Taking Stores to Customers
By Bernice
Hurst, Contributing Editor, RetailWire
For those
who may not be familiar with the UK’s WH Smith, the chain stocks a combination
of newspapers, magazines, books, cards and stationery – plus some confectionery
and a few toys. Stores have traditionally been located in town centers
but, more recently, branches have opened in airports, train stations
and hospitals. Latest plans, just announced, are for stores in office
blocks.
The Guardian reported
chief executive Kate Swann’s conviction that there is potential for 80
such stores, each of approximately 1,000 square feet, carrying some 2,500
lines. These will mostly be confectionery,
stationery and magazines. Plans are based on similar success in 80 hospital
locations. The first office block store has opened in a building in Liverpool
where 2,500 people work.
Intriguingly,
Smith’s “annual profits, for the year to the end of August, were up eight
percent despite lower sales…with outlets at airports and rail stations
on the brink of making greater profits than the main high street chain,
even though they have just half the turnover and less than 15 percent
of the shop floor space.” In fact, operating profits at the travel division
have reportedly increased by 17 percent despite fewer air passengers.
Meanwhile,
perhaps because so many other types of off- and online retailer are providing
serious competition, “like-for-like book sales were down four percent” in
spite of increased margins. And fewer computer games and DVDs were sold,
partly because its distributor folded but also because Ms. Swann scaled
down emphasis on what was described as a “highly-competitive, ultra low
margin sector.”
High street
stores sell a wide range of newspapers, magazines, stationery, books
and entertainment products. Travel stores focus on a tailored range of
newspapers, magazines, books and confectionery more appropriate to customers
on the move.
For a company
that was created in the early nineteenth century, the early twenty-first
century focus seems to be more on taking appropriate product to customers
where they are likely to be rather than filling shelves and hoping that
they will come.
Discussion Questions:
Will taking stores to places where customers work make them more attractive,
popular and/or profitable? What do you think about WH
Smith’s airport and railroad stores being more profitable than traditional
locations and styles?
I think it’s a great idea to take stores where customers are, i.e., in large office buildings and other public places. For example, in Dallas, TX there is a bookstore in Infomart, a very large building that primarily houses IT companies. Many conferences and exhibitions/trade fairs are organized in this building which brings thousands of people on the property and as they go though the lobby they can not miss this bookstore.
WH Smith has a book stall on almost every railway stations in India. Some of the books you find in these stores are not available in regular book stores! That makes them special!
Those locations make sense for what WH sells. Will a mini Walmart work at an airport or subway station? Probably. Will a furniture or mattress chain sell a lot of merch at a train station? Maybe not. It really depends on the business model and I don’t think what WH is doing is new. If they have never heard the industry-specific technical term ‘location, location, location’ then there is a problem. A store that sells newspapers and magazines at train stations or high traffic office complex? I think we may be onto something here….
Smart retailers never play in an empty stadium and WH Smith doesn’t either. They are smart to operate where people are, providing they merge an appropriate and proper mix of products. WH Smith has both ordinary and unique offerings in their captive locations in airports and train stations, and they extract higher margins for that convenient service. They will continue to do that in the new locations in office compounds. WH Smith seems to know how to stay profitable, even as sales slip.
The methodology is about a captive audience. If they take stores to office buildings with lots of workers, it flows with the methodology. In shopping malls there are lots of choices and they would not be as profitable.
The ABC Stores in Hawaii are similar to WH Smith’s plan and there’s one on every corner. Their methodology is convenience and abundance of traffic.
Pop-up retail is hot right now and WH Smith may be able to take advantage of the trend. If these stores prove to be a viable alternative to mall locations, we could see a significant shift in the way people shop. I have three pop-ups in my neighborhood and they’re doing gangbusters business!
This makes all the sense in the world. Why wouldn’t a retailer take their wares to the customer, whether it’s business merchandise in an office location, or active lifestyle products at a major sports arena…or even a large urban park with hundreds of families playing soccer, baseball, etc?
The opportunities are endless, and I cannot believe this hasn’t happened in a more widespread manner. There are examples of this decades ago, so I guess it was perhaps before its time.
I’ll have to go along with those who feel that this (i.e. news vendors in a rail terminal/airport) is hardly an innovation…more significant–and troubling, I think–is the suggestion that town centers are no longer “the places where people work.”
This is almost a no brainer. Putting the product as close to the customer as possible has been a retail fundamental of the convenience store channel for years. This is just taking it one step closer, which only makes it easier to reach out and increase availability, ease of access, and purchaseability of key items. Easier access means higher velocity in purchasing habits, which results in repeat sales (i.e. more profits)!
Remember that WH Smith originated as railway station news agents/bookstalls decades ago – so there is nothing new in retailing.