Finance Finance News Big W launches massive sale as store closure rumours circulate

Big W launches massive sale as store closure rumours circulate

big w
Woolworths is yet to name the 30 Big W stores to shut up shop. Photo: AAP
Twitter Facebook Reddit Pinterest Email

Big W has launched a massive two-day online sale, adding to speculation the national retailer could be looking to close more than 50 stores to boost its profitability.

On Tuesday morning, Big W kicked off its ‘click bonanza’ online sale, slashing prices across a range of products.

Well-known brands including Lego, Dyson, Nespresso and others were included in the sale, with some discounted by up to 50 per cent.

It might be good news for shoppers but it comes after reports that Woolworths, which owns the embattled business, could be forced to close as many as 60 of the chain’s 183 stores.

The report came after comments made in a Macquarie Bank clients’ note last week.

Responding to questions from The New Daily, Big W said the sale was one of several online promotions and not related to news reports on the speculated closures.

But Big W would not rule out the possibility of the closures, with a spokesperson saying the company has not made any decisions regarding the future of the chain’s existing locations.

“At the Woolworths Group Half-Year Results in February, we announced a review of our Big W store and distribution centre network,” the spokesperson said.

“The review is ongoing and no decisions about our network have been made. We will update our team members and the market once the review has been completed.”

Sales offer other perks

According to David Kindl, chair of retail business consultancy Retail Doctor Group, a sale of the magnitude of Big W’s click bonanza doesn’t necessarily indicate the chain is looking to close some of its locations. But such a sale could be a useful strategy if stores were being closed.

“It can liquidate a lot of stock if they’re over-stocked, and it gets customers into the store,” he said.

But Mr Kindl was quick to point out the other benefits a business like Big W stands to gain from a story like this: The publicity it generates.

“Big W is competing in the same market as Target and Kmart, and this sale is very clever because it’s got them a lot of advertising in the mainstream media for having the sale,” he said.

“This may be just part of their strategy to get noticed in the low-cost environment. The risk they run is that doing sales like this may mean consumers wait for discounts and not shop at normal prices.”

Turning a corner

Despite being a household brand, Big W has long faced challenges in the market, including stiff competition from similar retailers such as Target and Kmart – the latter even making offers to Big W landlords to take over its stores in 2015.

But the past 12 months have seen the chain start to improve, according to Mr Kindl, and the “effort and resources” that have been put into fixing the business may have helped it turn a corner already.

Woolworths noted in its 2018 annual results that Big W stores generated sales growth of 0.9 per cent in the 2017-18 financial year – a feat the business hadn’t achieved in almost a decade.

That doesn’t mean stores won’t be closed.

“Every retailer has strong stores and weaker stores, and it’s quite normal for retailers to close their worse-performing stores and put more resources into the ones performing well,” Mr Kindl said.

“It all depends on Big W’s strategy for how they’re going to position themselves in a very busy market and whether all the stores go with them in that journey.”

View Comments