Woolworth In Palma

In August 1965, "The New York Times" ran a short news report in its business section. It read: "The F. W. Woolworth Co., which operates the country's largest chain of variety stores, announced Wednesday that it would open a store chain in Spain and also import Spanish-made goods for sale in its stores in the United States, Canada and elsewhere. Robert C. Kirkwood, chairman, said Woolworth had obtained approval from the Spanish government to form a wholly owned subsidiary in Spain for both ventures. The plan is still in a formulative (sic) stage, so few details are available, another Woolworth executive said. Woolworth's decision to enter the Spanish market resulted from the company's studies and surveys of foreign markets, Kirkwood said."

Robert Kirkwood has gone down in retail history as one of the great CEOs and visionaries. Five years before this announcement, he had issued a warning to the UK Woolworth company. Despite the fact that it was then the second largest stock on the London Stock Exchange (only ICI was bigger), Kirkwood could sense where retailing was heading. The UK management mostly ignored him. The seeds of failure that took fifty years to grow into one of the most spectacular business collapses ever had been sown then. Inept and conservative management was to destroy Woolies.

But Kirkwood didn't necessarily get everything right. Almost five years after the announcement, Woolworth stores began to open in Spain. There were to be grand shops in Madrid, Santander, Alicante, Malaga, Granada, Cordoba and Palma. In 1972, what had been Granja Reus - founded by Gabriel Reus in 1935 - became Woolworth. It was located where Jaime III becomes Unión by the Plaza Juan Carlos I, then known as Plaza Pio XII, at the top of the Borne. Today, the store is C&A.

Eight years after it had opened, it was to close, as were the other Woolworth stores in Spain. In August 1980, "El País" had reported that the future of the 565 Woolworth employees in Spain were under threat because of the "serious financial crisis" that the Spanish company faced. Workers, said the UGT union, were putting this down to "poor management". A few weeks later, at the start of October, "El País" carried the news of the closure. Agreements had been reached to pay off staff and they would cost the company more than two hundred million pesetas. The serious crisis that the stores had faced amounted to debts of 150 million pesetas in unpaid rent, a debt to Banesto bank of 110 million pesetas and a further twenty million in unpaid invoices. These were a lot of millions, though at the rate of exchange when the peseta eventually became the euro, the debt was equivalent to almost 1.7 million euros. But that was in 1980.

What went so wrong? Was it a case, similar to the UK, of poor management, as the workforce suggested? Was there some resistance to what was the first major foreign retailer? As far as this was concerned, it doesn't appear to have been. In the Palma store, the whole island flocked in. They loved Woolworth, but it may have had more to do with the fact that it was the first store to have escalators. People would come to ride them. They didn't always spend money.

But actually they did. In the first financial year from when the Palma store opened and until 1975, the Woolworth operation in Spain recorded profits of getting on for some 100 million pesetas. After 1975, however, the rot set in. That year may just give a clue. Woolworth, never exactly known for being upmarket, may well have appealed to a still Franco-era Mallorca and Spain. Yet it would have appealed only so much. There was already a demand for elegance in clothing that Woolworth may not have been able to satisfy. With political change would have come greater demand for liberated and new design, while the Woolworth store in Palma had suddenly been confronted by a competitor. In October 1974, just a short distance away on Jaime III, the grand Spanish department store, Galerias Preciados, opened. (It was to become El Corte Inglés some twenty years later.)

Product ranges that weren't, so I've been told, terribly interesting or exciting, the arrival of competitors, the changes in society. They probably all conspired to create the debt that was to finally devour Woolworth. Kirkwood had misread the signs and the market surveys. After the Palma store closed, it was to be three years - 1983 - before C&A moved in.