What went wrong at Wilko and what happens next?


What next for Wilko?Wilko officially entered administration today, jeopardising 12,000 positions. We examine the challenges the value retailer faced and explores its potential for recovery.

Throughout the last year, the company grappled with financial constraints and challenges in product availability, leading numerous consumers to turn away from the brand.

Lately, the store’s proprietors were exploring opportunities to offload a majority share in an effort to safeguard the brand’s longevity.

Despite a “noteworthy degree of interest,” as stated by Wilko CEO Mark Jackson, the company couldn’t finalize a deal swiftly enough to provide the urgent funds required.

But what was the turning point for Wilko, a brand cherished by a multitude of customers?

Falling behind the value competition

Wilko has been navigating an intensely competitive landscape, with discount competitors like B&M, Poundland, and Home Bargains expanding swiftly and capturing its market presence.

Patrick O’Brien, the retail research director at GlobalData, suggests that these rivals have “significantly weakened Wilko’s competitive standing by offering more competitive prices,” leading to sustained challenges for the company.

Wilko has witnessed sales drops in its past four fiscal years, with a decrease of 18.6% in revenue from 2017/18 to 2021/22.

The company reported a £35.9m deficit in its most recent fiscal year, exceeding its operating gains from the prior four years.

Matt Walton, the senior data analyst at GlobalData, points out that the retailer is trapped between challenges related to both price and design.

“They’ve been outperformed in terms of pricing by brands like B&M, Home Bargains, and The Range, and when it comes to design, they struggle to match the likes of Dunelm or Ikea.”

From 2015 onwards, B&M, Home Bargains, and The Range — all in a phase of store growth — have surpassed Wilko in non-food market dominance.

Furthermore, during this timeframe, Wilko stands out as the only retailer among these not to have increased its market share, Walton notes.

Retail expert Richard Hyman concurs, saying, “Wilko represents a series of lost chances, and it must be deeply frustrating for the founding family to see the heights B&M and Home Bargains have reached.”

Structural issues

Hyman contends that there are core issues hindering Wilko’s progress. Among them is its choice of store location.

“Wilko primarily operates on the high street, and that’s been a misstep. A brand like Wilko doesn’t need high street presence. It’s more of a targeted shopping destination,” he articulates.

Charles Allen, a retail analyst with Bloomberg Intelligence, echoes this sentiment: “B&M has transitioned many of its stores to retail parks, which offer more convenience to many shoppers, particularly when purchasing larger items.

“While a significant number of Wilko stores remain in classic town centers or nearby shopping malls, such spots have lost their appeal as other businesses have shuttered or shifted to retail parks.”

Hyman posits that Wilko’s store sizes are excessive, and their high street locations inherently mean higher rent costs compared to those in retail parks.

Additionally, the retail expert notes an overly extensive product range in their stores.

“B&M and Home Bargains prioritize curated selections, zeroing in on fast-selling home goods. Their inventory doesn’t come close to the extent of DIY products that Wilko offers,” he remarks.

“Wilko holds onto an abundance of slow-selling items in areas where it doesn’t have a strong brand presence. The retailer should streamline its offerings to ensure quicker stock rotation. In the retail world, holding onto inventory for extended periods is detrimental – and that’s precisely Wilko’s predicament.”

It’s worth noting that the company has already initiated steps to trim down its categories, having phased out toys just the previous year.

The pandemic and cash crunch

The pandemic undeniably affected Wilko, with O’Brien noting the company “didn’t bounce back,” highlighting that after lockdown restrictions lifted, the business grappled with severe financial constraints that top leadership couldn’t mitigate.

Hyman observes that the pandemic might have “masked underlying issues and hid intrinsic vulnerabilities in several firms.”

“As governmental aid recedes, as landlords press for due rents, and as standard business dealings resume, these vulnerabilities are slowly coming to light.”

The strain on cash flow became apparent the previous year, prompting the retailer to enact measures to conserve it.

“There wasn’t an excess of available funds to genuinely reinvest to maintain business momentum,” says Patrick O’Brien. In the run-up to the festive season last year, the company postponed payments to suppliers and sought more flexible rental terms with landlords. Yet, the situation intensified when credit insurers Allianz Trade and Atradius withdrew their coverage in October.

Ever since, Wilko has faced tough times, with numerous suppliers requiring immediate payment for goods, a challenging feat for a retailer already grappling with financial constraints. This resulted in inconsistent stock availability throughout its stores over the past year.

While the retailer did receive a boost upon securing £40m from restructuring expert Hilco the previous year, it was insufficient to bring significant change to the business. This situation left the newly appointed CEO, Mark Jackson, who assumed leadership towards the end of the last year, with limited maneuverability.

“They lacked the necessary funds to genuinely propel the business forward,” O’Brien points out.

What next for Wilko?

While the retailer has engaged PwC as its administrator, there remains a glimmer of hope for a potential deal to salvage parts of the business.

Jackson indicates there’s been “considerable interest, inclusive of preliminary bids that align with our financial benchmarks to rejuvenate the company.”

Though an offer couldn’t be finalized quickly enough to provide the “immediate financial cushion” required, Jackson emphasizes they will persist with these dialogues, “hoping to finalize a deal that sustains the company.”

Conversations have been underway with private equity groups such as Laura Ashley’s owner, Gordon Brothers, Bensons for Beds’ parent company Alteri, and OpCapita, in addition to another competing retailer.

Hyman suggests any potential buyer would require “substantial resources, endurance, and a well-defined plan.”

“Given its current framework, expecting a distinct operational outcome seems challenging. The shortcomings are foundational. It necessitates a changed retail space and a reassessment of its product lineup. This demands time, especially within the relentless retail environment we’re seeing,” he comments.

Walton believes the retailer ought to “craft an attractive proposition to motivate customers to contemplate shopping there once more.”

“Infusing more design nuances can aid in realizing this goal, paired with enhancing the in-store ambiance and better aligning its online and physical store experiences.

“Without a lucid blueprint of its retail aim and a plan to execute it, Wilko might tread a path akin to Woolworths, moving towards obsolescence.”

Second last-minute bid launched to save stricken retailer

In recent developments, embattled retailer Wilko has received a potential lifeline, as reports highlight a second last-minute bid to rescue the chain. The news comes after the retailer went into administration just a fortnight ago, creating uncertainties for its 400 store locations.

With PricewaterhouseCoopers (PwC) at the helm as administrators, there has been a proactive search for potential bidders to salvage the brand and the jobs of thousands of its employees.

According to the Guardian, M2 Capita, renowned for its restructuring expertise, has proposed a substantial bid of £90 million. If accepted, this could see the entire Wilko chain continue its operations.

The GMB union, which represents a significant portion of Wilko’s employees, has been vocal about the need to prioritize bids that can ensure job security. “Any bid that guarantees jobs must be prioritised,” emphasized Andy Prendergast, GMB national secretary.

Addressing the situation further, Prendergast stated, “The devil is in the detail, but any bid that guarantees jobs must be prioritised.” Highlighting the broader implications of the retailer’s potential closure, he added, “Losing Wilko will not only put 12,500 people out of work across the country, but would also be another nail in the coffin of the high street.”

The news of this bid offers a glimmer of hope for the UK high street, at a time when many traditional retailers face significant challenges. As the situation develops, all eyes will be on PwC and the potential bidders to determine the future of Wilko and its employees.

The situation surrounding the struggling retailer Wilko continues to intensify. Recent comments urge PricewaterhouseCoopers (PwC), currently administrating Wilko, to prioritize the livelihoods of the workers over creditors’ interests. “PWC must recognise that creditors are not the only people with a stake on this – working people’s livelihoods must be the priority,” said a concerned party.

Adding to the plot, Canadian entrepreneur Doug Putman, notable for his acquisition of the music retailer HMV in 2019, was said to be tabling an offer for Wilko. However, sources from the BBC have cast doubts on its validity, suggesting it may not fulfill legal prerequisites.

Responding to these speculations, PwC termed the discourse around Putman’s bid as mere “speculation”. Emphasizing their role and dedication, a spokesperson elaborated, “Since our appointment as administrators of Wilko, we have been steadfast in our pursuit to secure a sale of the business, with active dialogues continuing with multiple interested entities.”

The spokesperson added, “Our primary objective remains to accomplish the best possible outcome for all stakeholders, with a special emphasis on saving as many jobs as we can. Naturally, we are also bound by our statutory obligation to serve in the paramount interests of the creditors as a collective.”

With regards to specific bidders, the spokesperson maintained a discreet stance, stating it was “inappropriate to comment on individual bidders or interested parties at this juncture.”

Wilko’s current predicament is even more poignant when considering its storied history. The chain has its roots going back over 90 years, starting from a solitary hardware outlet in Leicester. Inaugurated by James Kemsey Wilkinson in 1930, the inaugural store saw the light of day on Charnwood Street, operating under the banner “Wilkinson Cash Stores”.

Wilko: a brief timeline

May 2021: Amidst the aftermath of the Covid-19 pandemic’s “tough retail environment,” Wilko’s annual pre-tax profits suffer a downturn, with sales plummeting by £107m.

January 2022: Wilko discloses intentions to shutter 15 of its outlets in 2022, jeopardizing several jobs.

September 2022: In an effort to manage liquidity, the firm delays and prolongs supplier payments. For Christmas inventory preparation, Wilko seeks monthly rent payments from landlords instead of the usual quarterly arrangement.

October 2022: Wilko enlists consultation from Teneo specialists, aiming to identify cost-saving measures.

The company faces a blow as credit insurers Allianz Trade and Atradius retract their coverage.

November 2022: Amid escalating cost concerns as the holiday season approaches and the exit of managing director Alison Hands, Wilko endeavors to arrange an urgent £30m financial boost.

The retailer announces a distressing £36.8m loss for the fiscal year ending January 29, 2022.

December 2022: In the midst of ongoing refinancing discussions, Bensons for Beds leader, Mark Jackson, is announced as Wilko’s new CEO.

January 2023: Homebase and Cath Kidston proprietor, Hilco UK, extends a £40m financial aid to Wilko. In a strategic move, the retailer communicates to vendors that it will cease toy sales, pivoting its focus to garden and domestic products.

February 2023: Unveiling intentions to lay off over 400 staff to manage expenses, Wilko also reshuffles its top-tier executive team.

May 2023: Contemplating a Company Voluntary Arrangement (CVA), Wilko aims to reduce rental overheads and potentially shut down several outlets.

June 2023: Engaging real estate consultant CBRE to assist in negotiating rent reductions, preparations for PwC to oversee a potential CVA also commence.

July 2023: As the business scouts for novel financing sources and its proprietors weigh selling a significant stake, Hilco agrees to lend Wilko an additional £5m, especially given the firm’s acute financial strain.

August 2023: Designating PwC as its official administrator, Wilko’s move places a staggering 12,000 employment positions in a precarious state.


Wilko’s decline underscores the brutal realities many retailers faced in the post-pandemic landscape. From cash flow dilemmas to increasing competition and operational challenges, the brand struggled to maintain its footing.

The appointment of PwC as administrator marks a crucial turning point, with the company’s fate now hinging on potential restructuring or rescue endeavors.

As stakeholders scramble for solutions, the broader retail sector watches closely, understanding that Wilko’s journey might offer lessons for others navigating similarly turbulent waters

Insolvency & Restructuring Expert at Business Insolvency Helpline | + posts

With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.