You Know What WH Smith Isn’t? Losing Money

From our special correspondent, Wessex Man:

Following on the heels of a Which? report where Which? readers voted WH Smith the UK’s worst high street shop, comes an article in The Spectator bemoaning its current state by Professor David Butterfield

How things have slid. Twitter is no metric for serious analysis but it can provide a telling sign of the times. While the official @WHSmith has attracted an average of 6,000 new followers each year since 2009, a rival grassroots account, @WHS_carpet, has been picking up 2,500 a year since 2013. The first account promotes the products and activity of the company proper. The second, increasingly popular feed is devoted exclusively to showcasing the decrepit, chaotic and insulting state of WH Smith stores: more than 8,000 ‘followers’ (read ‘disgruntled customers’) regularly display the sorry results of underinvestment twinned with greed.

But where it really counts, WH Smith haven’t slid. Because the thing that trumps all else has improved, and that is that WH Smith is no longer making a loss. The version of WH Smith that the professor of classics doesn’t like was. The effects of Amazon and others on their trade. Then, about a decade ago, after some years of losses, they brought in Kate Swann from Argos who removed a lot of things that weren’t making much money and replaced them with things that did (I should declare at this point that I once did some work for WH Smith). They became a profitable company.

I don’t think many people get this, including many of the wonks that analyse businesses:-

Bryan Roberts, the insights director for TCC Global, said WH Smith’s tactic of incentivising staff to sell shoppers extra chocolate bars, take coupons for McDonald’s or encourage them to use automated tills is not shopper-friendly.

“If you are an investor then WH Smith is one of the best retailers in the country; its share price performance and profitability are a huge success,” he said. “But a lot of its practices don’t sit well with customer service.”

But if you’re getting a huge success, well, frankly, who cares? Customer service is not the end goal. You might need good customer service to make a profit. If you’re a Michelin star restaurant or a Savile Row tailor, people want excellent service and are happy to pay for it. But someone buying a Cosmo and a pack of chewing gum on their lunch break probably doesn’t care that much. And spending money on service is going to be wasted. We can even look at the evidence of the evolution of retail, from ironmongers giving personal service to the Argos-like sales at Screwfix to see that people will forsake service for price and other things.

Because ultimately, profit’s what matters to shareholders. They won’t be kept in comfortable retirement by the approval of classics professors, tweeters, insights directors, Which readers, David Cameron or thousands of Twitter users. Whatever people think of the shops, they’re making good profits. Probably not from Which readers and classics professors, but clearly, some people are happy shopping there.