WH Smith’s travel business which operates in locations such as airports, train stations and hospitals continues to serve as its cash cow.
Like-for-like travel sales were up 4 per cent and profit by 9 per cent to £87 million in the last financial year. And the company should see comfortable growth next year due to increasing passenger numbers and a growing UK and international store portfolio, as well as its achievements in property contract renewal.
WH Smith is also investing in its staff to improve customer service which should also drive sales as it is a particularly vital aspect of the shopping experience for the cash rich, time poor target market.
While a rigorous cost-saving plan has bolstered high street profit growth to 5 per cent, WH Smith was unable to recover sales in that division in the second half, leading like-for-likes to decline 2 per cent and serving as a reminder that a change of strategy is needed to bring the channel back to growth. Though this will be a challenge, the deal to relocate up to 61 Post Office concessions within WH Smith stores by March 2017 should help position the retailer as more of a shopping destination, increase footfall and drive impulse purchases of packaging and stationery.
High street sales have been driven by books and stationery, continuing consumer demand for colouring books and products and the success of the exclusive Zoella Book Club, all initiatives that WH Smith should continue to focus on to build destination appeal for its high street stores.
WH Smith has identified space management as a key focus in both its travel and high street channels, which has already proved effective with sales of stationery by moving products to the front of High Street stores. The retailer should continue to invest in customer service and space optimisation, while monitoring new entrants to the Stationery market and ensuring its ranges are adapted and updated to cater to changing trends and consumer preferences to retain market share.
- Sarah Johns is an analyst with Verdict Retail.
