WH Smith once again have given a great lesson in how to survive in a changing market with their recent Christmas trading report. Group chief executive, Kate Swann said: “During the period we saw a resilient performance in challenging trading conditions. Gross margin was in line with plan and costs were tightly controlled.” With their high street store reporting like for like sales down 5% and the travel division reporting like for like sales down 3% they yet again have shown that any business needs to exert an iron grip on costs. The company’s record on this is not new as they have managed their declining sales since 2008 and increased their net profit each year.
So what have they done and can you copy them? They have refocused their range to increase gross margin this has been done by reducing their lower margin product like CDs and DVDs. They have also relentlessly looked at how they operate centralising tasks to reduce branch cost and staffing levels. This clearly has changed the customer experience, but as their results show their efforts have produced a significant increase in net profit year after year. They have also looked at store layout with higher margin product, greetings cards and stationery being moved near to front of their stores. They also chase the extra sale both in what they display to customers in the till queue and with their till staff offering an extra ‘opportunity’ to every customer. Interesting. So what can you learn from WHS? Look at your product range, is it fit for purpose, which categories are failing to deliver, which products are falling to sell? Look at how you operate, does your staffing roster match your customer demand, are you undertake tasks that were needed in the past but are no longer appropriate, do you buy services that you can do yourself? Look at where your profit comes from. Do you plan your shop to maximise profit, do you train your staff in ‘conversational selling’? If you look at the WHS survival and recovery programme since Kate Swann became group chief executive and the annual accounts are on the investors page of their website there is much to learn. I think it’s worth a look.