Editor’s introduction: Global travel retailer WHSmith recently revealed preliminary results for the 12 months ending 31 August, with revenue up +7% to £1,918 million (US$2.4 billion) and Travel division revenue climbing +11% to £1,466 million (US$1,860 million). Within this, Travel UK revenue rose +12% to £795 million as trading profit from its largest market surged +20% to £122 million.
Group Chief Executive Carl Cowling hailed the “particularly strong performance” from the UK Travel business, saying it benefitted especially from the roll-out of the ‘one-stop-shop’ format now in place at some of the UK’s leading airports.
A prime example of the concept’s impact is at Birmingham Airport, where a 6,000sq ft blended essentials store opened just over a year ago. Encompassing health and beauty, technology, destination merchandise, food to go and coffee, a Well Pharmacy recently opened to round out the offer. Birmingham Airport is now among WHSmith’s top-performing stores in Travel UK, with revenue increasing +40% as a result of the new format.
Category development is another strategic pillar in driving transaction values, with health & beauty a growing platform and food – a core business for WHSmith for over a decade – now representing 15% of revenue in Travel UK. With a post-pandemic shift to more leisure passengers across the air channel, longer dwell times have lifted demand for improved food offers in the airport space, which the retailer has seized on to develop its own portfolio including a new in-house brand, Smith’s Family Kitchen (more on this below).
After the results announcement, we spoke to Travel UK Managing Director Andrew Harrison about performance, consumer trends and evolving the one-stop-shop format.
Harrison echoed the words of CEO Carl Cowling by saying that WHSmith is now in its “best position ever” as a global travel retailer, with that status reflected in double-digit growth in Travel UK sales and profits.
He says that the development of formats and ranges have been the major drivers behind that performance.
“We can look at locations such as Birmingham that were new a year ago and point to a really strong performance since, which just underlines the power of the blended essentials format.
“On ranges, we have worked really hard during and since the pandemic to ensure that as we get more passengers coming through, that they are adding more to their baskets. That’s where the emphasis on food, on health & beauty or on tech really shines and its shows that the strategy is working.”
Elaborating, Harrison adds: “If you make the decision at the airport to go into a shop and buy something you have to go through the till process and you are using some of your valuable time to do that.
“What we are saying is if you make that choice to come and buy your essentials, you can be more productive and get all of them in one place. And the layout and environment we have created is working, and so too is how we have constructed the ranges.
“We have long been known for books and for magazines, and we’ve had to work very hard to build our reputation in health & beauty, in food, and latterly in consumer electronics. Giving more people more reasons to put something in their basket is what is driving the average transaction value.”
Returning to the Birmingham Airport example, the store flows from health & beauty into gifting and souvenirs, food & drink snacking, meals to go, reading materials, electronics and coffee before self-service tills at the far end.
Twelve months on, Harrison says that most categories have worked well, and the addition of Well Pharmacy has also enhanced its appeal.
“Having that green cross as the pharmacy symbol outside the store is universally understood, and it has helped to attract people not just into pharmacy but to create an understanding that this is also a full health & wellbeing store.
“In the health & beauty baskets, one-fifth of the products that are purchased could not have been bought in a traditional pharmacy environment, so we are gaining customers.
“We have learned a lot about that category now, and we are adding capsule ranges in health & beauty to all our stores of every size, because it just works. It means that every time you go into a WHSmith, you can be confident you’ll have the basics wherever you go.”
Of the other growth categories, food also stands out strongly in the blended essentials stores.
“We have seen food, alongside health & beauty, create real impact at the front of the store, and that also benefits other categories from books to destination.”
The impact of the new space has seen Birmingham Airport rise from number 15 in sales terms (within UK Travel) to number three for most of the summer and closing in on number two at certain periods.
One important element of the one-stop-shop approach is that the offer is tailored for the traveller, not simply picked up from the company’s extensive high street offer and replicated in air or rail.
Harrison says: “In Birmingham we’ve got probably 3,000 SKUs and all of them are bought by our team for their relevance. What we have seen is that people who come in to buy a suntan lotion then move across to buy a book for their holiday, which shows the value of adjacencies rather than forcing people to buy those categories in separate stores.
“Whether it’s in UK Travel or our international portfolio, we are always looking through the lens of what is right for the customer, not just at an airport, but at each stage of the airport journey. What a passenger or a member of staff might need in the landside environment is going to be very different to a first-hit store or a main store airside, or even stores on the satellite or at the gates.
“It’s about understanding and adapting to what they need at that moment in time – it’s certainly not about squeezing in your high street offer. It’s only really in the travel space where the suntan lotion, the book, the headphones, the food to take onboard and the snack to have when you’re there all make sense under one roof.”
In its results statement, WHSmith highlighted the opportunity to scale the one-stop-shop format to many types of locations – but how can this work profitably in smaller stores, we ask?
Harrison says: “We have to be able to work in smaller footprints as not every store is the size of a Birmingham or a London Stansted shop. Here the capsule collections work very well. In health & beauty these can fit into as little as one square metre.
“In a large store you might want to choose from a wide array of products. But actually, there are times when you just need a blister plaster or headache tablets or suntan lotion, and those items are available everywhere in our business.
“Probably the best example of a smaller scale is not in airports, but rail. At London Euston Station we have a much smaller footprint but we’re able to drive great sales densities and be really relevant to a rail customer who has only got ten minutes to shop versus the 40 minutes to an hour you might have at the airport. And one-third of that Euston store is given over to health & beauty.
“Just recently we opened at London Kings Cross Station, where we also have a strong, relevant health & beauty in a small space. Charing Cross Station in London is another exciting development where we have taken an airport approach to a smaller footprint.
“So this format does not just have to be about large environments, it’s more about relevance and being proportionate about the ranges within the space you have. We are demonstrating that from a format perspective, in the future, every store will be a one-stop-shop.
“And we’re talking to a whole range of airports of different sizes and scales about how we can bring the concept and make it relevant to their airports and their store environments.”
Among the intriguing recent developments at WHSmith Travel is the creation of an in-house food brand under the Smith’s Family Kitchen name. It’s a project that helps the retailer take more ‘ownership’ of the fast-growing chilled food market, says Harrison.
“Food is a strategic category for us. We now sell 11 million meal deals a year. We have 95,000 combinations of meal deal, blending different sandwiches or main meals plus a snack and drink.
“But as food becomes a more important part of our business, we also felt we needed something that was ours to develop and nurture.
“We asked ourselves what we want to be known for in food, how we build a reputation and how we invest in that with food quality. We spoke to a lot of customers, many of whom said that if you’re taking that route you have to put your name on it. We went to a creative agency and Smith’s Family Kitchen was the name that resonated most with our customers.”
The reaction, says Harrison, has been nothing short of “phenomenal”. WHSmith has launched 34 products to date under the brand name, most of which are available under its meal deals. There are other variations too, with a premium range of products that allows shoppers to step outside of the meal deal. The branding also helps build a coherent look to the offer rather than the jumble of products that one sometimes encounters on chilled food shelves.
“Ultimately this helps us build credibility with customers in what is such an important space,” says Harrison.
Across the entire chilled food offer, the BLT sandwich remains the best-performing item, and the best-selling combination most weeks is the chicken salad sandwich with ready salted crisps and a bottle of water.
And Harrison’s personal favourite? “I love the Korean barbecue wrap, which is absolutely delicious. In the new ranges we have launched for Christmas, we have some brilliant products. One I am delighted to see is miso chicken in a brioche bun, which is something we have not done before but says something about how we are elevating the offer.”
Looking to 2025, WHSmith Travel UK will open ten to 15 stores across air, rail and the hospitals channel, alongside a number of refurbishments.
“With airports we are looking at opportunities where we can make investments and stretch the offer just as we have been doing recently,” says Harrison.
Behind that plan for expansion lies what Harrison terms the “obsession with driving average transaction value and spend per passenger”, aided by a relentless focus on both format and range.
“The key is to really understand customers better than we ever have before. In the last 18 months we spent over 10,000 hours listening to our customers and understanding what they want, and that has been the power behind us.
“That’s our job. The job of the airport is to bring the passengers. The job of the retailer is to convert those passengers, giving them what they want as part of a great experience, so hopefully we in turn can pay more rent to the airport so they can continue to invest in the infrastructure.
“And as long as airports keep up the momentum in terms of passenger numbers, we are confident of keeping the momentum going in terms of spend per passenger growth to go alongside it.” ✈