The owners of WH Smith’s former high street empire have parachuted in a team of corporate troubleshooters less than a year after taking over the chain.
The Telegraph understands that private equity firm Modella Capital has asked advisers at Teneo to come up with a restructuring plan that will put the business – now trading under the name TG Jones – on a more sustainable footing.
Of course, this is why Smith’s sold them anyway – it’s a difficult line of business these days. But no doubt we’ll soon enough see people blaming private equity rather than the tough line of business.
I suppose ‘sell stuff at the price people want to buy it and make the outlets pleasant places rather than cluttered with confectionery stands’ isn’t something they are looking into?
The books-confectionery-magazines-stationery-cards offering might work in airports and rail stations but it’s largely redundant on the high street.
That’s the bit that Modella don’t own. They’ve only got the High Street stuff.
The nearest is half-an-hour’s walk away and I used to go in a couple of times a year to buy a map or an odd bit of stationary or a greeting card. I shall regret its disappearance but only when I norice.
I think these revolutionary ideas would be going too far for them.
WHS has suffered years of under investment so the stores weren’t places people wanted to visit. Plus cards, stationery etc could be bought on line or at the supermarket.
The only part of the business that made money is WHS Travel – and they kept that bit.
One has to wonder why private equity types are considered to be so clever (and well remunerated) when they keep buying complete turkey businesses for hard cash. Modella paid £40m for the high street retail arm of WH Smith.
Why would I go into a WH Smith? I haven’t bought a paper or mag in years; have no interest in their junk confectionery or food, and no longer use stationery.
The only one I’ve been in within probably 20 years is at a service station, and I think they are the ones that weren’t sold to Modella, being part of the travel arm.
My mother uses the local WH Smith for greetings cards. I sometimes drop in when I am visiting for the same reason, or to buy gift wrap. I see people in there buying sweets, the odd paper and cards. So we have a large store on the high street, selling much the same stuff as the front bit of a supermarket. Not sustainable.
As someone who once did some work for them, the problem with the high street stores isn’t about how the stores are done, or underinvestment. They’re a largely redundant business. Like silkworm farmers and messenger boys.
If you look through any of the accounts from the past decade, nearly all the profit came from the travel stores.
Yup. What’s the point of them?
They were still making a profit when I did some work for them, but the market is getting older for what they do. The stores are eventually going to the wall.
WHSmith themselves, however, are quite cheap.
Well, if the people blaming private equity for this are its investors, then fair enough. Whether there’ll be enough doing so is really just a question of numbers, Tim.
Presumably the remuneration of private equity types depends on doing deals. Incentives matter!
Doing deals both in terms of buying them and then selling them for a higher price. So their incentives are very well aligned. (They can still be idiots of course but that’s difficult to solve for)
I went in the former-WHS in Sheffield last week, and it was nearly deserted. Ok, some of that is because the council is blanket bombing the town centre, but the shelves themselves were half empty. They had enough content for a lock-up in a three-floor 30-foot by 90-foot site.
Sheffield city council has been waging war against its own centre since long before I was working there, and that’s almost 30 years ago.
Ah, enlightenment! I saw a ‘TG Jones’ last week in and thought that looks remarkably like WH Smith.
I agree about them being a bit redundant, there’s a TG Jones near me, but if I want stationery or cheap books I save half the price and go three doors down to The Works, and if I want a greetings cards I do the same five doors down at Card Factory, and if I want confectionary then I go round the corner to Morrisons. If I want a quality book I order online or go to Waterstones. I only go in there if I really can’t find what I’m looking for in all the nearby shops that are cheaper and/or I have more regular reason to visit.
Yes, and the alternatives are cheaper.
Mind you, I haven’t been in one for ten years or more, so that may no longer be true. But that’s the reputation, which is just as bad for business.
MJW, ditto. My local WH Smiths saved itself a couple of years ago by absorbing the town centre Post Office so there’s lots of through traffic.
I too haven’t been in a WH Smiths for years. What I always find baffling when this kind of chain goes under is why they don’t try selling something else. Surely in retail it would be easy to experiment and find other things that sell better than the things that they currently stock? Then unpopular lines can be discontinued. I remember thinking this when Woolworths died. Again I hadn’t been in one for years.
They did do lots of experiments. The problem is that most bricks and mortar retail is dying. If you need to feel a thing, check the colour, or have it right now, it works. So clothes shops, chemists, Specsavers still work.
It is true that Amazon makes life very easy and lots of stuff that we used to have to go shopping for we now buy online. In some cases, if I had to go and search for something in the shops I wouldn’t know where to start. Where would you go to find a fabric watch strap to fit a Casio G Shock model GW6900? I could see myself scouring the shops all day and still coming away empty handed. Five minutes on my phone and I’ve got it the next day.
This is something people never mention in their nostalgia for physical shops. You got a limited range of stuff. You had to go find it rather than 5 seconds on Amazon or Google.
I have large feet and shops were always rubbish. I’d go around town and there would be 1 or 2 pairs available. Online, it’s a massive choice. I can start my search on a website by size. It’s like visiting every shop in the UK.
I did enjoy the logic of the naming:
‘We need something different from Smiths’
‘How About Jones?’
‘Brilliant!’
How much do you think some consultant got paid for that?
Alas.
I think I have only been in WHS in airports and service stations in the last 20 years. They have a branch somewhere, Portugal, Spain, yes, Valencia I think, airport, for sunseekers desperate to get their first bite of 3 day-old prawn cocktail or pan-fried roast beef tikka masala and hand-selected watercress stem English sandwich on the way home.
The concept only makes sense as a kind of Konbini, an eastern 7/11 or Lawson – and there is absolutely space for an upmarket such in the UK. How you would run the food logistics I can only guess. Your typical konbini refreshes food stock every couple of hours, in the way that only works in dense cities. And the places where WHS is have places like S&M, Waitrose, Pret, Boots, and so on competing with them.
S&M? More leather in the knickers department?
I’ve always been impressed by WH Smith’s ability to get people to pay way over for whatever. My wife quite happily pays three pounds there for sellotape, I don’t know how they do it and am somewhat in awe. Myself, I never patronise that shop – too expensive.
I hate paying over the odds for stuff. Even when the difference is maybe only a couple of quid which I’m really not going to miss, I don’t like feeling as though I’ve been ripped off.