Untangling the Woolies – a gratutious business history post

Posting about Aussie retail giant Woolworths (here, here and here) has reminded me of one curious dimension of international business – the proliferation of firms with very similar brands but distinct identities. There appears to be some confusion caused by the existence of different Woolworths in the retail world. As such, I thought I’d explore the history of each business.

First off the rank, is the US ‘five and dime’ pioneer F.W. Woolworth Company, which kicked off operations in 1878-9 and quickly grew to be one of the largest retail chains in the US. Their headquarters in New York was, for a time, the tallest building in the world. The firm ran what we would now call low-cost, High Street, variety stores. Woolworth did not pursue a supermarket business, but did venture into department stores and speciality stores – most successfully Foot Locker. With the decline of smaller scale variety stores, especially in the face of Target, Kmart and eventually Wal-Mart, the US Woolworth stores eventually all closed and the parent company was renamed Venator in 1997. The company now trades under its most successful brand, Foot Locker, has a retail presence in over 20 countries, and is the world’s 121st largest retailer (according to Deloitte).

The US firm internationalised into Canada, Mexico and more significantly into the UK (in 1909) and Germany (1927). The UK stores flourished and became a staple of the High Street. The UK firm spun off from its US parent in the early 1980s, and was last year the 198th largest retailer in the world. As of last month, this entity is now under receivership, as the firm has failed to manage the competitive onslaught from supermarket chains such as Tesco, Marks and Spencer and Asda, and the decline in CD purchases (one of its biggest market segments).

woolworth-gmbh1The German business was similarly prolific and by the time it spun off from the US parent in 1998 it had over 300 variety stores across Germany and Austria. It continues to operate.

Most of the Canadian stores were sold off to Wal-Mart in the mid-1990s. The rest closed. The Mexican business (in operation since 1956) slowly shifted into Mexican hands from the early 1980s (due to restrictive foreign ownership rules) and still operates under the Woolworth name.

Now we turn to two more lively Woolworths.

First is the South African business. This has been in existence since 1932. It is unclear if it ever had any relationship to the US or UK businesses. Certainly by 1947 it had signed onto a distribution relationship with UK retailer Marks and Spencer which is maintained to this day. It is sells both groceries and homewares. It is one of the more geographically dispersed retailers in Africa, operating via franchise in Botswana, Kenya, Lesotho, Mauritius, Mozambique, Namibia, Nigeria, Swaziland, Tanzania, Uganda, Zambia, Zimbabwe, as well as the United Arab Emirates. The firm also owns Australian fashion retailer Country Road.

So that leaves us with the Australian firm. This firm has never had a formal connection to any of the others above. The gentlemen who started it in 1924 were simply opportunistic in using the brand name. Legend has it that they telegraphed the US firm in New York and told them that they were using the name, and that the Americans replied saying “That’s fine. We aren’t going to expand down there anyway”. The Aussie firm was also originally a variety chain, but did expand into supermarkets in 1960. It is has subsequently extended its reach into a wide variety of offerings and formats. Their stable of brands includes Safeway, which was previously an internationalisation effort by the US firm of that name (#19 retailer in world) but was bought by Woolworths in 1985.

This Woolworths has not been an overly ambitious internationaliser until very recently. It did enter New Zealand in the early 1930s, but sold the brand on in 1979 and only bought it back in 2005. The Aussie Woolies is by the far the largest retailer of this name, coming in at #25 on the global rankings. It recently launched a new logo (see left). It is, as yet, unclear whether expansion into India will involve use of the Woolworths brand.

So, there you go, a complex world of doppelgangers. Intriguingly none of the firms have ever trod on each other’s turf, reflecting the limited internationalisation of retailers generally. Stay tuned for more movements…

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