Okay, so this story about WH Smith being "the UK's worst high street shop" is super-interesting, because it says a lot about the tension between:-

Consumer expectations of retail
What it takes to run a high street biz in the post-Amazon world http://www.bbc.co.uk/news/business-44274654

Both @Joannechocolat & @meandmybigmouth have made excellent points about criticism of Smiths being very class-based (it's the 'not posh' bookshop option), so I won't repeat them.

But please read their threads... They're

https://twitter.com/meandmybigmouth/status/1001065745613238272

The top-rated shop in Which's survey was Lush.

The bottom-rated was WH Smith.

Let's compare the typical store environments of those two chains...

To be momentarily wanky, Lush has captured consumer imaginations by selling an 'experience'.

A lot of consumers really like this kind of intervention in shops. It's why Waterstones handwritten book recommendations get so much spontaneous recall among shoppers.

I call this trend the bougie-fication of retail.

A lot of retailers have worked out that their best protection against cheap online competitors is to make their shops beautiful places to hang out. That means:-
Decor
Experiences
Curation

See brands like Lush, Arket, etc

Smiths hasn't done this.

It's not the brand's heritage, and anyway that would mean huge investment. When what Smiths is really about as a business is...

GOOD FINANCIAL MANAGEMENT.

I also find it really interesting that Smiths gets pilloried for offering a similar retail environment to Savers, which is equal top with Lush.

(Maybe people like smellies more than media nowadays. Maybe they don't think they're getting a bargain from Smiths.)

So let's look at WH Smiths annual financial report.

In 2017, Smiths generated £140m in profit. Waterstones managed £18m.

They're different businesses serving fundamentally different customer bases.

Also, Smiths isn't a high street focused business anymore.

It's a travel retailer with a legacy business in high street newsagents/bookshops, which it's managing through structural decline.

Very well, actually.

Smiths makes
Less revenue
Lower profits
From fewer sites

Across its high street retail estate.

This isn't a trade secret either. This is WH Smith's company strategy.

WH Smith is a business based on cost control, focusing on growth areas and...

RETURNING MONEY TO SHAREHOLDERS.

This is a really remarkable set of graphs.

Smiths' business *should* be on fire according to conventional wisdom, and yet it delivers consistent profits each year.

And what does it do with those profits?

It returns them to shareholders in the form of dividends.

(Remember, folks, dividends are not fashionable at the moment, but they pay for your pensions. They're an important financial instrument.)

Smiths also pays tax.

Your friendly reminder that last year Amazon paid £7m in corporation tax.

But the responsibility to

Pay dividends
Manage a high street estate through decline
Pay tax & pension contributions

Puts WH Smith in a Sophie's Choice situation re. store investment.

Every year, Smiths spends MORE on share dividends & pension contributions than it does on capital expenditure.

This is why so many of its stores look like the Augean Stables with a couple of Wimpy Kids and a Jamie Oliver in the corner.

Because fundamentally, Smiths knows that *IF* it refurbished those high street shops and made them bougie.

It would be a waste of money.

Smiths future is about convenience retail in airports & railways, and international expansion.

The high street stores are something it's managing until it can give the leases up.

It's not the best store on the high street because it's getting OUT of the high street.