The Stationary
Stationer?
William Henry Smith Jnr was a marketing visionary.
When he joined the family firm in 1846, he realised
that the fast-growing railway network delivered
him a new market - customers on the move. He just
needed to be in the right place to sell them products
to help pass the time while in transit. So when
‘WH’ opened a stall at Paddington
- selling newspapers and letter-writing materials
- he called himself a ‘stationer’.
Not just a company, a retail sector was born.
For over 200 years, WH Smith has been part of
the fabric of UK high streets, railway platforms
and airport terminals. It’s a chain of newsagents
and booksellers with a turnover of £2.9bn.
And it’s a company in trouble:
- At the end of last year the former managing
director received £112,000 payment after
failing to get the CEO role. She was sacked
shortly after Christmas.
- The new CEO started in November and received
a welcome payment of £2.6m in cash and
shares.
- Over the previous six years the outgoing CEO,
now chairman, collected £4m in pay and
£5m in pension contribution.
- In January this year the company issued its
third profit warning, which it followed with
a six-month pre-tax loss of £72m.
- In June, private equity group Premira withdrew
its bid – and one of the few pieces of
shareholder good news for some time - on the
discovery of a £200m pension-fund hole.
To set all this in context, Richard Ratner at
retail analyst Seymour Pierce says that he has
been following WHS for 23 years: “They have
failed to make the profit figure we forecast at
the beginning of each year, 22 times.”
I’m not writing this because I have an
axe to grind: I’m not a shareholder; I have
no relatives at WHS (although my grandmother worked
in a branch about 30 years ago). Nor do I want
to kick a good man when he’s down.
But there are marketing lessons to be learned
from WHS that apply to any business. And you don’t
have to be an insider, or to read the company
history, to understand the problems it faces.
Just walk into a branch.
Go to your local shopping centre and take a look
at the book promotions, the piles of newspapers,
the lottery stand, the rows of magazines, the
racks of greeting cards, the pen-pencil-and-protractor
sets, the CDs, DVDs, games and Harry Potter paraphernalia,
and ask yourself:
“WH Smith – what are you for?”
Then, pick any three people at random going into
the shop and watch what they do. More importantly,
watch what they buy. More specifically, watch
what they pick up, fondle, browse, read and replace.
Then ask yourself: “What’s the customer
experience in visiting this store?”
(This straw poll is backed-up by WHS own figures.
It says that 70% of Britain’s adults pass
through its doors every year. But too many go
away empty-handed.)
What’s the Big Idea?
You can’t build a business by driving in
reverse, but we can learn lessons from past success.
William Smith had a Big Idea; he redefined his
father’s business and created a whole new
sector. Today, WH Smith doesn’t look like
a company with a Big Idea.
According to a recent statement to investors,
it wants to regain its position as the country’s
“most popular stationer, bookseller and
newsagent.” Hhmmm.
Over the past 20 years, WHS has lost ground to
specialist booksellers, specialist music and video
retailers, online vendors and – scariest
of all – supermarkets.
You pays your money and you takes your choice;
greater depth of offer, greater convenience or
lower price. Meanwhile, WHS finds itself in no-man’s
land.
Today, analyst Paul Smiddy of RW Baird says:
“WHS is one of those retail names that,
if it was not around already, you wonder why anyone
would bother inventing it today.”
Painful, but it’s an acid test worth applying
to your business while you drink your 5-minute
memo coffee:
- What’s the big idea that means we have
to exist?
- What do we do that the competition doesn’t?
- What value space do we occupy in the customer’s
mind?
Are we consistent?
Once you have the big idea – your big idea,
unique to your organization – ask yourself
how it manifests itself in front of the customer.
Is it real? Is it consistent?
Of course, the ultimate test for a retailer is
the shop, a three-dimensional customer experience.
The fitting, the stock and the staff all communicate.
I took a trip to Guildford to see a WHS ‘concept
store’. Wandering around and comparing it
my local branch, there is evidence of some interesting
marketing decisions:
- Separate different value: don’t have
£1.50 biros next to £150 gift fountain
pens; present them in different contexts –they
are different purchasing decisions
- Cross sell through bundling: rather than making
the customer go from one section to another
(card, gift, wrap) for, say, Mother’s
Day, bring them altogether into one area
- Improve the purchasing experience: okay, so
comfortable seating in bookstores is hardly
novel (excuse the pun), but to find it in a
WHS shop is a welcome surprise.
It’s all a very bold, brave step. Someone,
somewhere is trying to address the issue of what
the company wants to be, and how best to express
that to its customers.
Can partners provide value?
In the past couple of weeks, WHS has also announced
that it sees future in coffee and mobile phones,
with concession test sites for Costa and Virgin.
More value, more positive association (two great
brands joining the gang), more reasons for buying.
As a huge consumer of news, books, music, and
paper (and coffee), I watch WHS with an interest
that borders on obsession. The management are
currently wrestling some of the biggest issues
facing any business – and providing those
of us on the outside with a chance to reflect
of some of the basic questions that define success.
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