I enjoyed reading Jonathan Eley’s Focus on Profits in the FTWeekend on 11th November.
It discussed the brilliance of the WHSmith business and sales strategy and those of you that know me know that I live a bit of strategy....
The article was titles “Discipline helps WHSmith stay streets ahead”
The theme of discipline in WHSmith stores is a great lesson for all businesses from start up through to multi- national level. How easy it is to become a magpie distracted by ‘shiny objects’ in business.
In 2001 WHSmith simply decided they could not do everything. They sold their publishing assets to Hachette Livre in 2004 and Kate Swann (Chief Exec appointed in 2003) had the foresight to develop the travel side of the business.
The ruthless pursuit of profit is an interesting lesson - as is their approach to productivity of space.
Most retail companies would be driven by chasing growth in sales - but Kate Swanns appointment led to a new strategy - one where the focus on profitability led to margins in the high street stores being doubled over the past 10 years. They also don’t bother with a digital platform - they rely on small and often purchases (impulse buying). The current Chief Exec Stephen Clarke explains they make the same profit on £10 of stationary as they do on £40 of newspapers therefore they increased space for stationary. The focus on profitability has doubled margins in the high street stores whilst so many retailers have struggled. They are also being ruthless on renegotiating leases.
These are my tips:
Know your numbers - do you have a totally accurate idea of what your profit/ loss is today and what will happen each day this week?
Know your margins (it’s easy to get caught out here)
Don’t follow the crowd - do what’s right for your business
Don’t be afraid to be different
Look at your own company - where are you most profitable? Where can you streamline? You don’t need to be in retail for these rules to apply - it works just as well for any product or a service industry.