UK retail giant trials ambitious plan

 

WHSmith, the UK High-Street retailer, is embarking on an ambitious project, trialling standalone stationery stores in an effort to stem dwindling consumer spending and reverse a 4 percent drop in 2006 stationery sales.
Group executive Kate Swann said: "In stores where we have excess space we are testing new ranges that complement our existing stationery offer. For example, we have introduced new ranges for the home office and new art and craft materials for all the family. We will roll out successful elements of these trials once we are satisfied they will deliver the return on investment we require."
The first of WHSmith’s four trial stores opened in Barnet, London, earlier this year and according to staff, the store has proved a huge success.
When the company announced its preliminary results earlier this year, it said that: "Our stationery trial store in Barnet performed well in the period and we will incorporate the findings into some of our standard stores. We will also expand the amount of space we dedicate to stationery and introduce new ranges through the summer period."
Sarah Heath, WHSmith’s head of communications and social responsibility, told OPI: "The purpose of the trial was to take lessons learnt across to our main chain. And that’s what we’ve been doing.
According to Heath: "Lessons learned have included bigger and more prominent seasonal promotional areas being located in the front of the store."
Because of the lack of public information concerning the trial, OPI visited the store to gauge the differences between the new stationery shop format and the existing format in place across the rest of the WHSmith chain.
In Barnet, the retailer, which has 3.3 million sq ft of selling space across the UK, operates two stores within a few hundred yards of each other.
The trial outlet, named WHSmith Stationery, Cards and Wrap, is approximately one third the size of its neighbouring sister store, WHSmith Books and Entertainment.
The standalone stores mostly sell stationery, although they also promote a small range of other products, including cards and gift wrap. At the back of the store there is an offering of art and craft products for both children and adults.
While the retailer is trialling the standalone stores, it has said that it plans to gradually shift emphasis away from its entertainment offering as it implements the separation of its retail and news distribution businesses to increase focus on the respective divisions.
"Stationery is still one of the core areas. Our products are stationery, books and news and the entertainment is gradually being de-emphasised" said Heath.
According to the company’s preliminary results for fiscal 2006, the retailer said that it focused on its core categories and "removed unprofitable categories, including electronics, which had a negative impact on sales but a positive impact on profit".
Commenting on product categories, new chief executive Kate Swann, said: "Over the course of the year we have made some key changes to our product categories. Many of these changes can be seen in stationery. WHSmith is synonymous with stationery and our customers expect us to have the most authoritative range on the high street. Our stationery range now includes many more price points from value lines at one end to premium lines at the other."
The company has added what it calls "missing essential products" such as archiving and storage, including the Snopake, Really Useful Storage, Centurion and ACCO Brands, and children’s correspondence to its product offering. It has also continued to launch new fashion stationery ranges including Punky Fish, Animal and Bratz.
Last year, the High-Street giant, which employs a workforce of 18,790, launched a total of 23 new stationery ranges including a new own label Basics stationery range, which includes of pads, paper, pens and recordable media.
The company’s efforts seem to be paying off. In a financial report released earlier this year, WHSmith confirmed: "Stationery gross margin improved in the period from the continued benefits of Far East sourcing, improved mix management and consolidation of suppliers."
Profits from High-Street trading operations increased by 14 percent to £42 million from £37 million in 2005.
In the second half of the year, three further standalone stationery-only stores were opened in Orpington, Bangor and Tonbridge to gather more data.
Although the number of standalone stationery stores accounts for only four out of 542 High-Street stores and 127 travel stores across UK airports and train stations, it is expected more resources will be invested in following up the trial. More information on the trial’s progress is expected in April when WHSmith will announce its next set of interim results.
Commenting on the challenges that lie ahead for WHSmith, chairman of the group, Robert Walker, said: "WHSmith benefits from a strong, well-established brand with good customer loyalty and leading positions in its key markets of news and magazines, books, and stationery. The challenge we face is to continue to reinvigorate the High-Street business through improving customer choice, range and value."