Interview: WHSmith duo Cowling and Keir – why our travel division isn’t grounded

“Is it too early for an espresso martini?” jokes WHSmith managing director for travel retail Toby Keir. “I spend my life in airports – I never know what time it is,” he explains, settling instead for a cappuccino. 

Pulling up a chair in Heston Blumenthal’s The Perfectionists’ Café in Heathrow Terminal 2, you’d be forgiven for thinking Keir and WHSmith chief executive Carl Cowling were about to head off on a business trip, were it not for their lack of luggage.

The coronavirus crisis has put paid to that, decimating footfall in airport terminals as the number of people travelling by plane plummets. 

But that hasn’t grounded WHSmith’s investment in its growing travel retail estate. 

Seventy-four years after it became the first ever retailer to open for business at Heathrow Airport, WHSmith has just launched its new-look store at Terminal 2, complete with a gift hall and book shop.

“We call the store ‘blended essentials’. If you go to an airport, it’s got everything you need for your holiday or flight”

Toby Keir, WHSmith

With the terminal’s Boots store closing its doors during August, WHSmith worked with Heathrow to conjure up a concept that includes a Well pharmacy and a health and beauty section selling 3,500 lines to help plug that category gap. 

The store, due to open earlier in the year but delayed by the pandemic, has been a year and a half in the making, and aims to bring several categories together to create a one-stop-shop for travellers. 

Categories combined

“We call the store ‘blended essentials’,” says Keir. “If you go to an airport, it’s got everything you need for your holiday or flight. We’ve got a great tradition in areas like books, magazines, food and drink – those are all big categories for us. We looked at health and beauty in particular, and if you’re going abroad it’s something you need.

“Our thoughts were having it all together would actually be a lot easier for the customer, as in our airport stores the average dwell time is around six minutes.

“Having everything together is actually really important because often you’re trying to get to your flight quickly – it’s difficult to get to four or five shops before your gate is called.”

WHSmith has separated the store into different zones, creating a shop-in-shop feel that guides customers around – a concept that, unbeknown to the planning team at the time, has become even more useful in a Covid-secure one-way system.

Customer numbers may be vastly reduced, but Cowling and Keir are pleased with early shopper reaction – net promoter scores were “way above 70” during its first two weeks of trading – and plan to roll the concept out to other travel destinations.

Despite the impact of the pandemic, WHSmith remains committed to opening its pipeline of new stores in travel hubs, although opening dates will hinge on how coronavirus plays out globally over the next few months. 

“Our ability to drive business in an arena where there’s fewer passengers will be much better than retailers who only have a single category”

Carl Cowling, WHSmith

Among the new locations, WHSmith is opening two stores with health and beauty sections in Manchester’s new Terminal 2 building, due to be the largest airport terminal in Europe upon completion.

Although the coronavirus crisis has clearly dealt a major blow to WHSmith’s travel division, with sales down 91% year on year at the height of lockdown, Cowling is already eyeing further expansion opportunities that have arisen from the current adversity. 

“I think, while we wouldn’t have wished this on ourselves, over the next couple of years there’s going to be a lot more opportunities for securing space in airports,” he says. 

“Because we sell a lot of different categories our ability to drive business in an arena where there’s fewer passengers will be much better than retailers who only have a single category.”

Cowling looks around Terminal 2, pointing to the John Lewis & Partners and Cath Kidston stores. Neither of them will be reopening, but those units will offer prime locations for other retailers looking to expand their travel footprint.

Similar stories will be playing out at airports around the world, Cowling suggests, and WHSmith appears well-placed to take advantage of that churn in terminal tenants – not just in the UK, but on a global scale.

Its reputation in travel retail was given a huge boost last year with the $400m (£312m) acquisition of US company Marshall Retail Group (MRG) – a deal that added 170 US stores, including 59 in airports, to its growing international portfolio. 

At the time of that purchase, MRG had plans to open a further 33 airport stores by 2024 – one of which, Gotham News by WHSmith, opened at New York’s LaGuardia Airport last month. 

The store is a nod to the DC Comics’ Batman movies, often filmed in New York City.

Opening such stores in major international airports is a far cry from where WHSmith’s international business was a decade ago, when it consisted of mainly UK shops, plus 10 in Denmark. 

It now has a presence in 32 different countries – and, despite the current issues plaguing the travel retail sector, Cowling believes its reputation as a business offering travellers “essentials” will allow it to expand further.   

“When we go out there and tell our story to international landlords, I think our ability to win more business will only increase,” says Cowling, who took the reins as chief executive from Stephen Clarke last November.  

“Landlords increasingly will be looking for something that’s more efficient for them, and that makes sense in this new world where passenger numbers are going to slowly increase, but it’s not going to recover to pre-Covid levels. 

“Most forecasts are saying that will happen in 2023, so retailers and airports need to do something very different in that time. Having a much better retail offer that draws people in is going to be much more important.” 

“It’s a very tough time out on the high street and we’ve worked pretty closely with our landlords to try to find a solution that’s right for us and right for them”

Carl Cowling, WHSmith

Cowling places great emphasis on WHSmith’s ability to work alongside landlords like Heathrow Airport in its travel locations, but such relationships with other property owners have seemingly become strained – particularly after the retailer demanded rent cuts across its high street portfolio amid the pandemic.

However, Cowling says the majority of landlords have been forthcoming in lease negotiations and maintains that WHSmith has a positive working relationship with high street property owners. 

“We’ve got a very good relationship with all of our landlords,” he insists.

“Unlike a lot of retailers, we’ve really thought through our property strategy over the past decade, so we’ve got a really short average lease length. We’ve been pretty good over the last few years about reducing our rents.

“It’s a very tough time out on the high street and we’ve worked pretty closely with our landlords to try to find a solution that’s right for us and right for them. I wouldn’t comment on any specifics, but I’d say that it’s quite collaborative.

“We’ve collaborated with our high street landlords, we’ve collaborated with our travel landlords, and we’ve built relationships with some of these property companies for over 100 years.”

Despite such co-operation from landlords to reduce rents, WHSmith’s high street stores have become an easy target for criticism over the perceived lack of investment in them. Indeed, images of below-par store standards have allowed the @WHS_Carpet account to become a Twitter sensation in recent years. 

Sales have been falling, too. Revenues from WHSmith’s high street sales tumbled 74% year on year in April, at the height of lockdown, although that rate of decline eased to 25% by July.

High street shops seem to have become the forgotten element of WHSmith’s estate, and even Cowling himself is quick to turn conversation back to the future of the travel division.

When asked whether the new-look Heathrow store could form a blueprint to revive its high street shops, Cowling says that it’s far easier to understand the customer journey in a travel store.

Adding a health and beauty section to its high street shops, he adds, would not work due to the immense amount of competition from other more established retailers in the category, such as Boots and Superdrug. 

While that rationale makes sense, WHSmith’s ongoing investment in travel retail seems somewhat at odds with its ongoing restructure. The consultation could result in as many as 1,500 roles being axed – the majority of which would be in its travel locations.

Cowling says the process, which he hopes to have completed by October, is a “very difficult” one, but insists it will be “for the good of the business” in the longer term.

“We can’t really control the number of passengers in airports or the number of customers who go on to the UK high street. What we can control, though, is the way that we lay out our products and the conversations we have,” he concludes. 

As Cowling and Keir focus on setting its travel division apart from the rest, WHSmith is banking on its airport stores not being grounded for too long.