“Small companies should be on their guard,” says Fred Edwards, the founder of Henley-on-Thames-based interim FD service MyFD. “Although it’s sad that a great trading name like Woolies is bowing out, there’s a stark warning here that trading with high profile, established businesses isn’t necessarily going to secure your own commercial success."
While Woolies might have had a reputation among the general public as the “kind old granny” of the high street, Edwards says the retailer was like a wolf in sheep’s clothing, “ruthless in its dealings with suppliers who, it now appears, were subsidising a flawed business model.”
"Businesses seeking successful trading relationships with giants need to take a reality check: is this contract really so worth having that you can justify the margins you’re being asked to accept?” he says. “If not, take a deep breath and take your business elsewhere. Or you, too, could be a victim, not only of the credit crunch, but of companies that are far less secure than they look.
"With 30,000 employees in danger of losing their jobs and no chance of a government bail-out (unlike the banks), the only chink of light might come from the prospect of Woolies’ administrators being able to trade through the high-volume Christmas period.
“Let’s hope that there not hundreds of small suppliers who will also pay the ultimate price."