Making Sense of the Past Seven Days

No retailer has managed to be successful over the past few years without being utterly ruthless about costs. At a time when businesses are under tremendous pressure and fixed costs have been outgrowing sales, no retailer can afford to have any fat in their business.

It has been an approach pioneered by private equity-owned retailers, but has spread throughout the sector and there has been no more successful exponent than WHSmithchief executiveKateSwann.

Swann has been praised by City analysts for reshaping a retailer many thought was in terminal decline. Even if like-for-like sales in WHSmith's high street business are slipping, the travel business continues to thrive and most importantly profits have gone up and up.

This has been achieved in two ways – by reshaping the offer away from the slowly dying entertainment category, she has driven up margins while refocussing on better performing categories such as books and stationery.

But there has also been an unremitting focus on efficiency in the business. No bad thing and to start with desperately needed. But Retail Week’s front page story today, uncovering a confidential union survey revealing deep dissatisfaction among WHSmith store managers, shows that she may have gone too far.

A retail business is nothing without the stores, and the stores are nothing without dedicated and committed staff. When you have 80 per cent of a survey of 300-odd store managers saying their business doesn’t care about them, the company has a problem.

These are not people just passing through the business, but seasoned retailers, two thirds of whom have been with the company more than 10 years. WHSmith's argument is that the survey is not representative of managers because only a third replied, but any HR expert will tell you that’s a pretty good response to a staff survey.

Swann can’t continue to grow profits forever by cutting costs. Getting the like-for-likes moving back up will be crucial and for that the stores will have to be onside. From the look of this survey, she has a long way to go.

For all retailers, adapting to life in the multi-channel age represents a huge opportunity, but a challenge too. If it’s any consolation though, it’s just as big a challenge for those of us in publishing.

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