There are not many things that surprise me in life – not these days, anyway – but one thing that does continue to surprise me is WHSmith. How does this horribly tatty shop continue to survive? Actually, not just survive, but thrive.
This week the retailer – complete with its notoriously grubby carpets – announced a £300m-plus deal to buy US-based travel retailer Marshall Retail Group, a business that operates 170 stores across North America, including 59 inside airports. A further 33 airport outlets are set to open by the end of 2024.
The deal is by no means done, and WHSmith said it would need to raise £155m of the cash needed to buy the business through an equity placing, with the rest coming via a new debt facility. But it is interesting – and encouraging, perhaps – to see a retailer in acquisition mode.
WHSmith is a special kind of retailer, however. It is one of the two types of business, or indeed products, that we as human beings will always need or want. The key to survival, according to one of my coffee business dates this week, is sex and time.
What? I hear you say. What is she talking about now? Well – so says my coffee date – there are two things we will always want in life: sex and convenience. We need the former to survive (as a species) and the latter because we are inherently lazy.
Therefore, if you are a business that is either sexy or convenient, you are way more likely to survive. If you’re both, happy days! It’s pure and simple Darwinism.
Now, WHSmith is clearly not sexy, but it has convenience nailed down.
Its travel business – which now extends to more than 586 shops in the UK and a further 433 units across the globe – recorded sales up by 22% in the year ended 31 August, with profit in that division up by 14%. What other retailers can we name enjoying those sort of double-digit figures? Maybe it is pretty sexy after all?
Sex and convenience. While a little crude, it is a great way to look at the world in which we now operate. If we think about the businesses that real estate is trying to serve, and the ultimate customer – you and I, the average Joe or Josephine on the street – it is exactly what we are after.
We have all become so horribly promiscuous. We see, we want, we take, we use, we get bored or see something better and move on. It is the world of short leases, the world of flex space, the world of online retailing, the future world in which we as a sector will have to operate.
It can be a scary world, not knowing if our tenant, or shopper, or employee is going to remain faithful to us, but it should also be an exciting world. The world of the chase, of making sure that we are continuing to offer the best (to be the sexiest out there) or to offer the most convenient solution.
If we are to do that, if we are to be the fittest that survives in this Darwinian environment, it will mean investment, hard work and vision. But it will also bring with it change and continuing improvement.
To send feedback, e-mail samantha.mcclary@egi.co.uk or tweet @samanthamcclary or @estatesgazette
