, Mexico and South Africa.

On the surface, Woolworths appears to be a victim of a global economic downturn that is hitting Britain. The nation's biggest business lobby group, the Confederation of British Industry, said Friday that a survey of member retailers indicated sales the first two weeks of November were down the most in 25 years.

However, Geoffrey Wood, professor of economics at the Cass Business School at City University London, said it was a "miracle" that Woolworths has hung on as long as it has.

"Have you been in a store lately?" he said. "I have. It was such a mess. It's hopeless."

Other British discount chains offer better-stocked shelves and aisles, better prices and better service than Woolworths has for years, Wood said.

Perhaps the only thing that has kept the chain alive, he said, is its stores are well located. Those locations, he predicted, will be what any buyers wishing to pick up a piece of Woolies at bankruptcy prices will want.

Under the British system, administrators are appointed to salvage as much money as possible for the company's creditors. Previous attempts to sell the company failed.

Barbara Mundy, 75, who says she's been shopping at Woolies all her life, agrees that the store she once knew is gone.

"It used to be very good," she said. "You could get everything at Woolies except food. Now, all they have are sweets and toys. There's no service at all anymore."

Still, she was at the Camden store Saturday to pick up "a few things." And, she lamented, "What will replace it — another coffee shop?"