I know what went wrong at Wilko – the real reason it’s gone bust is actually why shoppers love it

According to one expert, WILKO is loved by thousands of shoppers, but the real reason it’s popular may be its demise.

The budget retailer has something for everyone to put in their carts, ranging from DIY essentials, cleaning products, stationery, kitchen and bathroom supplies, as well as snacks.

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So many were surprised when Wilko rushed into management after failing to reach a rescue agreement.

The fact that it sells a wide variety of items, rather than specializes in certain areas, may have been part of the reason for its demise.

Retail analyst Richard Hyman told The Sun: “I’m not sure if Wilko selling a variety of products will benefit customers.

“My view is that Wilko is good at all professions, not mastered at anything.”

While Wilko can be trusted to pick up almost anything, from doorknobs to pet food and cleaning suppliers to plants, this doesn’t make business sense.

That means many of the items left on the shelves tie up cash needed elsewhere in the business.

Wilko has 400 stores across the UK, most of which are on the main street – another big reason Wilko is so popular with shoppers.

But while this benefited shoppers, it meant Wilko had to pay high rents at a time when margins were low.

For some businesses, the location makes sense, but not for Wilko.

“The main streets are the most expensive places to shop, and the typical tenant will be connected in one way or another with fashion,” says Richard.

“Shoppers don’t really need fashion – they have to be convinced to want it.

“That’s why stores in conspicuous locations pay more, so passersby are drawn in – that’s really their shop window.

“Wilko doesn’t need those locations – or at least doesn’t need them.

“Most of its shoppers go there with a specific purchase intent – what we call the destination store.”

Other low-cost chains, such as Home Bargains and B&M, are mainly located in these suburban locations.

That means not only are rents lower than on the main street, shoppers are more likely to buy more and larger items – something Wilko hasn’t been able to take advantage of.

“Most of the businesses that sell the things Wilko sells come from retail districts, where rents are lower and there’s free parking,” says Richard.

So while high street stores are convenient for shoppers without cars, having large stores in expensive locations doesn’t keep Wilko in business.

But like many shoppers, he thinks it would be “regrettable” if Wilko couldn’t find a buyer.

“Hopefully it will find a new owner and continue to trade under its current name, but a lot of investors will be attracted by the opportunity to buy a large chunk of stock at a knock-down price,” he added.

“It’s possible that the business ends up breaking down.”

Why did Wilko go into management?

Wilko was founded as a hardware store in Leicester in 1930, but quickly expanded across the UK and now has 12,000 employees.

It launched a turnaround plan earlier this year after sales and shoppers came under pressure as consumer budgets were hampered by rising costs of living.

Wilko said it has seen “real progress” in many areas of its plan and significant cost savings, but has not been able to improve its financial position fast enough to avoid insolvency.

Administrators will now be looking for potential buyers for the company’s store real estate and its brand, while the stores continue to trade as usual for now.

Wilko, like many other high-street retailers, is said to have seen customer traffic plummet and has “shut down to its full potential”.

Chains have felt the pinch since the pandemic while shoppers are cutting back on spending due to soaring inflation.

High energy costs and the post-pandemic shift to online shopping are also having dire consequences, and many brick-and-mortar stores have struggled to stay afloat.

If you want to know how your local street is affected, you can check out our helpful guide to all the stores closing in August.

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