RETAIL PAIN
Closing more WH Smith shops will leave a gap on the high street but there’s a reason shoppers have abandoned it
Watch the video to hear Ashley talk about high street troubles
WHAT was the last thing you bought at a WH Smith shop? A magazine, a newspaper, a vape refill?
Or were you ripped off spending almost three times as much on a bottle of water, packet of crisps or chocolate bar than you would in a supermarket?
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Because that is part of the reason WH Smith is planning to offload all 500 of its high street stores as it turns all its attention to its faster-growing travel business.
WH Smith benefits from captive customers - when people are trapped in an airport waiting for their flights or killing time in a train station due to delays - they have little choice.
It is easier for WH Smith to get away with charging sky-high prices for basics that would otherwise be available pretty much everywhere else when passengers are brain-numbed by staring at departure boards.
For the past 15 years, under Kate Swann, then Steve Clarke and now Carl Cowling WH Smith’s bosses have run its high street business for “managed decline”.
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They knew that there was little point in expanding further or investing heavily in its high street stores when returns (for its investors) were limited. It could be run for profit and cashflow rather than growth.
That’s not to say WH Smith hasn’t kept the high street stores going: A social media savaging by @WHS_Carpet prompted it to start spending on refurbishments especially when the City also read headlines about it being called a “national embarrassment”.
It recently added more food and Toys R Us concessions to shops to try and drive some more footfall.
Why are shops closing stores?
But it’s not dramatically changed its fortunes:
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This morning WH Smith reported that while sales in its high street business slumped by 6 per cent, its UK airport shops sales rose by 9 per cent.
In hospital shops - where patients and visitors also have little choice while waiting for treatments- sales were up 8 per cent and at train stations sales were up by 5 per cent.
The contrast is clear.
Meanwhile, WH Smith is galloping across the globe, buoyed by its rapid growth in US airports after two takeovers.
WH Smith is already being eyed by buyout firms including Alteri, Hilco and Modella Capital. HMV owner Doug Putman is watching the process closely and it’s expected a couple more names will join the sale process.
However, it’s unlikely that all WH Smith’s 500 stores will remain on the high street for long.
The retailer’s iron grip on costs means that it has managed its shop estate to have just two year leases. In the centre of Manchester there isn’t a WH Smith because the board couldn’t justify paying up when the last lease expired.
Expect its new owners to be even more brutal.
WH Smith store closures would leave another empty gap on the high street, making it even harder for their retail neighbours to capture passing trade.
It poses problems about the future of its Post Office shops and could damage newspaper and magazine sales further.
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But there’s no feel-good factor about visiting WH Smith.
People missed Woolworths when it shut for the pic n mix. It’s not clear what people will miss when WH Smith leaves town.
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