WHSmith is selling its high street business to focus on its successful travel operations—notably the US, described by the retailer as its “most exciting growth market”
The shift comes amid global disruption precipitated by president Trump’s confrontational polices, but WHSmith chief executive Carl Cowling is unfazed and tells Retail Week why.
North America is the world’s biggest travel market and WHSmith sees “significant market share opportunities” and “excellent prospects” to expand its airport business at what is its second largest division by profitability after the UK travel arm.
Space growth, increasing average transaction values through initiatives such as range development, developing categories such as food to go, health and beauty and tech are among the growth drivers.
But could bold Stateside ambitions be undermined by Trump, who has upset many other nations through an abrasive attitude and the imposition of tariffs?
‘Insulated’ from tariff troubles
Cowling is confident that the convenience and needs-based driven nature of WHSmith’s US business will protect it from any tariff impact, as will its supply chain.
The average transaction value in the US airport stores is less than $20. Cowling says: “A bit like in the UK, we’re not a luxury retailer—we’re a low ticket-value retailer.
“We’re selling things to people who are consuming and using those on their journey. It’s very much a need-based range that we sell to US consumers—a lot of food, snacking, drinks, all sourced within the US.
“The tech accessories that we sell in InMotion stores are all about chargers, cables—even the headphone market is largely a replacement market. People are buying those products because they need them for their journey. We’re not selling MacBooks, we’re not selling iPads, we’re not selling watches or phones. So I think we’re much better insulated than other retailers.”
WHSmith does not import much from China or Asia, and that means the retailer can seek the best deals when necessary. Cowling says: “We’ve got a number of options for sourcing in our US business. We’ve got that sort of buffer in the middle, with wholesalers that we can trade between to work out how we maintain the best possible ranges.”
What are the implications of recent declines in overseas air travel to the US?
While wider international air passenger numbers are forecast to double over the next two decades, there are some signs that overseas visitors have started to draw away from the US specifically.
Visitors from overseas to the US, for instance, were down 12% year on year in March according to Financial Times analysis. It was the biggest fall since the aftermath of the pandemic in 2021. The US Travel Association has signalled “concerning trends” because of “a question of America’s welcomeness”.
However, Cowling points out that more than 80% of flights in the US are domestic. He says: “Our new stores are largely in domestic areas—so LaGuardia, our big site in Newark, those are all domestic passengers. We’ve got big operations in Kansas and Denver, which are largely domestic.
“In terms of the vagaries of what does or doesn’t happen with international traffic, it’s quite minor for us. I think we’re pretty well sheltered.”
How space changes should drive the business
Away from debates about the fallout from international relations and trade, WHSmith is focusing on extending its store estate and making its US shops as compelling as possible.
The retailer has a new store pipeline of approximately 70 branches opening over the next two years or so, and it expects to close about 20 as it seeks to improve the quality of its space.
The core of the business is the Travel Essentials format. By 2028, WHSmith anticipates operating around 500 of those, by which time it is targeting a market share of 20%, and air is expected to account for 85% of the North American business.
Cowling says: “We’ve got 200 stores that have been open for more than a year. We’ve crawled all over the data and broadly the theme that’s come out is that the intense areas are chillers, where we sell food and drinks, and all of the snacking areas.
“The less intense areas are some that we devote to souvenirs. What we’re trying to do is to respace more towards food, snacks and drinks, which is similar to what we’ve been doing over a number of years in the UK. We know that works.”
A ‘scaleable’ travel business
As WHSmith prepares to say goodbye to its UK high street business, Cowling believes the travel division is well positioned to grow.
He maintains: “The prognosis for our travel business is good. The trend of passenger numbers is to grow as population and economies grow.
“In all the markets that we operate in—the UK, America, and the rest the world—we’re pretty confident that we can continue to grow. For us it’s about improving our spend per passenger, improving the range that is in front of consumers, getting more people into our shops, and then getting more products into their baskets.
“It’s a highly scaleable business and we’re pretty optimistic about the future, even though there is a bit of economic uncertainty out there with all the things that are happening on a geopolitical level.”
No comments yet