B&M and Wilko strike £13m deal ahead of closures: Business community reacts

As discount retailer Wilko announces a number of stores set to be shuttered in the coming weeks, a bright spot emerges as rival retailer B&M announces its intentions to buy 51 Wilko stores in a £13m deal and have them rebranded to reflect their new ownership. But what does this turn of events mean for the wider retail sector? Read on to find out more…

Tania Clench, legal director in the restructuring and insolvency team at Cripps, says:

“Despite today’s deal, the future of the remaining Wilko stores (350+) still remains in doubt, meaning thousands of high street workers still face losing their jobs, and unsecured creditors still don’t know where they stand.

“The dialogue with Doug Putman appears still to be ongoing, but it looks like if that deal is to be reached, fewer stores than originally anticipated will be acquired. So, after payment of the Administrators’ fees and paying out Hilco as the secured creditor, what will there be left to pay preferential and/or unsecured creditors?

“It is too early to tell, which means unsecured creditors will be wary of their next steps: Wilko is reportedly in £40m debt to Hilco and needs at least another £20m for ordering new stock, and yet, looking at the empty shelves in many of Wilko’s stores, it does not look like stock is being replenished. Understandably, suppliers will want to ensure they are being paid for the supply of stock.

“Anyone who takes on Wilko will need to invest time and cash in bringing the stores and the brand in line with what its rivals are offering; joining up the online and in-store operations, revamping the look of their stores whilst still safeguarding the shopping experience many look to have at Wilko.

“Wilko’s retail business proposition will need to be clear going forward if the business is to survive and it is clear that Wilko is a very much loved and valued brand by many up and down the country. For this reason, I would not be surprised to see other potential bids for parts of the business coming through and with these, hopefully, jobs being saved.”

Paul Louden, regional director UK & Ireland, Sinch, comments:

“B&M’s purchase of up to 51 Wilko stores demonstrates that the retail sector is moving away from its reliance on bricks and mortar and is becoming more selective with high-street footprint. Ultimately, customers now see brick-and-mortar as an extension of the retail omnichannel experience.

“It is our expectation that retailers will enhance their brick and mortar experiences with the new, engaging digital journeys today’s customers are asking for.”

Orwa Mohamad, analyst at research agency Third Bridge, adds:

“The company will have cherry picked Wilko’s best stores, the ones that are most profitable. B&M’s general focus on out-of-town locations means it can incorporate many of Wilko’s high street stores and locations with limited cannibalisation impact.”

“From an assortment perspective, there’s a high degree of crossover between Wilko & B&M in households, garden, toys, accessories. Quite often, Wilko & B&M sell the same product, meaning consumers have a strong incentive to continue frequenting those stores regardless of the banner.”

By Matthew Neville – Senior Correspondent, Bdaily

• Add me on LinkedIn and Twitter to keep up to date
• And follow Bdaily on Facebook, Twitter and LinkedIn
• Submit press releases to editor@bdaily.co.uk for consideration.

Looking to promote your product/service to SME businesses in your region? Find out how Bdaily can help →