by Kate Pritchard - Thursday, 27th November 2008 -

The collapse of Woolworths and MFI has sent shockwaves through the high street, spelling even more doom for the beleaguered sector during the crucial Christmas trading period.

Woolworths, which opened its first British shop almost 100 years ago, will close down its 800 outlets. Despite the intervention of Baroness Vadera – who ordered Woolworths’ banks back to the negotiating table to try to stave off collapse – the retailer will be forced to axe 30,000 jobs.

Meanwhile MFI, the kitchens and furniture retailer, also called in administrators, raising questions over roughly 1,200 jobs.

The collapse of these stalwarts could spark a price war on the high street as the retailers’ administrators slash prices to avoid being left with piles of unsold stock.

"While a price war is good news for the consumer, it is likely to be very bad news for small high street shops," comments Phil Orford, chief executive of the Forum of Private Business (FPB). "We are campaigning for fair competition for smaller retailers, which is particularly important at this time. Christmas should be their busiest period and set them up for the year ahead.

"All retailers are having to battle hard for custom, and bigger chains are more able to discount their products in order to attract customers than their smaller competitors. That is why we are calling on Christmas shoppers to support their local businesses – and their local high streets – this year."

Not all entrepreneurs are despondent over the recent high street closures. "It is tough out there but it is not all doom and gloom," says Green Baby founder Jill Barker, who has just opened her fifth babywear store in Reigate, Surrey. "For the smaller business there are still opportunities: we are nimble and can react quickly; we respond to market conditions; and we are much more aware of changing consumer demands.

"What is most important though is that we continue to offer a point of difference. As long as we do that the customer will respond."

We bet Sir Alan Sugar is seething over the closure of Woolworths. The Amstrad founder and Apprentice star acquired a four per cent stake in the company in October – despite the fact that the ailing chain had reported pre-tax losses of almost £100m in the first half of 2008.

We hate to say "I told you so", Sir Alan, but we knew it was a ridiculous move.

Related articles:
Woolworths rejects bid from Icelandic entrepreneur
Stop press: Sir Alan Sugar's bought into Woolies

Picture source